The World Trade Organisation (WTO) has declined to grant China its market economy status. This was a massive blow to China as they faced their third application rejection. Having a market economy status translates to instant lower tariffs amongst the WTO members.
Tensions have grown between the East and West in recent years and it’ll be increasingly unlikely it will ease with the Trump administration ready to take over. Trump is also determined to leave the Trans-Pacific Partnership trade deal (TPP) and China may push forward to take its place and initiate a new vision for free trade in Asia. There have been numerous reports that Chinese firms are engaging in many unethical practices and disregarding its anti-dumping duties. For instance, the steel market has been flooded with artificial Chinese goods which has led to an oversupply and alleged increased dumping.
US official said that “The U.S. is not changing China’s status as a non-market-economy”. President elect Donald Trump remains persistent saying that “China is not a market economy.” Allowing China to obtain market status will give Chinese firms an even greater unfair advantage and will add further trade frictions.
Asian markets are trading broadly lower due to the negative announcement. China A50 index fell 2.5%, trading at around 10340 level.