08 December 2016 / public affairs / FR 

Belgium should support China's market economy status

In light of the EU’s possible opposition to grant market economy status (MES) to China, the latter however offers many opportunities for Belgium’s economy in the long run.

 

China is sexy, and Belgium knows it

In a world where advanced economies are stagnating, Belgium needs to look for new business opportunities and fresh capital. China is one of the few countries able to offer such possibilities. In October, Prime Minister Charles Michel travelled to China on a promotional visit. He emphasised Belgium’s advantageous tax regime, with notably the absence of capital gains tax and the notional interest scheme. During his visit, several deals between Belgian and Chinese businessmen were forged. Undoubtedly, the good Belgium-China relationship is bearing fruit: a new flight route connecting Brussels to Shanghai will be open in 2017, and one of the biggest incubators in Europe (the China-Belgium Technology Center) will be inaugurated in Louvain-la-Neuve at the end of 2018.

 

What is at stake?

By December 11, the EU institutions will decide whether or not to grant market economy status to China. When China joined the WTO in 2001 it had 15 years to become a market economy. Today, China is not a market economy yet, but the transition period is coming to an end. The situation is such that China demands its promised status, whereas the EU remains hesitant. Granting the status to China would make it more difficult for the EU to implement anti-dumping measures against Chinese dumped products. According to the latest news, the EU is likely to grant MES to China while it will upgrade its trade defence instruments in order to protect EU industries.

 

Endangered EU-China projects

Refusing to grant the market economy status to China would be the ‘kiss of death’ for several EU-China projects. While there are understandably those who stand against China’s MES in the name of possible short-term job losses, the long-term positive impacts of such a development should also be taken into account. Indeed, the EU and China are currently negotiating a comprehensive EU-China Investment Agreement that would open up parts of China’s market to European companies. Moreover, Brussels and Beijing are also trying to build synergies between China’s One Belt One Road initiative (commercial routes that would connect China to Europe through Asia) to the EU’s Investment Plan. Once sealed, these projects would offer enormous opportunities for European companies.    

Given that Chinese foreign direct investments in Europe continue to grow, even more opportunities will arise in the future. The question which thus remains - is it truly in the EU’s interest to deny China market economy status?

 

Bertrand Wyns

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