Protectionism Is Like Locking Oneself Up in a Dark Room

On March 5, 2017, the Fifth Session of the 12th National People’s Congress (NPC) opened at the Great Hall of the People in Beijing.

In the government work report delivered at the meeting, Chinese Premier Li Keqiang pointed out that the world economy would continue to experience sluggish growth, and that instability and uncertainty are growing significantly amid an exacerbating tendency toward protectionism and the mood of anti-globalization. There is also an increased possibility that such conservative mentality in general and trade policies in particular of major economies could create spillover effects.

Given the circumstances, the Chinese government has made clear its standpoint in coping with the global economic situation, both at present and in the near future.

Premier Li pointed out that economic globalization meets the fundamental interests of all countries, and that China will unswervingly promote global economic cooperation, safeguard the key role of multilateral trade mechanisms, and actively participate in multilateral trade negotiations.

Who Are “Black Swans”?

When talking about international trade, “black swan events” became a frequently-mentioned term among participants at the annual sessions of the NPC and the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), collectively known as the “Two Sessions.” The global political landscape is undergoing tremendous changes. Events like Brexit, general elections occurring in major European countries, the Trump administration taking office, and the pending presidential election of the Republic of Korea (ROK) are expected to cause serial policy changes, thus exacerbating trade protectionism globally.

“It is increasingly obvious that the economic policies of some major economies are shifting towards anti-globalization,” notes Yin Zhongqing, vice chairman of the Financial and Economic Affairs Committee of the 12th NPC.

His remarks have been evidenced by recent statistics. A report released by the World Trade Organization (WTO) in June 2016 shows that G20 economies enacted a total of 145 trade restrictive measures from October 2015 to May 2016, averaging at over 20 per month―the highest level since the WTO began to monitor trade restrictive measures worldwide in 2009.

It is evident that against the backdrop of sluggish economic growth, methods such as implementing trade protectionism, erecting trade barriers and manipulating trade on the pretext of anti-dumping have become primary means for some countries to grab a larger share of the international market. China has fallen victim to a slew of anti-globalization practices by a number of its trading partners. Statistics from the Chinese Ministry of Commerce indicate that China encountered 119 trade remedy investigations, launched by 27 countries and regions, in 2016, involving a total of US$14.34 billion. Compared to the previous year, the number of investigation cases and the amount involved increased 36.8 percent and 76 percent, respectively.

 Broadening Modes of China-U.S. Trade

This year marks the 38th anniversary of the establishment of China-U.S. diplomatic relations. On average, U.S. cargo exports to China grew by 11 percent annually over the past decade. Outside North America, China is the fastest-growing export market for the U.S. From 2001 to 2016, U.S. service exports to China increased fifteen-fold, and its surplus in trade of services multiplied by 29. Statistics from the U.S.-China Business Council show that bilateral trade has helped create 2.6 million jobs in the U.S.

However, the U.S. government neglects the mutually beneficial connotations of China-U.S. trade. It over-emphasizes China’s trade surplus, turning a blind eye to the structure of Chinese exports to the U.S. and China’s demands for hi-tech imports. Fu Ying, spokesperson of the NPC annual session, stressed at a press conference that China hopes to solve its trade imbalance with the U.S. through broadening modes of trade.

The U.S. has maintained strict restrictions on the categories of its exports to China. The fact that some American politicians still regard China as a competitor rather than a partner has made exports of hi-tech products to China impossible.

 Promoting China-EU Multifaceted Cooperation

On February 28, 2017, the European Commission (EC) decided to impose anti-dumping duties ranging from 65.1 percent to 73.7 percent on Chinese steel plates for a five-year period. Of the 41 trade restrictive measures on steel products, 18 were targeted at Chinese exports.

China’s Ministry of Commerce points out that the difficulties faced by the steel industry are primarily attributed to the sluggish world economic recovery and declining demand. So, it is groundless that the European Union (EU) blamed China’s exported steel products, and trade restrictive measures cannot help the EU address the challenges imposed on its steel sector.

Chi Fulin, a member of the CPPCC National Committee and president of the China Institute for Reform and Development, said that in view of the complicated situation caused by the fact that several European countries will hold general elections this year, China should accelerate its cooperation with the EU in various fields, especially investment agreement negotiations, the Belt and Road Initiative, and the possibility of establishing free trade areas. “Such issues are not only important to China, but also meet the demands of the EU and will set good examples for the improvement of a global governance structure,” he added.