The European Union Chamber of Commerce in China said that because China's efforts to promote economic marketization are not enough, it will be difficult for EU countries to recognize China's market economy status. The Chamber of Commerce also said that there are concerns that the import of Chinese goods within the EU will reduce the employment of EU member states. . February 2...
The European Union Chamber of Commerce in China said that because China's efforts to promote economic marketization are not enough, it will be difficult for EU countries to recognize China's market economy status. The Chamber of Commerce also said that there are concerns that the import of Chinese goods within the EU will reduce the employment of EU member states.
According to a report published on February 22, China’s overcapacity has deteriorated since 2009, and this issue cannot be resolved through China’s “One Belt, One Road†plan or the AIIB. Solving this problem requires a deeper reform of the Chinese government and the way it manages the economy.
The Chinese side believes that China will automatically gain market economy status by the end of 2016, according to the accession rules of joining the WTO in 2001.
However, EU member states have different views on this, while the United States clearly opposes it. The United States stated that the Chinese economy relies heavily on government organization and administrative pricing.
The chairman of the European Union Chamber of Commerce in China said that the European Parliament generally believes that China is challenging the European job market.
Joerg Wuttke said that concerns about job losses have not only been in academic research, but have already led to demonstrations on the streets of Brussels. The depreciation of the renminbi may boost China’s exports, but it will make it harder for the EU to make a decision.
Joerg Wuttke told reporters yesterday: "China has not been able to push the transition to a market economy as its leaders expected in 2001."
According to the Chamber of Commerce’s report, overcapacity has led to growing trade tensions, such as in the steel industry. China's steel exports to the EU increased by 41% year-on-year in 2015, while domestic capacity utilization – the amount of production actually used in production – fell from 80% in 2008 to 67% in 2015.
Wuttke said that if there is some progress later this year, such as the long-term bilateral investment agreement between the EU and China, China's access to the EU's recognition of market economy status may benefit.
According to the Chamber of Commerce’s report, local protectionism is a major cause of the deterioration of overcapacity in recent years.
Wuttke said that most of the problems are in the industry protected by local governments.
“Made in China 2025†may also generate new overcapacity. The program aims to improve China's manufacturing and technology content.
The Chamber of Commerce’s report said that the idea that the “Belt and Road†and the AIIB should address overcapacity may be misleading and they have limited role in absorbing excess capacity.
Wuttke said: "I think this idea has been kidnapped by some people. They hope to delay the resolution of overcapacity through the "Belt and Road" and the AIIB as a safety valve."
The Chinese government should address the problem of overcapacity from its roots, such as reforming the fiscal system, allowing local governments to have more choices of funds, while strictly restricting local government subsidies for state-owned enterprises.
Wuttke said that such a goal will not be effective soon, because it requires reforms in various aspects, including multiple levels within the government.
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