Status conscious

Both the US and the EU have turned Beijing down, leaving a handful of Asian trade partners, and Brazil, either backing her bid or inclined that way.

MES isn't just a face thing. Without it, WTO member countries are free to designate China's exports as non-market priced and slap on extra tariffs. Under China's terms of WTO entry, this torture can go on for 12 more years – unless it wins MES. Right now, trade partners can level anti-dumping charges any time they feel pressured to protect home industries – as happened in June when the US slapped higher tariffs on Chinese furniture, the biggest Sino-US dumping case to date till the penalties were lifted last month.

In early June, a week before US Commerce Secretary Donald Evans was due to visit China, state media reported that China was faced with more than twice the number of US anti-dumping investigations as any other country, and had already been served with tariff penalties in 17 cases. In June, the EU had 32 anti-China dumping disputes on the books, and 22 more cases are under investigation.

Without going into the rights or wrongs of these cases, it is worth considering China's quest for MES on its merits.

China has made mind-boggling strides in just 25 years. Think of North Korea, or more generously, Cuba, if you want a present-day snapshot of where it was. To get from then to now took enormous risks. As China started to dismantle its old centrally planned economy, it closed down a system that provided cradle-to-grave welfare, health care and housing to a large proportion of the population. China walked a tightrope to market economics while the safety net was being removed 200 feet below.

West only speeds up
And it did it as the Western industrial model was itself changing and becoming lightning efficient. Companies were beginning to focus on core competence and spinning off anything other producers were better at. So while China's auto industry was busy spinning off hospitals, housing estates and other parts of a vast extended enterprise, GM was way ahead, spinning off or outsourcing pieces of the car manufacturing process. And automating more and more processes from design to final assembly.

So it was only to be expected that highly efficient and focused foreign companies entering China would hammer state-owned enterprises, however quickly they might try to reform and trim down. Their best and brightest would soon be leaving for better pay and career prospects at foreign ventures anyway.

But that migration of talent to the private sector also sowed the seeds of China's success today. Enquiring, energized and entrepreneurial, these pioneers crossed over, absorbed the dynamics and mechanics of modern business with blinding speed and set off to create the Lenovos, Haiers and other industrial giants of modern China.

China has come far fast. It has already been three years since its accession to the WTO. The fact that it meets resistance in its bid for MES is as much a measure of how it is feared as an economic power as anything else. Let's face it: the countries prepared to accord it MES – Kyrgyzstan, New Zealand, Singapore, Malaysia and Thailand so far – have no comparative leverage; Japan, the US and the EU, its top three trade partners, most certainly have.

Has China come far enough to merit MES? Not yet.

Let's accept at face value what Chinese Foreign Ministry spokeswoman Zhang Qiyue said on the day in late June when the EU formally rejected China's bid: that more than 90% of goods produced are now priced by the market.

Even so, there are any number of benchmarks that indicate the distance China still has to travel. A controlled currency, limited capital market access for foreign investors, a low free float on the stock markets, many sectors which remain dominated by state enterprises, the importance of state directives in determining bank credit policy.

As the US and the EU have told Beijing, China must make processes much more transparent before it can be accorded MES, the currency should move towards full convertibility, and the market should be allowed to decide the value of a greater number of commodities.

When it does these things, the world really will be China's oyster.