China Market Economy Status Debate Heats up

Brussels, 12 January 2016 – On the day of an important conference on Market Economy Status for China (MES) in the European Parliament (EP), which was held on January 12th, the European Steel Association (EUROFER) calls for policy makers to more rigorously, transparently and comprehensively assess what granting this designation to China would do to the EU’s jobs, growth and investment prospects.

“The EU has set out five criteria establishing how China could be considered to be a market economy. Presently, the country meets just one of these conditions. China is simply not yet a market economy. There is still too much state involvement”, said Axel Eggert, Director General of EUROFER.

Mr Eggert continued, “China is placing political pressure on national and EU policy makers to prematurely grant it the status of a market economy. The country is arguing that its WTO protocol assures it MES by the end of 2016. However, the WTO protocol was established under the presumption that China would make sufficient progress towards becoming a market economy; progress that it has studiously failed to implement.”

Were MES to be granted, the anti-dumping measures that safeguard hundreds thousands of EU jobs against China’s unfair competition across a range of strategic EU industries would become ineffective. The EU’s other trade defence measures are either inoperative or simply insufficient to defend against the rising tide of dumped Chinese products, particularly steel.

China has an overcapacity of perhaps 400 million tonnes – more than twice the EU’s total steel production of around 170 million tonnes. Import volumes of steel from China into the EU have doubled in the past 18 months, with prices collapsing by about 40%. MES would worsen already dire market conditions caused by China’s dumping of steel in the EU, and would threaten the entirety of the 330,000 jobs in the European steel sector.

Mr Eggert concluded, “Despite those that believe the EU must give China favourable terms, the fact remains that China already has a favourable commercial position: the EU’s total goods trade deficit with China was around €137 billion in 2014, a figure expected to grow 30% larger for 2015i. With the College of Commissioners due to discuss MES tomorrow, EUROFER insists that policy makers think long and hard about the political direction of the EU’s trade relations with China, or else face the potential demise of the sector on which Europe was built.”