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Editor’s note: Liu Zhiqin is a senior researcher at Chongyang Institute for Financial Studies, Renmin University of China. The article reflects the author’s opinions and not necessarily the views of CGTN. It has been translated from Chinese and edited for brevity and clarity.
Back in 2019, I wrote a short commentary titled The U.S. Is an “Atypical Market Economy”, which reverberated within the industry. Many Chinese and international friends said that they shared my sentiment. Now, almost five years later, has the U.S. undergone positive changes? Has it taken the necessary, pertinent reforms?
To people’s great disappointment, the U.S. has not implemented the positive changes the market anticipated, nor has it made effective efforts to promote its domestic market economy. Internationally, it has continued to play the dual roles of “economic policeman” and “market villain”, continuously wreaking havoc on both its own economy and the stability and health of the global market.
Truth be told, the U.S. economic system has morphed from being an “atypical market economy” five years ago to a “non-market economy” today. Its domestic and international economic and diplomatic policies have derailed from the two fundamental market tracks, that is, the complementary supply and demand, losing balance in the market. Instead, the U.S. has become obsessed with petty non-market tactics, seeking illicit, extravagant profits through under-the-table schemes such as conspiracies, blackmails, and defamation, as well as non-market modes such as coercion and bribery, carrot-and-stick strategy, and unfair competition. The expected acquisition of wealth through civilized means and transactions and exchanges with dignity have been manipulated by a few American politicians, sometimes without a sense of shame.
<img src='https://news.cgtn.com/news/2024-08-17/Why-does-the-U-S-continue-to-label-itself-as-a-market-economy–1w8U7ovlV5u/img/4733d3d63b8e461c8db8608bb9810e48/4733d3d63b8e461c8db8608bb9810e48.jpeg' alt='Wall Street and New York Stock Exchange in downtown Manhattan, New York, USA. /CFP'
These impressions are not groundless. Rather, over the past five years, the non-market economic tactics employed and played by American politicians have burdened the world overwhelmingly to an intolerable degree.
A few random examples are enough to illustrate the U.S. doings, blatantly exposing its facade of a “fake market economy”.
There are clear international standards and consensus for determining whether a country is a market economy. The primary criterion is how open a country’s market is, which decides whether it can be recognized as a market economy.
A few years ago, the U.S. refused to acknowledge China as a market economy purely for political purposes. However, by doing so, the U.S. has drawn the attention of the international community to this question: if China cannot be recognized as a market economy, then what about the U.S.?
Many have traditionally thought of the U.S. as a market economy, but in comparison with China, it is widely acknowledged worldwide that the Chinese market is far more open than the American one. The U.S. has long been relegated to a subpar market economy. If China cannot be counted as a market economy, then few countries in the world would dare to purport to be market economies, especially since more and more countries are beginning to “close” their markets under the U.S. influence, with increasingly lower levels of market openness.
Market openness is evident in several dimensions, such as the goods market, financial market, technology market, talent market, research and development (R&D) market, capital market, cultural market, and communication market.
With “national security” as an excuse, American politicians have implemented extremely stringent measures in almost all the markets mentioned above, cracking down and restricting Chinese enterprises, obstructing their operations and development in the U.S.
In particular, in core areas such as the financial, technology, talent, and R&D sectors, the U.S. markets are almost entirely “closed” to China. Overtly discriminatory policies, such as the infamous CHIPS Act, Science Act, and Foreign Investment Risk Review Modernization Act, have tightly shut the doors of the American market. Recently, the U.S. introduced dozens of bills specifically targeting Chinese enterprises and talents, which has been hugely controversial worldwide.
<img src='https://news.cgtn.com/news/2024-08-17/Why-does-the-U-S-continue-to-label-itself-as-a-market-economy–1w8U7ovlV5u/img/633c8ee73e4b4853aa50aa1a0f675d5b/633c8ee73e4b4853aa50aa1a0f675d5b.jpeg' alt='View of the Manhattan financial district in New York, USA. /CFP'
Some might argue that the American policies and markets are detrimental only to China, so it’s improper to consider that the U.S. market is closed. However, this is not the case.
The relevant U.S. policies do not solely target China; many American allies in Europe have also been affected. Particularly, the CHIPS Act, the Science Act, and the large-scale subsidy bills have been unrivaled in the world and have set several world records in the harm done. They have all highlighted how narrow-minded and petty the U.S. can be, constantly measuring others by its own yardstick.
The U.S. has always been wary of its allies and never willing to share with them its unique technologies or research outcomes. The U.S. trusts no one, including its so-called allies. It is closed to other countries in many fields as it is to China, though the intensity and severity may vary.
Apart from market openness, another criterion for determining whether a country is a market economy is its approach to handling economic development disparities and trade disputes. More often than not, the U.S. resolves economic conflicts and trade disagreements not based on the international law or the World Trade Organization (WTO) regulations.
Instead, it relies on its domestic laws, which override international ones. It even substitutes domestic laws for international laws, showing no shame for this dictatorial act but rather enjoying doing so. Most crucially, when dealing with dissenting parties or countries it does not consider like-minded, the U.S. frequently abuses sanctions to coerce and intimidate in order to pursue and protect its own interests, and achieve its political goals.
These actions are nowhere near “market measures” but embody blatant gangster logic.
Maintaining a country’s market competitiveness through sanctions is not what a normal “market economy” would do.
Furthermore, the degree of commodity flow, especially the openness in foreign trade, is another measure of a country’s market economy status.
The U.S. imposes high tariffs on goods from China and other countries, severely restricting their free flow within the U.S. Labeling other countries’ products as “overcapacity” at every turn is to limit the imports of products from these countries and to protect the market share of its domestic goods. The most absurd example is the 100 percent tariff the U.S. has imposed on new energy vehicles from China, a world record that highlights how severe U.S. protectionism has become.
The U.S. has lost its composure despite the fact that these vehicles have not yet entered the U.S. market, which shows the world the U.S. true nature as a “fake market economy”. The market is the best “court”, with a natural instinct to select superior products and the mechanism of eliminating inferior ones. The U.S. government doesn’t even dare to let the market decide whether to welcome Chinese new energy vehicles, just flatly blocking them from entering its market.
All these have unequivocally and truthfully demonstrated that the U.S. market is no longer the open, inclusive, and cooperative free market it once was. It has degenerated into an “arbitrary, dictatorial economy”, not having the guts to form mutually beneficial economic and trade relationships depending on fair competition and friendly cooperation. Instead, it has resorted to sanctions, high tariffs, and the “small yard and high fence” policy to maintain its economic advantage. So naturally, it cannot be regarded as a “normal market economy”.
The U.S. really doesn’t have to insist on touting itself as a “market economy”. It has long since changed for the worse and lost its original character.
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