Trade barriers no solution to crisis

Increasing trade restrictions against Chinese products signify a discordant resurgence of protectionism - a development that will not only hurt China, but also hamper global economic recovery.

Ministry of Commerce data show 15 countries and regions initiated 60 investigations against Chinese products for dumping and over-subsidizing goods and other suspected reasons in the first half of this year. The number of probes and the value of the goods, $8.276 billion, are record high.

Not surprisingly, those targeted were products of the steel, rubber, footwear, and aluminum industries, in which China has spent decades in building up some advantages. Since last year, investigations against Chinese steel products have forced them to beat a retreat from markets in more than a dozen countries and regions.

Complaints against made-in-China products have spread like a contagious disease from the developed markets to the developing ones. It is to be noted here that a number of countries have imposed incipient protective measures such as increasing export subsidies, fund offers and currency devaluations on the pretext of rescuing their economies or issuing stimulus packages.

But this new wave of protectionism is not conducive to global economic recovery. The overt and covert trade restrictions go against the free-trade and competition principles of the World Trade Organization (WTO) and the promises made by world leaders at the G20 meeting last fall in Washington.

Such trade frictions have resulted in suspension of production or closure of factories in China's coastal region, where a majority of its 220 million migrant laborers find employment. But many of these laborers have returned home empty-handed and that in no way will increase consumption, which is deemed essential to help ensure an early economic recovery.

Trade restrictions will eventually hurt other economies even if China does not resort to tit-for-tat retaliation. The reason is simple: Today's economies are interdependent, and manufacturing in China is essentially a subcontracting system woven into the low-end of the international supply chain. The products assembled in China by lowly paid workers, who have to send money back home to support their families, comprises raw materials and intermediate parts bought from abroad. Much of the capital investment originates in the developed world, and the gains flow out of China. That partly explains why the economic growth of China can help put its partner economies on a healthy track.

In the age of globalization, the belief that severe economic crisis is followed by protectionism should be changed to a 21st century economic mantra that trade and open-mindedness are integral to each other.

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