US President Donald Trump’s administration refused to recognize China’s economy as a market economy. This a second rejection of China’s request to change its economy status according to international trade rules.
The US’ decision was submitted to the WTO’s headquarters in Geneva a few weeks ago, but it was published only on Thursday 30 November.
The US’ second refusal to grant a market economy status to China may aggravate the relations between the two countries, says The Wall Street Journal. The Journal mentioned that negative consequences will mostly impact on the Chinese side. Particularly, trading partners may maintain high duties on imports from China. The reason is that a state not considered to be a market economy provides unfair benefits to producers, according to generally accepted views.
The current duties on Chinese goods often exceed 100%, which results in losses worth $billions for Chinese companies.
In December 2016, China already sent official complaints about the USA and the EU to the WTO’s court, pointing to the WTO membership rules that automatically change a country’s status to “market economy” after 14 years of membership. The case has not been brought before the court yet.