China: Trade conflicts returned - OCBC

The US recently rejected China’s bid for “market economy status” again as the Trump administration only announced the decision last Thursday even though it has already submitted the decision to the WTO in mid-Nov, notes the research team at OCBC Bank.

Key Quotes

“Although the presumption that China is a non-market economy under the article 15 of the WTO protocol has expired on 11 Dec 2016, the major trading partners such as EU and US continued to refuse to grant the market economy status to China. The non-market economy status will put China in a disadvantaged position in the case of antidumping investigations as its trading partner will use the selected third-country price as benchmark rather than China’s own costs.” 

“In addition, the US Commerce Department also launched the anti-dumping investigation into Chinese aluminium alloy sheet without complaints from the domestic companies.”

“The US’s rejection of China’s market economy status and the self-initiated antidumping investigation, first since 1991, show that the trade conflict between China and US is unlikely to go away despite warm relationship between President Trump and President Xi.”