Why the European Parliament does not recognize China's market economy

A few days ago, the European Parliament in Strasbourg overwhelmingly voted to adopt a resolution: refusing to recognize China's market economy status and calling on the European Union to take anti-dumping measures. In the 751-member European Parliament, a total of 546 MEPs endorsed the motion against China's automatic access to market economy status under the World Trade Organization, while only 28 MEPs voted in favor of China and another 77 abstained.

In fact, not only the external Europe and the United States questioned China's market economy, in the internal also frequently issued dismal voice.

Hu Zuliu (worked as an investment director at Goldman Sachs Bank): State-owned enterprises are still at the heights of our economy, telecommunications, energy, banking, aviation, railroads, including the media, are dominated by state-owned enterprises, monopoly, many industries, private capital, not to mention foreign capital, the threshold of entry is very high, or even unattainable, simply can not be accessed.

Wen Yuankai (a famous Chinese economist): Why can't the people's private capital open oil refineries? Why can't private enterprises do the import and trade of crude oil and petroleum products? Why can't private capital open gas stations? Your government planning is fine, if private capital is allowed to enter these areas as well, I believe our oil will be cheaper than now, and the quality of our oil products will be higher than today.

       Li Keqiang (Premier of the State Council): the wrong hand installed in the government for the market hand, this is to cut power, is a self-revolution, will be very painful, and even the feeling of slitting the wrists, but this is the need for the development of the people's aspirations, we have to have the determination of a strong man to cut off the wrists, the words will be implemented, and do what I say.

What is a market economy? A market economy (also known as a free market economy or free enterprise economy) is an economic system in which the production and sale of goods and services is guided entirely by the free price mechanism of the free market, rather than by the state, as is generally the case in planned economies.

       More than two hundred years ago, the British economist Adam SMITH put forward a shocking theory, in which he believed that in order to develop the economy, what the Government could do was in fact very simple, that is, it should not do anything and it should not care about anything. Because the market itself is an "invisible hand", it can silently into the supply and demand adjustment to a balanced state. The government's use of public power to intervene will hinder economic development.

China has been openly practicing a market economy for at least 18 years, or at least 22 years if we consider that the market had already begun when the two-track system was introduced. However, so far, many aspects of China's market economy have been criticized, and the results of market-oriented operation have made many commodities such as medicine, real estate and many other areas, so that our bosses feel not the benefits of the market, but the disadvantages of the market. Our market seems to be a messy garden, on the one hand, to plant the flowers do not grow or wilted, while on the other hand, the weeds are growing aggressively, shoveling, and then reborn. Is the market economy to blame? Is the market economy not adapted to the Chinese people, or are the Chinese people not adapted to the market economy? In fact, objectively and fairly speaking, although the market economy has its drawbacks, the most fundamental problem is that our market economy does not exist in the true sense of the word.

What is a market? A market is a place where transactions are realized. Under the conditions of the ideal economic man, the two parties to a transaction are on equal footing, the transaction is mutually beneficial, and everyone has the same amount of information about the market, and the transaction can be accomplished directly by the two parties. The market is ubiquitous, and there is no need for regulation. At this point, transaction costs are limited to the transaction expenditures of the two parties to the transaction without any other costs, and the effectiveness of the market will promote the normal development of the economy. However, in societies with governments, or societies that require public services, transactions cannot be completely free, so they often require a fee to be paid to a third party. However, in a market with mature mechanisms, transparent information and free transactions, this cost can be minimized, so at this time, although the third party will charge additional transaction costs, but how this cost is charged is transparent, and the second is recognized by both parties to the transaction can be minimized transaction costs. By paying the transaction fee to the third party, both parties to the transaction can get the necessary services, such as market fair supervision, market information transparency, services in the transaction process, and so on. In this case, the government is just a more attached cleaner of the market, but the government can neither influence the trading tendency of the two trading parties nor interfere with the free conduct or non-conduct of the trading process.

       So far, almost none of the monopolized industries or industries in which the government is too deeply involved has developed healthily. The computer industry, the government can not control, and the global open, so now no one has no complaints about the computer market. China's small household electrical appliances have long been open, so not only the market competition is fierce, consumers enjoy the benefits, but also some Chinese enterprises are doing well, but also exported to foreign countries. So far salt, tobacco and alcohol are still monopolized. Japan and the United States duty-free stores in the price of cigarettes and alcohol and China is almost the same. You know, the United States and Japan to restrict smoking, the tax is also very heavy, and how workers' wages are more than five times the domestic.

Banks are a monopoly, so when Goldman Sachs and Citi are crisscrossing the land of China to engage in mergers and capital maneuvering, making a fortune, China's banking industry turned a blind eye. By the way, a lot of bank leaders and real estate close relationship, but also can not care to earn the money that really should be earned, but to join the camp to promote high prices. Real estate and how to develop, it will not promote economic transformation, but to make the economy deformed, a real estate and resource industries are tied to the economy, can develop to where? What the government really needs to do is precisely to reduce the profits of resources, simple processing and real estate by increasing taxes and labor wages, forcing capital to shift to industries that are more difficult to start, but where labor is efficient and technologically advanced. When labor wages increase, companies will automatically choose high technology, and when the resource sector no longer makes a lot of money, investment will naturally go to the technology sector or the service sector.

In short, the major mistakes that China's market economy has made and the serious shortcomings that have arisen are not the result of the shortcomings of the market economy but the result of our distrust of the market and the non-existence of a free, fair and open market.

In a sense, the freedom, fairness and transparency required by the market can only be guaranteed by the freedom, fairness, democracy and transparency of society. The essence of a market economy is democracy, freedom, fairness and transparency. Without the fulfillment of these conditions, there can be no true market economy.