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'Surrogate country' policy undermines China's exports

Reporter: Michelle Van den Bergh 丨 CCTV.com

12-11-2016 14:17 BJT

Let's take a look at how the surrogate country approach, or the "analogue country method", affects China's exports...and what China has done to make itself a fair and open market.

When China joined the WTO in 2001, it did so with a condition that it would be regarded as a "non-market economy" for 15 years, during which this Analogue Country Method would be used to determine tariffs on Chinese exports.

Under it, WTO members use production costs from a third country to calculate the value of products from countries on their "non-market economy" list -- a list which includes China.

The "analogue country method" results in higher anti-dumping margins and can even function as a trade barrier, giving local industries an unfair competitive advantage, and undermine China during anti-dumping investigations. China has cut its overall tariffs from 15.3 percent to 9.8 percent. 

It has streamlined regulations for foreign companies, reduced taxes, regulated the country's financial system, and improved foreign investment approval procedures.

The Chinese economy has also opened up quite a lot during this period: for instance, the government opened three free-trade zones in Guangdong, Tianjin, and Fujian -- established the Asian Infrastructure Investment Bank -- and founded the Belt & Road project to further support international trade and investment.

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