China Warns "Buy American" Effort is Protectionist Poison

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.

Reader Comments

Tom E.

February 16, 2009 5:37 PM

China has domestic content laws that are the same thing as the buy America law. Who do these people think they are kidding? In addition, they engage in protectionist currency rigging. We cannot trust trading partners that engage in such bald face lying.

Peter

February 16, 2009 9:29 PM

It seems true that protectionism is generally bad for individual economies and also bad for global economic growth.

It also seems true that all countries, including the U.S., have some protectionist policies in place.

It's likely also true that it's better to allow your neighbors to have protectionist policies and rolls yours back, than to get into a tit-for tat protectionist escalation. This, of course, has uneven effects across different industries, which is where the politics (unfortunately) comes in.

More importantly, let's see if we can get the discussion focused on allocating resources to foster growth(infrastructure, education) rather than discussing protectionist policies that often allocate scarce resources to prop up uncompetitive or dieing industries.

Jen

February 25, 2009 9:52 AM

China also called Tibet's version of Buddhism "poison" before it took over Tibet, exiled the Dali Lama, and then tortured the remaining monks.

john

March 18, 2009 9:09 PM

Protectionism is not good for any countries. Lead to trade wars and global depression. As for Tom's post, China has a lending of almost $1.3 Trillion to the U.S.(nearly double the amount of the U.S. stimulus fund) If we still insist on protectionism then we do better start saving now before they ask for their money back!

Lou

August 4, 2009 10:49 AM

Trade and protectionism both have their uses. Assuming a reasonably level playing field, trade brings about efficiency. When the playing field isn't level and one country is using things like child labor to prey off of countries that won't engage in such things, protectionism is warranted. This raises the point of culture. Efficiency is important, but it's any culture's prerogative to forego an efficiency that runs counter to their cultural needs.

Peter

August 5, 2009 8:22 PM

Patents and Copyrights are protectionistic. National security is a good excuse. WTO is for show only, not effective. Caprice!

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