US-China trade war weighed on Beijing’s decision not to pursue WTO market economy status, analysts say

China asked the World Trade Organisation to suspend dispute on its market economy status, while the US has postponed a case against China on intellectual property

Analysts say Beijing is adapting to new realities in global trade, with the US trade war forcing policymakers to pursue new priorities

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Dennis Shea, US Ambassador to the WTO talks with Xiangchen Zhang, Chinese Ambassador to the WTO before the General Council meeting at the World Trade Organisation in Geneva, Switzerland, July 26, 2018. Photo: Reuters

Published: 7:00pm, 18 Jun 2019Updated: 10:04pm, 18 Jun 2019

The ongoing trade war with the United States was an important factor in China’s decision to halt a case against the refusal of the European Union to grant Beijing “market economy” status at the World Trade Organisation, analysts say.

The pursuit of market economy status has been a long-term strategic goal for China, since it would enable it to avoid the anti-dumping cases it often faces because of its model of selling cheap goods to developed markets. It would also be a symbolic recognition of China’s arrival as a mature economy itself and a tip of the hat to the “socialist market economy model” for policymakers in Beijing.

However, the rapidly changing international trade landscape has caused China to re-evaluate its priorities, with the trade war forcing China to take “a step back” from World Trade Organisation (WTO) reform, according to experts in the mainland.

Su Qingyi, a senior research fellow at the Institute of World Economics and Politics under the Chinese Academy of Social Sciences, said the trade war has made it more difficult for the multilateral trade system to function. “The WTO system will remain, but reform of the WTO is a long-term process,” Su said.

Ying Pinguang, associate dean at the School of WTO Research and Education at the Shanghai University of International Business and Economics, suggested China could be halting its pursuit of WTO market economy status as a negotiating ploy in the US-China trade war. Photo: Brussels Diplomatic Academy

Ying Pinguang, an associate dean at the School of WTO Research and Education at the Shanghai University of International Business and Economics, suggested that Beijing’s dropping of the case could be viewed as a goodwill gesture designed to help reignite negotiations over an end to the trade war.

“The US halted a WTO dispute over China’s intellectual property rights a few days ago, so, it could be part of a broad negotiation strategy,” Ying said.