Posted by: Bruce Einhorn on September 14, 2009
The Chinese government is trying to have it both ways in its current trade spat with the U.S. Following the news on Friday that the Obama Administration will impose new import tariffs on tires from China, Beijing announced it was launching investigations targeting U.S. poultry and American-made cars. At the same time, the government-run media reported without any apparent irony that the Chinese government was resolutely opposed to trade barriers. “China has always opposed protectionism and has demonstrated this stance with its actions since the outbreak of the global financial crisis,” said the Ministry of Commerce, as reported by the state-controlled Shanghai Daily.
So what does it mean to always oppose protectionism? Apparently it means you are allowed to tell local companies that they need to buy Made-in-China products rather than imports. My colleague Dexter Roberts in July wrote here about Beijing’s Buy Chinese policy. “Chinese officials have informally and sometimes formally made it very clear that Chinese products are to be favored when it comes to the stimulus package.” Consider this report regarding the fast-growing renewable energy industry in China. “A controversial ‘Buy Chinese’ policy could leave overseas manufacturers of wind turbines and other renewable energy technologies locked out of the bidding for new low-carbon projects undertaken as part of China’s $586bn economic stimulus package,” Yvonne Chan wrote on the BusinessGreen.com website in June. “The recently released edict states that ‘government investment projects should buy domestically made products unless [they] cannot be obtained in reasonable commercial conditions in China. As a result, developers of state-backed stimulus projects would have to seek permission from the government before buying foreign goods and services.”
I’m not arguing that the U.S. doesn’t play such games. For instance, when passing Obama’s stimulus plan Congress included Buy American provisions not unlike those the Chinese government has pushed. But really, China as a resolute opponent of protectionism? China, which restricts foreign movies, foreign TV shows, foreign telecom investment, to name just a few of its long-standing policies that protect its local companies from American competition, knows very well how to be protectionist when such policies suit the government’s needs.