A Major Threat to Europe's Economy
Will EU recognize China as a market economy? A positive answer to this crucial question may have serious consequences for an important part of the industry in Europe. Let us summarize the situation. China joined the World Trade Organization (WTO) in 2001 and requires to be granted the Market Economy Status (MES) by December 2016. According to the Economic Policy Institute, the decision to grant China MES could very badly affect significant sectors of the European industry such as steel, automobile parts, glass and aluminium. As a result up to 639,000 jobs could be lost in Germany, 416,000 in Italy and 387,000 in the UK. We should also mention that even without MES the Chinese exports to Europe increased massively from € 74.6 billion in value in 2000 to an estimated € 359.6 billion in 2015. However, the majority of experts are convinced that Chinese firms do not operate under market economy conditions. Indeed, these companies are heavily subsidized by public money and closely depend on policies of the central government. This is exactly the opposite of the free market. But, the EU-28 is China's largest trading partner. It makes things more difficult for both parties and especially for Germany which has the greatest trade exposure to China -6.6% of its overall exports- of the 28 EU nations. We believe that Europe should continue to fight against unfair competition and maintain the antidumping measures currently in force. In view of the present situation China should not be awarded the Market Economy Status.