China adopts some protectionist policies

Despite their rhetoric against protectionism, the Chinese government has implemented some policies that are receiving criticism.

China has begun a concerted effort to keep its export economy humming, even as demand for its goods has plummeted with the global downturn.

Risking the ire of the United States and other trading partners, the Chinese government has quietly started adopting policies aimed at encouraging exports while curbing imports, even though China, as one of the world’s largest exporters, has aggressively criticized protectionism in other countries.

The government has sharply expanded three programs to help exporters, giving them larger tax rebates, more generous loans from state-owned banks to finance trade, and more government-paid travel to promote themselves at trade shows around the world.

At the same time, Beijing has banned all local, provincial and national government agencies from buying imported goods except in cases where no local substitute exists.

The rule, issued as part of the country’s economic stimulus plan and enforcing a seldom honored Chinese law from 2003 favoring domestic suppliers, exploits China’s failure so far to sign a global agreement barring protectionism in government procurement.

And in an effort to strengthen its own exporters, it is limiting how much of certain key raw materials can leave the country.

The last thing we need is a trade war, and other countries have done things to support their local industries, but China is now a major player in the world economy. If they continue to push the envelope, they might hurt themselves in the long run.

Meanwhile, here in the United States, the economy is terrible and people are hurting, with many looking for emergency loans just to pay the bills.


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