New Zealand has announced it will regard China as a market economy, a breakthrough statement which paves the way for the nation to earn the international trading status it deserves.

A New Zealand Government statement said China had already developed a strong and vibrant private sector.

China has notched up an impressive annual economic growth rate of 10 percent since it decided to move away from a centrally planned economy 10 years ago.

In another important move, New Zealand has also agreed not to apply anti-dumping provisions in China's World Trade Organization (WTO) Accession Protocol.

Experts have applauded the initiative shown by the New Zealand authorities, hoping other countries will follow suit.

New Zealand was also the first country to support China's accession to the WTO, which fully integrated China with the global trading system.

The Chinese Government has frequently urged its trading partners to realize China now has a vibrant market economy, with trade suffering due to their failure to recognize this fact.

As a condition of WTO membership, China agreed other members could treat it as a non-market economy for 15 years after its entry.

But by defining China as a non-market economy, anti-dumping rules adopted by China's trading partners refuse to recognize China's domestic production costs. They instead use production costs in a third "surrogate" country to calculate Chinese exports' so-called "normal value."

The use of a surrogate, usually an emerging economy such as Turkey or Mexico where material and labour costs are much higher than in China, often means Chinese exporters are deemed to be selling below their normal value. As a result, they become subject to tariffs that exceed 100 percent in some instances.

The central government's efforts to remedy this situation have met with some success.

Besides New Zealand, Australia has promised to grant China market economy status and the European Union (EU) is also considering the request, according to Wang Hejun, deputy commissioner of the Bureau of Fair Trade for Import and Export under the Ministry of Commerce.

Chinese Premier Wen Jiabao also asked the United States to give China market economy status when meeting US Vice-President Dick Cheney in Beijing on Wednesday.

The ministry is also requesting a revision of the WTO rules, which distinguish between market and non-market economies. The ministry contends that the organization's criteria rule out non-market countries from joining it.

Both the United States and the EU have granted market economy status to Russia, which has yet to join the WTO.

Chinese Academy of International Trade and Economic Cooperation Deputy Director Li Yushi said China's non-market economy status is the result of compromise, rather than objective assessment.

"It is understandable that some countries did not want China to have full market status, as a result of their own self-interests," Li said. "But with the constant development of China's market system and enhanced understanding between China and other WTO members, China's market status should be a negotiable issue."

(China Daily April 16, 2004)