US representatives at the World Trade Organization, or WTO, have reportedly told the organization that the US will not automatically grant China market economy status in November.
China insists that the country be granted the status automatically this winter.
The request is based on an agreement between China and the WTO dating back 15 years ago when the country first joined the organization.
A market economy status will make it more difficult for WTO members to levy anti-dumping taxes on Chinese exports.
The latest announcement from the US side follows a squabble between the US and China at the WTO earlier this week.
The US challenged China over Chinese export duties on nine raw materials, alleging they are causing higher manufacturing costs in the US by giving an unfair competitive advantage to Chinese companies.
The US asserts China failed to keep its promise to eliminate these duties, made upon joining the WTO.
China claims the duties are in accordance with WTO rules, and that the rules have been deliberately misinterpreted by the US.
The two sides will go for a consultation within the WTO framework as the next step in settling the dispute.
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