In support of its preliminary determination in the antidumping duty investigation of imports of aluminum foil from the People’s Republic of China, the Department of Commerce has released a 205-page memorandum finding that China continues to be considered a nonmarket economy (NME) country in trade remedy cases because it “does not operate sufficiently on market principles to permit the use of Chinese prices and costs for purposes of the Department’s antidumping analysis.” At its core, the memo concludes, “the framework of China’s economy is set by the Chinese government and the Chinese Communist Party (CCP), which exercise control directly and indirectly over the allocation of resources through instruments such as government ownership and control of key economic actors and government directives. The stated fundamental objective of the government and the CCP is to uphold the ‘socialist market economy’ in which the Chinese government and the CCP direct and channel economic actors to meet the targets of state planning. The Chinese government does not seek economic outcomes that reflect predominantly market forces outside of a larger institutional framework of government and CCP control.”

The memo provides a detailed analysis of the six statutory criteria for determining whether a country is a market economy in trade remedy cases as set forth in the Tariff Act of 1930. Among the factors detailed in the memo are the Chinese government’s continuing restrictions on foreign investment, the level of Chinese government ownership of various entities, the government’s ability to set and control prices, and the continued functioning of  China’s legal system as “an instrument by which the Chinese government and the CCP can secure discrete economic outcomes, channel broader economic policy, and pursue industrial policy goals.”