The perennial issue came up again this week during annual high-level talks known as the Strategic and Economic Dialogue (S&ED), Commerce Under Secretary for International Trade Francisco Sanchez told Reuters in an interview.
Declaring China a market economy would change how U.S. anti-dumping duties are calculated on Chinese goods, in cases where a U.S. industry such as steel has been able to prove to U.S. officials that Chinese companies are selling in the United States at below-market prices.
Despite a rise in such cases in recent years, the U.S. only has anti-dumping or anti-subsidy duties on about 3 percent of imports from China.
China believes anti-dumping duties levied against it would be lower if it were considered a market economy.
Obtaining market economy status would have some practical aspect for China, but "I also suspect that it's just an important milestone in their development, in their economic development," Sanchez said.
"I think it would be an important symbol of their advancement," he said.
It is a odd fact that China is a member of the World Trade Organization but is not considered a market economy by the United States.
In contrast, Russia is not a WTO member but obtained U.S. recognition as a market economy several years ago.
"I know it's an important issue for (China), so we reiterated we would very carefully review that issue. But that's all we agreed to," Sanchez said.
The United States analyzes six criteria in deciding whether a country is a market economy: currency convertibility; free bargaining for wages; foreign investment; government ownership or control of production; government control over prices and the allocation of resources; and "other appropriate factors."
"We will adhere to those statutory requirements as we study that issue," Sanchez said.
During this week's meeting, Chinese President Hu Jintao addressed an important U.S. concern by hinting China would allow its currency to slowly begin rising in value after almost a two-year pause.
But that would still be a long way from having a freely floating exchange rate as the United States and other major economies have.
Meanwhile, Sanchez said he and Deputy U.S. Trade Representative Demetrios Marantis met with their Chinese counterparts this week to prepare for another high-level U.S.-China meeting in November.
That forum, known as the U.S.-China Joint Committee on Commerce and Trade, focuses on nitty-gritty trade issues much more than the S&ED, which discusses big overarching themes in the U.S.-China relationship.
Sanchez said he hoped for progress in November on several issues, including improved market access for U.S. clean energy companies in China. (Reuters)
