Posted by: Frederik Balfour on February 16, 2009
China has long been a favorite target of U.S. protectionists, and in recent years has been subjected to a number of anti-dumping measures on steel pipes, televisions and coated paper. And of course Beijing bashers routinely accuse China of manipulating its currency to boost cheap exports [which the U.S. has happily consumed for years]. For a good discussion of the rising Sino-U.S. trade tensions, see this piece by my colleague Pete Engardio.
But now, as the global outlook grows ever bleaker and Chinese exports are plunging—they fell more than 17% year on year in January—it is not surprising that the official Xinhua News Agency should publish on its English website a commentary expressing alarm at the “Buy American” provisions in President Obama’s $757 billion fiscal package approved by Congress on Feb. 13. “History and economics have told us, facing a global financial crisis, trade protectionism is not a solution, but a poison to the solution,” the commentary says.
Of course Beijing can hardly claim an unblemished record either. In mid-December, the W.T.O. upheld a ruling against China for illegally imposing tariffs on imported auto parts. But let’s hope that no-one tries to ratchet up the rhetoric even further when Secretary of State Hillary Clinton visits Beijing later this week. The last thing the world needs is a tit-for-tat, beggar-thy-neighbor round of protectionist policies that could strangle global trade even further. China already faces a trade showdown with India which has posed a six-month ban on Chinese-made toys. Luckily, India is a relatively minor player in global trade and cooler minds are prevailing at the Group of Seven, G7 countries whose finance ministers over the weekend pledged not to resort to protectionism.