BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/25
In principle, the two countries share common views on what China needs to do to strengthen the role of the market in its economy. China confirmed its plans to increase the role of markets in determining the yuan’s exchange rate and conceded that production needs to be cut in the steel industry and other industries suffering from overcapacity. This will be helped by China’s commitment to ongoing deregulation of energy prices. China will continue to improve the quality of its economic statistical data collection and communication on economic policy. The problems with corporate cybersecurity continued to be on the agenda. Many of the issues mentioned during dialogue have already been addressed or at least noted in China’s own programmes or at international meetings, so emphasis was mainly on strengthening reform policies rather than launching new initiatives.
China promised this spring to ease foreign investment to China by introducing a “negative list” that limits or bans outright the access of foreign firms to certain sectors. The Americans suggested that further reduction of the negative list is a threshold issue to finalising the key bilateral investment protection agreement. China last week delivered a whittled-down list, which Reuters reports still contained 35–40 sectors off-limits to foreigners (down from about 80 sectors earlier). Given the relative freedom Chinese firms enjoy in investing in the US, the Americans still feel the list is too long,
The US is about to revisit the issue of whether China finally fulfils the criteria for market-economy status. The common view is, however, that the status will not be granted. The status would make it more difficult to impose anti-dumping duties on Chinese products sold below their producing costs to the US markets. Just last spring, the US imposed, in line with its WTO commitments, very high additional tariffs on certain Chinese steel products. China wants its market status classification conferred automatically at the end of 2016 as it completes its 15th year of WTO membership. The EU Commission will review its assessment of China’s market-economy status in July.