China’s State-Directed Economy and the World Trading System

  • Luyao Che


This chapter argues that the existing multilateral trading system, which is underpinned by WTO rules, has limited ability to adapt to the recent development of the state-directed economic model, as it has not contemplated the newly emerging market-state relationship in China. The chapter first puts forward a point that various WTO rules have been introduced in order to discipline two types of economies, namely command economies, wherein the state regulates every economic actor and leaves no room for market mechanisms to function, and market economies, wherein the state fulfils a single role as a regulator, which is secondary and supplementary to the market. Then the chapter examines the challenges imposed by the rise of contemporary state-directed economies to the multilateral trading system, using China’s recent involvement in the areas of anti-dumping and countervailing measures against subsidized trade as case-studies. The chapter argues that a certain difficulty exists in applying the relevant instruments to the situations in which the state is alleged to distort free trade by performing its role as a competitor or a planner, rather than as a regulator, because when these instruments took shape, the multilateral trading system was only conceived of in one way for the state to influence the economy, which is through exercising its regulatory authority.



  1. Feldbrugge F, Joseph M, Simons William B (1982) Perspectives on Soviet law for the 1980s, vol 24. Brill, The HagueGoogle Scholar
  2. Grzybowski K (1987) Soviet International Law and the World Economic Order. Duke University Press, DurhamGoogle Scholar
  3. Hancher L, Ottervanger T, Slot PJ (2012) EU State Aids, 4th edn. Sweet & Maxwell, LondonGoogle Scholar
  4. Hoogmartens J (2004) EC Trade Law following China’s accession to the WTO. The Hague, Kluwer Law InternationalGoogle Scholar
  5. Jackson JH (1997) The world trading system: law and policy of international economic relations. MIT press, LondonGoogle Scholar
  6. Salvatore D (2014) National trade policies. Elsevier, AmsterdamGoogle Scholar
  7. Van den Bossche P, Zdouc W (2013) The law and policy of the World Trade Organization, 3rd edn. Cambridge University Press, CambridgeGoogle Scholar

Book Sections

  1. Calliess G-P, Mertens J, Renner M (2013) Privatizing the economic constitution: can the world market reproduce its own institutional prerequisites? In: Herrmann C, Krajewski M, Terhechte JP (eds) European yearbook of International Economic Law, vol 4. Springer, Berlin/Heidelberg, pp 201–221Google Scholar
  2. Footer ME, Forbes AR (2012) Changing ideologies in trade, technology and development: the challenge of China for International Trade Law. In: Muller S, Frishman SZM, Kistemaker L (eds) The law of the future and the future of law, vol II. Law of the Future Series. Torkel Opsahl Academic EPublisher, The Hague, pp 309–322Google Scholar
  3. Wu M (2015) The WTO and China’s unique economic structure. In: Liebman BL, Milhaupt CJ (eds) Regulating the visible hand?: the institutional implications of Chinese state capitalism. Oxford University Press, Oxford, pp 313–350Google Scholar

Electronic Articles

  1. AndroshchukA (2006) Transition economies: a look at Russia, Ukraine and Poland. Honors College Theses. Accessed 1 Sept 2018
  2. Atkinson R (2012) Enough is enough: confronting Chinese innovation mercantilismGoogle Scholar
  3. Ma J (2012) Challenge the non-market economy methodology taken by EU and US against China in WTO anti-dumping area. Peking University School of Transnational Law. Accessed 1 Sept 2018
  4. USDOC (2015) Enforcement and compliance antidumping manual. International Trade Administration. Accessed 1 Sept 2018
  5. Watson KW (2014) Will nonmarket economy methodology go quietly into the night?: US antidumping policy toward China after 2016. Cato Institute Policy Analysis. Accessed 1 Sept 2018

