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Europe on a Chinese Shoestring

BEIJING – Will China help to rescue the euro, or not? In August, Premier Wen Jiabao said that China was ready to assist Europe in its hour of need. But, in December, at the Lanting Forum in Beijing, Deputy Foreign Minister Fu Ying declared that China could not. “The argument that China should rescue Europe does not stand, as reserves are not managed that way,” she announced.

For months, European leaders and International Monetary Fund officials have been hoping that China would lend a hand to save the euro. But Wen proposed certain conditions, including the European Union’s recognition of China as a market economy. Europe’s leaders, however, have not agreed to this or any other of Wen’s conditions. Hence, Fu’s insistence that China can do nothing to help.

Market-economy status is largely symbolic, but it is important to China. European Commissioners and lawyers are currently engaged in a heated debate about whether the World Trade Organization should automatically grant China this status in 2016. Whatever the outcome, the benefits are marginal; the primary benefit of market-economy status for China is that it would preclude anti-dumping charges under WTO regulations.

Nevertheless, it is a symbol that matters to China. Many Chinese believe that to deny China market-economy status is to dismiss the last 30 years of often wrenching reforms. Above all, China wants a sign of acceptance by the advanced Western economies, which continue to regard the country not only as repressive, but as representing an alternative economic model: state capitalism, rather than the free-market variety.