China pulls WTO suit over claim to be a market economy

China has halted a dispute at the World Trade Organization over its claim to be a market economy, a panel of three WTO adjudicators said on Monday, meaning Beijing must accept continued EU and US  “anti-dumping” levies on cheap Chinese goods.

One trade official close to the case said so much of the ruling had gone against Beijing that it had opted to pull the plug before the result became official.

“They lost so much that they didn’t even want the world to see the panel’s reasoning,” the official said.

Without a WTO ruling in Beijing’s favour, the EU and United States can keep imposing duties on cheap imports from China while disregarding its claim that they are fairly priced. China had insisted that they treat it as a  “market economy”, countering their view that the price of Chinese exports could not be taken at face value due to state interference in the economy.

It took legal action saying that under its 2001 WTO membership terms it must be recognised as a  “market economy” after 15 years. “China believes that there can be no other plausible reading of this simple and unambiguous treaty language,” China’s WTO ambassador Zhang Xiangchen said at a WTO hearing in 2017, calling the text  “crystal clear”.

But the United States and the EU disagreed. They said Chinese goods -- especially commodities such as steel and aluminium -- were still heavily underpriced because of subsidies and state-backed oversupply, giving Chinese exporters an unfair advantage.