Journal Articles

  1. Bremmer I (2009) State capitalism comes of age: the end of the free market. Foreign Affairs 88(3):40–55Google Scholar
  2. Clarke DC (2003) China’s legal system and the WTO: prospects for compliance. Glob Stud Law Rev 2:97Google Scholar
  3. Cornelis J (2007) China’s quest for market economy status and its impact on the use of trade remedies by the European Communities and the United States. Glob Trade Customs J 2(2):105–115Google Scholar
  4. Countervailing duty investigation of coated free sheet paper from the People’s Republic of China – Whether the analytical elements of the Georgetown steel opinion are applicable to China’s present-day economy (2007) Investigation public document, vol C-570-907Google Scholar
  5. Detlof H, Fridh H (2007) The EU treatment of non-market economy countries in anti-dumping proceedings. Glob Trade Customs J 2(7):265–281Google Scholar
  6. Du M (2014) China’s state capitalism and world trade law. Int Comp Law Q 63(02):409–448Google Scholar
  7. Eid RN (1988) Effect of Georgetown Steel Corp. v. United States on nonmarket economy imports. Am Univ J Int Law Policy 3:65Google Scholar
  8. Grzybowski K (1980) Socialist countries in GATT. Am J Comp Law 28(4):539–554Google Scholar
  9. Liu L, Fan C (2006) Woguo Fei Shichang Jingji Diwei de Yuanqi, Weihai yu Duice (我国非市场经济地位的缘起、危害与对策) [The origin, negative effects and strategies of China’s non-market economy status]. Market Modernization Mag 462:13–14. (in Chinese)Google Scholar
  10. Prusa TJ, Vermulst E (2013) United States–definitive anti-dumping and countervailing duties on certain products from China: passing the buck on pass-through. World Trade Rev 12(02):197–234Google Scholar
  11. Shi S (2006) Qianxi ‘Fei Shichang Jingji Guojia Diwei Tiaokuan’ (浅析“非市场经济国家地位条款”) [Analysis on the ‘Provision of Non-Market Economy Status’]. World Econ Study 10:47–52. (in Chinese)Google Scholar
  12. Snyder F (2001) The origins of the ‘Nonmarket Economy’: ideas, pluralism and power in EC anti-dumping law about China. European Law J 7(4):369–424Google Scholar
  13. Tietje C, Nowrot K (2011) Myth or reality? China’s market economy status under WTO anti-dumping law after 2016. Policy papers on Transnational Economic Law Transnational Economic Law Research CenterGoogle Scholar
  14. USDOC (2017) China’s status as a non-market economyGoogle Scholar
  15. Yu Y (2013) Rethinking China’s market economy status in trade remedy disputes after 2016. Asian J WTO Int Health Law Policy 8:77Google Scholar
  16. Zang MQ (2009) The WTO contingent trade instruments against China: what does accession bring? Int Comp Law Q 58(02):321–351Google Scholar
  17. Zang MQ (2011) EC–fasteners: opening the Pandora’s box of non-market economy treatment. J Int Econ Law 14(4):869–892Google Scholar
  18. Zheng W (2010) The pitfalls of the (Perfect) market benchmark: the case of countervailing duty law. Minnesota J Int Law 19(1):1–54Google Scholar
  19. Zuo X (2013) WTO Fanqingxiao Zhidu xia de Zhongguo Fei Shichang Jingji Yanjiu (WTO反倾销制度下的中国非市场经济地位研究) [Study on the non-market economy status of China under the WTO anti-dumping mechanism]. Foreign Investment in China 293:260–261. (in Chinese)Google Scholar

Primary Sources

  1. Agreement on implementation of Article VI of the general agreement on tariffs and trade (15 April 1994)Google Scholar
  2. General Agreement on tariffs and trade (15 April 1994)Google Scholar


  1. Liu S (2010) Zhongguo Guoyou Qiye Butie Ruogan Falv Wenti Tanjiu (中国国有企业补贴若干法律问题探究) [Legal issues on subsidies to Chinese state-owned enterprises]. East China University of Political Science and Law (in Chinese)Google Scholar

Web Pages

  1. Truman T (2007) Commerce department targets Chinese subsidies on coated free-sheet paper. International Trade Administration. Accessed 1 Sept 2018
  2. WTO (2001) WTO successfully concludes negotiations on China’s entry. WTO. Accessed 1 Sept 2018
  3. European Commission (2016) Does this mean that market economy status will not be granted to China?. Accessed 1 Sept 2018

Copyright information

© Springer Nature Singapore Pte Ltd. 2019

Authors and Affiliations

  • Luyao Che
    • 1
  1. 1.China University of Political Science and LawBeijingChina

Personalised recommendations