(Reuters) – China’s push for the troubled European Union to recognize it as a market economy is more about political status than economic concession, but experts doubt Beijing can leverage purchases of euro zone debt to achieve it.
As Chinese premier Wen Jiabao presented it at a conference on Wednesday, the trade-off was clear enough: Europe can get a bigger slice of China’s $3.2 trillion in foreign exchange reserves in return for treating China as a market economy.
But analysts say China has to keep buying euro bonds anyway and the 27-member European Union is unlikely to bow to Beijing’s demand, even if it is more about symbolism than substance.
“We cannot say that China will buy European bonds only if it’s given market economy status. China will invest if it thinks it is necessary,” said Ding Zhijie, a professor at the University of International Business and Economics.
The drive for market economy status is not new. Since it joined the World Trade Organisation in 2001, Beijing has regularly pressed for such recognition, which it will receive automatically in 2016.
Without it, China is more vulnerable to EU trade actions.