China

The dispute over China’s Status

By the end of the year, the EU Commission must decide whether China has the Status of a market economy decides. Many industries in Europe fear an even stronger competition from the far East.

China’s economy is faced with a Problem: Instead of the necessary structural reforms push, pumped the government in the last few years immense quantities of capital in the economy. At first, it seemed this strategy to be successful. China was the world economic crisis gone loose, achieved double-digit growth rates. But now it shows itself that The prescribed growth was at the expense of efficiency. As a result, suffers from the country’s immense Overcapacity. In the past year were about Chinese steel plants, on average, only about 70 percent capacity. At the same time, China was, according to the World Steel Accociation with an output of just under 804 million tons of the world’s largest steel producer. For comparison: Japan as the runner-up comes on just once, to around 105 million tons. According to a study by the EU chamber of Commerce of the Chinese steel production is “completely detached” from the actually existing demand.

China’s steel industry is currently not even at 70 percent capacity

The fear of Chinese Import flood

Similar problems, the people’s Republic in the production of paper, glass, and petroleum products. “Overcapacity has for years been a plague of the Chinese industrial landscape, dozens of industries affected and mean far-reaching damage to the global economy in General and Chinese growth in Particular,” said the EU chamber of Commerce.

The Chinese Overproduction always leads to tensions with various industrialised countries, the the country are accusing their markets with surplus products to flood. In the last year, exported to China, about 50 percent more steel in the EU than 2014. Last week, rallied thousands of steel workers in Brussels against the cheap competition from the far East. The EU-Commission initiated an investigation to Stahlimporten from the people’s Republic. It should be examined whether it is here in order to artificially cheap products, and thus to unfair competition. Should this be the case, the Commission’s Anti-Dumping duties imposed, and so the European companies to protect. Currently, a total of 55 Anti-Dumping proceedings in the EU against China in force. Particularly affected are in addition to the steel industry, the chemical, Solar and mechanical engineering industries.

Assault against the Marktwirtschaftsstatus

But may be the hurdles for such Anti-Dumping procedures soon later. At the end of December, the Commission must make a decision, the far-reaching impact on the treatment of China in these proceedings could have. In concrete terms, the question is whether the EU is China a market economy Status Market Economy Status, MES) ascribes. Then it would be much more difficult, Anti-Dumping proceedings against China to launch possible punitive duties fell lower.

In Brussels, demonstrated the steel workers from across Europe against cheap competition from the far East

Since running for weeks representatives of the affected industries in Europe storm against such a decision. Representatives of industry associations seek opportunities for dialogue with trade Commissioner Cecilia Malmström, lobbyists write letters to EU parliamentarians and EU commissioners. “The awarding of the Marktwirtschaftsstatus to China would be Dumping in Europe open the door. The at risk investment and jobs,” says Milan Nitschke of the Industrieallianz Aegis, which many associations belong, such as the Solar or steel industry. Support the associations of some EU countries, such as Italy and France, as well as the trade unions. The traditional freihandelsfreundliche the UK, by contrast, speaks for the grant.

The Chinese government pushes for economic and political reasons on the Marktwirtschaftsstatus. And the opportunities to receive it are not bad. As China 2001 member of the world trade organization (WTO) was, went to the EU States believe that the country within the next 15 years, i.e. until no later than December 2016 – to a fully developed market economy would develop. Certain Transitional provisions in the Beitrittprotokoll will now run in December. China sees it as a representation, automatically as a market economy, to be recognized. Ironically, the legal service of the EU Commission estimates this similar. China would the Marktwirtschaftsstatus not get, this could be for the EU to have a risk. “Then China would certainly be against this decision in the context of WTO proceedings, lawsuits”, says Mikko Huotari from the Mercator Institute for China Studies (Merics).

At the end, a compromise?

The EU Commission had initially announced, the potential impact of a Martwirtschaftsstatus for China to examine. When a decision is, is still open. At the end of the EU Parliament and the European Council as representatives of member States to agree.

Anti-Dumping practices despite Marktwirtschaftsstatus calls on EU-Commissioner for competition, Vestager

The decision will have not only economic dimensions but also political and strategic aspects, says Merics expert Huotari. “You should try, with China in negotiations to join. You should try to make concessions in other areas to get, if you are then you may at the end of China the Marktwirtschaftsstatus to play.” In a Merics-study of China’s Marktwirtschaftsstatus hits Huotari, among other things, China in such negotiations about stronger compliance with WTO or to adapt to OECD rules, to move.

Would be possible at the end of a compromise. China would receive the Marktwirtschaftsstatus and the EU could temporarily special rules for the prevention of Dumping to prevail. “We are very determined to continue Anti-Dumping and Anti-subsidy measures, regardless of whether there is a Marktstatus to be there or not,” said EU Commissioner for competition, Margarethe Vestager, recently, in Brussels. This is crucial to a fair competition.