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China advancing to full market economy
Updated: 2004-07-02 11:20

China is pushing forward to a full market economy at its own schedule despite the European Union refusing to give it MES (market economy status) three days ago.

Two laws, including the Administrative Licensing Law and the revised law on foreign trade, took effect on Thursday, showing the country's new efforts to improve its market economy mechanism.

The Administrative Licensing Law, the first of its kind in the world, streamlines administrative approval procedures and removes restrictions considered unnecessary.

Experts say the law helps curb protectionism and the abuse of power as it will restrict governments' power, help increase the transparency of the administrative approval procedures, and reduce the cost of administration.

The law is also expected to lower or cut the obstacles that baffle individuals and organizations to participate in economic and social activities, and help China fulfill the commitments it made to the WTO (World Trade Organization).

Yuan Shuhong, vice president of the State Administrative College, said the law offers a system guarantee for the market mechanism to play a more important role in its whole economy.

Under the revised law on foreign trade, individuals and companies, even foreigners, will be enabled for the first time to engage in import and export business without obtaining government approval.

According to the law, a person or a company may engage in foreign trade after it registers with government departments concerned, and no official permission is required so long as the applicant is a legal company.

Shen Sibao, president of the Law School attached to the University of International Business and Economics, said the new law emphasized the leading role of natural person and corporations in the market, marking an improvement of China's market economy mechanism.

China designated some state-owned companies to engage in foreign trade before its reforming and opening up to the outside began in 1978.

And later, more foreign trade companies were granted the licenses on condition that they have met official requirements.

"Too much control over foreign trade obviously didn't match up with a market economy as it restricted competition," said Li Chenggang, deputy director of the fair trade bureau under the Ministry of Commerce.

He said China then issued its first law on foreign trade in 1994 and prepared for a new one after its entry into the WTO in 2001, aiming to better fulfill its commitments.

In April 4 this year, the Standing Committee of the National People's Congress (NPC) passed the revised law on foreign trade.

China would also protect intellectual property rights in foreign trade according to the amended law and other related laws and regulations on intellectual property, said the deputy director.

"It is unreasonable for some WTO members not to give the market economy status to China," he said.

The private sector has developed quickly during these years and made up a heavy proportion of the national economy while the administrative measures from the government dropped sharply and, as a result, over 90 percent of products' prices were independently decided by the market.

China had also amended more than 3,000 laws, regulations and policies on foreign trade to meet the WTO regulations, he added.

However, the European Union refused China full market economy status Monday because of what it said was too much state interference, the weak rule of law and poor corporate governance.

China has so far succeeded in winning MES recognition from New Zealand, Singapore, Malaysia, Thailand, Kyrgyzstan, Benin and Togobut it has yet to persuade the United States and the EU.

The experts also appealed to look at China's MES issue rationally, as the market economy mechanism of the country can not be denied by the refusals, and on the other hand, part of the standards to the MES set by some developed countries also shows the direction of China's further reform and development in economy.

The MES issue led to numerous anti-dumping cases worldwide involving China, according to experts.

And currently, other countries can use prices of third-country markets as a benchmark to compare with domestic prices in determining whether Chinese products have been dumped or not because the country does not have MES.

"However, the issue doesn't curb the continuous boom of China's foreign trade and says nothing of changing its direction toward full market economy," said Li Chenggang.

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