The research and analysis on the development of China's market economy (domestically also called the "process of marketization") was primarily designed to find out the weak points existing in the market-oriented reform process, so as to promote China's reform and opening-up. Nevertheless, the analysis result has become more and more interrelated to anti-dumping cases since the 1990s, especially in the process of and after China's WTO entry.
It is widely known that whether a country is a market economy or not is an important concept frequently used for determining the dumping margin in anti-dumping investigations. Once the exporting country is categorized as a NMC, the investigation authority of the country launching anti-dumping actions will refer to the cost related data of a market economy country with a similar level of economic development(surrogate country) in calculation of the so-called "normal value", which is used to measure the dumping margin and to determine the corresponding duties to be imposed.
Antidumping is permitted by the WTO and is accepted by all countries as a lawful measure for maintaining fairness in trade and for protecting the safety of domestic industries. China agrees with and supports such actions and has always opposed using dumping to distort the fair competition in international trade or to harm the interests of relevant businesses of trading partners.
On the other hand, China is strongly against abusive use of anti-dumping or turning it into a tool for implementing trade protectionism or discriminative policies. Currently some countries, taking advantage of certain cases of trade disputes, have turned anti-dumping into a weapon for trade protectionism by purposefully exaggerating the magnitude of the so-called dumping from other countries. Moreover, some developing countries and countries in transition are categorized as "non-market economy countries", and market prices of a third country, whose economy has nothing whatsoever to do with these countries, are used in determining the normal values of their products regardless of the actual costs and prices of themselves. Thus the real economic situations of these exporting countries cannot be correctly reflected, leading to wrong conclusions. Faced with such discriminative measures and unfair treatment, exports from some countries are judged as "dumping" when they are actually not, or "serious dumping" when they are slightly so, creating artificial barriers to exports from these countries and causing excessive frictions and disturbances in the fair order of the international trade.
China is one of the seriously afflicted countries. The insufficient communication explains why China is judged as a NMC and anti-dumping policies against China were frequently used. They have little knowledge on how far China has gone on the development of a market economy, its rapid progress in the market-oriented reforms, nor do they understand exactly what is the "socialist market economy". As for Chinese enterprises, they are short of knowledge about international anti-dumping laws and procedures and don't fully keep themselves updated of the fast various changes happening in China's market economy; therefore, they have failed to provide extensive background information for investigation for a considerable length of time. Although Chinese scholars have made numerous attempts at assessing China's market-oriented reforms with a view to further promote the reforms, they have rarely discussed the issue of China's NMC status with their foreign counterparts from an anti-dumping point of view. The result is that some countries' misjudgment of China's economy not only has never been corrected, but it has even been aggravated due to some trivial disputes. Indeed, factors rather than misunderstanding dominate in some anti-dumping cases. For instance, when the economic interests of the relevant enterprises of an importing country are involved, the government of the importing country sometimes may yield to undue demands of the domestic enterprises. At times it is even possible that certain government institutions have sneaked certain political factors into anti-dumping measures when they are only supposed to deal with trading issues.
As a matter of fact, the status of a market economy is not the only condition for winning an anti-dumping case. Unfair trade exists in a market economy as well. Fair and mutually satisfying trade is also possible in a non-market economy. Among enterprises that all have obtained market economy status there are losers in anti--dumping cases. Therefore China claims that the anti-dumping countries take a realistic position in relation to China's NMC issue. China is not pursuing a favorable position in anti-dumping actions, but is demanding fair treatment as a trading partner. China only hopes that anti-dumping measures for reinforcing fairness in trade will not turn into a weapon for expanding unfairness in trade.
In order to obtain a non-discriminative and impartial judgment on China's status of a market economy, we would present the truth of the rapid economic advancements in China with patience; consequently, China's market economy status would be better understood. As a result, a conclusion is naturally drawn that Chinese enterprises are run according to market economy principals. The report provides our foreign friends with the results from a comprehensive research on China's market economy. Readers at home and overseas, especially those for overseas, are welcome to give their verdict with regard to the development of China's market economy. Comments and suggestions put forward through reasoning matter-of-factly by all parties including those from Chinese and foreign experts will be considered to the full extent, as they will not only further promote China's market-oriented economic reforms, but will also contribute in forming a fair and impartial world trade order and economic development environment.
(China.org.cn November 7, 2003)