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BRUSSELS, Sept. 29 (Xinhua) -- A tussle over economic status continues to cast a shadow on trade ties between China and Europe.

In 2001, almost exactly a decade ago, China became a full member of the World Trade Organization (WTO), marking a milestone in its drive to open up and reform its economy.

However, in 2007, the European Union (EU) rejected China as a market economy, citing what it said was "excessive state interference, a weak rule of law and poor corporate governance."

The issue of China's market economy status is back in the media spotlight after Chinese Premier Wen Jiabao attended the Summer Davos Forum in Dalian, China, two weeks ago.

In a keynote address, Wen asked Europe and the United States to "put their houses in order," referring to the sovereign debt crisis. He said China was willing to help Europe in its debt crisis by increasing its investments in the region.

In his speech, he also reiterated his hope that the EU recognize China as a market economy, adding that doing so would benefit both sides.

This led some sections of the western media to misinterpret Wen's words as a "friendly threat to a beleaguered Europe."

Under a market economy, supply and demand in free markets determine the allocation of resources and the prices of goods and services. By contrast, in a non-market economy, the central government sets prices.

China has sought to be recognized as a market economy since Beijing decided to reform its economy in 1984. Achieving this goal helps China stand on a level playing field when it faces anti-dumping allegations.

Chinese exporters frequently face dumping charges and investigations by the EU for products such as stainless steel, fasteners, clothes and shoes, to name a few.

Experts believe that the differences between the China and the EU on this matter boil down to different perspectives.

Baudouin de Sonis, associate director of the European Institute of International Relations, said what is currently lacking is international recognition of basic elements that may be used by both parties to build trust, agree contracts and strike mutually-beneficial arrangements.

Till date, China's entry into the WTO has had several positive effects. Official figures indicate an enormous increase in global trade.

By the end of 2000, prior to China's accession, the volume of China's merchandise exports and imports was 249.2 billion U.S. dollars and 225.1 billion dollars respectively.

Within a decade, as of the end of 2010, China's merchandise exports reached 1,600 billion dollars and imports amounted to 1,400 billion. Today, China is the world's second largest economy, largest exporter and second largest importer.

Despite the ongoing economic crisis, bilateral trade between EU and China has also continued to rise. According to Eurostat, EU exports to China grew nearly 40 percent to 113.1 billion euros (161 billion U.S. dollars) last year, while imports from China rose by a third to 281.9 billion euros (403 billion U.S. dollars) compared to the previous year.

Emerging countries have benefited in no small measure. "The global production network that centers around China has substantially raised the welfare of developing countries, especially through capital goods that greatly improved the efficiency of their industries and everyday life," Hozuk Lee-Makiyama, researcher at the European Center for International Political Economy, told Xinhua.

Countries in regions such as South East Asia, Asia-Pacific and Latin America are firmly a part of the production chain. As a result, south-to-south trade in electronics is today larger than the trade between developed nations, Lee-Makiyama stated.

Other key improvements have been in granting foreign companies access to the Chinese market and transferring technology from Western countries to China.

However, China's dominance in manufacturing and export causes uneasiness,with some countries choosing to use punitive trade defence measures to stem the inflow of Chinese goods, he added.

Even though China will automatically be observed as a market economy in 2016, it seeks an earlier recognition as a "friendly gesture," a proverbial hat-tip for the economic reforms it has carried out so far.

These include participating in international mechanisms that support strong global economic governance and reduce the burden of sovereign debt. Since joining the WTO, China has also drastically reduced import tariffs, cancelled non-tariff measures and liberalized foreign trade, all the while taking steps to tighten corporate laws, improve its investment environment and intellectual property rights.

"We hope that through such efforts, countries can reflect more fairly the changes in the world economy and listen to the voices of different countries in a more balanced way," China's ambassador to the EU Song Zhe told Xinhua.

However, experts in Europe strongly doubt the EU will stop viewing China's exports as a threat.

"The EU is less capable of making unpopular concessions to China in the current climate of economic crisis and looming unemployment," said Lee-Makiyama.

Song Zhe cautioned that while safeguarding one's interests is understandable, protectionism was not the answer.

"We understand that there are always people whose only concern is about keeping one's own strength. They are afraid of being caught up and outperformed by others. If we all think like that, we may all go for protectionism and set barriers to keep other economies from growing," he said.

"We believe that greater democracy in international relations will help put in place a more fair and reasonable new international order," he added.