Obstacles to trade can be guise for protectionism, experts say

BEIJING - Despite a sharp reduction in the number of trade remedies against Chinese goods and services launched by trading partners last year, Chinese companies still face trade and investment barriers, the Ministry of Commerce said on Tuesday.

In 2010, 66 trade remedy investigations, including anti-dumping, anti-subsidy and special protection measures, were launched by 16 major trade partners on China, according to a report issued by the Ministry of Commerce.

The investigations looked at trade with a potential value of $7.14 billion. The ministry has issued the report, which examines international trade barriers, since 2003.

The 2010 figure was far smaller than the 116 investigations launched in 2009, with a potential trade value of $12.7 billion.

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Huo Jianguo, director of the Chinese Academy of International Trade and Economic Cooperation, said the reason for the sharp drop was directly linked to the global economy, when China was seen as a handy scapegoat by some countries amid the full-blown financial crisis.

"The drop in the number of investigations shows that the global economy is recovering and is also an indication of China's efforts to achieve balanced trade," he said.

However, trade protectionism is still increasing, he said.

For instance, the United States launched 19 cases of Section 337 investigations into Chinese imports in 2010, compared to eight investigations in 2009.

The Section 337 investigations are conducted by the US International Trade Commission, which most often involve claims relating to intellectual property rights and issues over imported goods.

"Trade barriers and trade remedy measures set or levied by the US on Chinese products have affected bilateral trade," Yao Jian, Ministry of Commerce spokesman, said at a news conference on Tuesday.

Out of the 66 trade investigations targeting China, six were launched by the US with a value of $860 million. And the US also launched 19 cases of Section 337 investigations.

Trade between China and the US was $385 billion in 2010, up 29.2 percent year-on-year. China's trade surplus with the US was $181 billion for the same period, according to the General Administration of Customs.

Yao said China's trade surplus in goods with the US should not be an excuse for barriers as the US also has a $10 billion trade surplus with China in services.

Major products that China imports from the US include soybeans, processors and aircraft, while goods that the US buys from China include computers, toys and shoes.

Long Guoqiang, a senior fellow at the research department of foreign economic relations at the Development Research Center under the State Council, said Chinese companies' technical progress is a concern behind the increasing usage of the Section 337 investigations.

"To some extent, trade friction between China and the US is due to politics, such as national security," Long said.

At the same time, national security is also a major issue that has hindered Chinese companies expanding overseas, said trade experts.

US restrictions on China's high-tech imports are "strict and extensive" and it has exacerbated trade imbalances between China and the US, Yao said.

A host of Chinese companies, including high-profile Chinese telecom equipment maker Huawei, suffered setbacks to their overseas acquisition and merger plans because of US national security fears.

Wang Zhile, a professor at the Chinese Academy of International Trade and Economic Cooperation, said the definition of so-called national security is ambiguous and convenient for protectionism.

Both the US and China should abandon any "Cold-War mentality", as the two countries can benefit from increased trade, he said.

China is determined to continue opening up because competition is the best way to push reform forward and improve people's livelihood, Commerce Minister Chen Deming said last Saturday.

China has plans to further loosen restrictions on foreign investment but developed countries also need to provide equal market access, Chen said.

In 2010, China's overseas direct investment was $59 billion, equal to only 60 percent of foreign direct investment in China, according to the Ministry of Commerce.

Meanwhile, trade experts urged the US to further reduce trade imbalances between the two countries by lifting controls on imports of high-tech products.

"The invisible loss caused by restrictions the US levied on high-tech imports to China is hard to estimate," said Long, but it's clear that the US has lost a number of business opportunities to its rivals.

China's robust demand for imported high-tech products continue to grow while imports from the US continue to shrink, so more orders were won by European and Japanese companies, he said.

"It's a great pity for US companies," Long said.

In the first three months, the inflow of foreign direct investment in China surged by 29.4 percent from a year earlier to $30.34 billion, according to the Ministry of Commerce.