Years of lobbying by the Chinese government didn't convince the European Union (EU) to grant China market economy status Wednesday at the EU-China summit in Prague, but the EU said it was willing to deal with the issue objectively.

The EU made the remark at the 11th annual EU-China summit after Chinese Premier Wen Jiabao expressed his hope that the EU would recognize China's market status soon, during the one-day summit.

Wen noted that recognition from the EU would benefit both sides. That view was shared by experts interviewed by Xinhua, who said the status would boost bilateral trade, especially amid the global economic downturn.

Zhang Junsheng, director of the WTO Research Institute at the University of International Business and Economics in Beijing, told Xinhua Thursday that it had been expected that the EU would not recognize China's market economy status during the summit.

China has sought to achieve market economy status since the government made a decision to reform its economic system in 1984. Achieving that goal would help the country avoid punitive anti-dumping measures.

The EU would probably wait till 2016 when all countries had to grant China that status under the terms of China's accession to the World Trade Organization (WTO) in 2001, Zhang added.

Michael Pulch, Deputy Head of Delegation of the European Commission to China, told Xinhua by e-mail Thursday that China had made tremendous economic progress since the reform and opening up drive that began 30 years ago. However, he declined to comment on why the EU refused to recognize China's market economy status.

"Transforming a planned economy into a market economy takes time and requires not only adopting rules and legislation but also proper implementation by all authorities and business in all sectors," he said.

Under a market economy, supply and demand in free markets determine the allocation of resources and the prices of goods and services. By contrast, in a non-market economy, the central government sets prices.

Zhang Yansheng, director of the Institute of Foreign Trade of the National Development and Reform Commission, told Xinhua Tuesday that no country today could be defined as a pure market economy.

Yao Jian, spokesman of the Ministry of Commerce, said last week that gaining market economy status would help China get fairer treatment in anti-dumping investigations.

"The EU's recognition would help accelerate the healthy development of trade, investment, tourism and other sectors between China and the EU," said Zhang Yansheng.

The EU is the largest trade partner of China. China ranked the second-largest in trade value with the EU. In 2008, bilateral trade totaled 425.6 billion U.S. dollars, up 19.5 percent year on year.

However, Chinese exporters frequently face EU anti-dumping claims and investigations by the EU. In 2008, the EU started six anti-dumping investigations against Chinese imports such as stainless steel, fasteners and shoes.

A WTO report showed that China was the most frequent subject ofnew anti-dumping investigations during the second half of 2008, with 34 cases directed at Chinese exports out of 120 new investigations.

Out of the 81 anti-dumping measures applied during July to December, 37 were directed at China, according to the report.

Zhang Junsheng told Xinhua Tuesday that the EU's recognition would help reduce trade disputes and create an equal footing during such probes.

Otherwise, he said, importers might misuse anti-dumping measures against Chinese exports, putting mutual trade and economic cooperation in jeopardy. He said denial of market economy status would make it easier to prove dumping by citing a third country's comparable cost.

So far, 97 WTO members have recognized China's market economy status. But its major trade partners, such as the EU, the United States, Japan and India, have not.

In 2007 the EU rejected China as a market economy, citing what it said was excessive state interference, a weak rule of law and poor corporate governance.

MOC Minister Chen Deming stressed China was already a market economy during the China-EU High-level Economic and Trade Dialogue on May 7 and 8. He said China and the EU had different understandings and macroeconomic controls over their market economies as they were at different stages of development with different conditions.

An expert from the China Society for World Trade Organization Studies, who declined to be identified, told Xinhua Tuesday that China's economic reform was not mature enough to gain EU recognition of market economy status before 2016.

He said the government should step up reform in some areas such as energy prices and capital account convertibility.

He also disputed claims that China's 4-trillion-yuan (585 billion U.S. dollars) stimulus package and plans to support 10 key industries were delaying the move to a market economy.

He said that given current economic conditions, it was reasonable for any government to step up macro-controls temporarily to achieve economic stability.

"Governments in Western developed nations also took steps to sustain their economies, including injecting capital into troubled banks or nationalizing such banks," he added.

Zhang Yansheng said the ongoing economic downturn, to some extent, was conducive to the reform progress. He cited as an example the government's efforts to reform oil pricing to reflect international markets.

(Xinhua News Agency May 22, 2009)