US finding bodes ill for China's exporters

Updated: 2011-10-29 08:07

By Ding Qingfen (China Daily)

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Senior commerce official warns of growing trade protectionism

CHONGQING - The US Commerce Department on Friday said Chinese companies are dumping steel wheels and moved to set duties on the items, a decision one senior commerce official said foreboded increased trade protectionism.

"Another round of trade remedy cases against made-in-China goods from around the world is coming, for which we have to be ready," Zhou Xiaoyan, director of the Bureau of Fair Trade for Imports and Exports of the Ministry of Commerce, said on Friday.

"It (trade protectionism) always happens when the global economy is gloomy. But unfortunately, China is always a major target," she told China Daily on the sidelines of a forum in Chong-qing municipality marking the 10th anniversary of China's entry into the World Trade Organization.

Zhou's comments come as US economic growth falters and European nations are dealing with severe debt woes, and as Chinese exporters of chemicals, equipment and solar energy have either encountered or will face investigations.

China also faced a series of investigations when the financial crisis first broke in late 2008, one result of which was a tariff levied on Chinese tires by the Obama administration.

Leaders from European nations are currently struggling and quarreling over how to contain a sovereign-debt crisis in the region that started in Greece and is threatening to engulf Spain and Italy. On Thursday, the Eurozone leaders struck a deal with private banks and insurers on lowering Greek's debt burdens.

Despite any progress, economists are still pessimistic about the bloc's economy. Martin Wolf, chief economist of the Financial Times, said recently in a column that even if the immediate crisis were overcome through such measures, it wouldn't promise a sunlit future for the euro.

"The European debt is one part of the story," Zhou said. "The high unemployment rate and the upcoming election campaign will also push the US to transfer its own economic and political pressures onto Chinese goods through various trade remedy tools," said Zhou.

In the third quarter, the US returned to solid economic growth of 2.5 percent, alleviating fears that its economy was falling into recession.

But economists warned that the recovery is precarious, with the unemployment rate remaining at more than 9 percent since April.

Cases targeting China have already been growing. Earlier this month, the US Senate passed legislation that would allow the government to impose tariffs on Chinese goods to compensate for an undervalued currency.

The US also recently filed a WTO case over Chinese blocks on US poultry exports and has questioned more than 200 Chinese domestic subsidy programs.

"We are going to keep pushing and use all the tools we have," Demetrios Marantis, deputy US trade representative, said on Wednesday.

"Undoubtedly, new challenges are rising for Chinese exports," said Sun Zhenyu, the former Chinese ambassador to the WTO.

"The US will diversify the tools to charge duties on Chinese exporters and strengthen its efforts, and so will European nations."

Last week, the US SolarWorld Industries America Inc and six other solar cell and solar panel makers filed trade complaints, accusing China of illegally dumping silicon solar cells and panels through massive subsidies.

Yet it's not only about developed nations. Chinese exports are also challenged by emerging markets including India, Argentina, Pakistan, South Africa and Brazil, which recently launched a wide range of investigations into Chinese goods including bolts, shoes, glasses and paper.

"We are much busier than before, dealing with the increasing cases," said Zhou.

Trade protectionism has hurt Chinese exports, with annual export growth falling to 17.1 percent in September, the lowest since February.

"While they promise to combat trade protectionism, many foreign nations do something different. It's troublesome," said Lu Chang-jiang, a WTO liaison with the China Petroleum & Chemical Corporation.

Because of its quick growth in exports for more than a decade, China has been a major target of trade protectionism worldwide. Globally, one-third of the anti-dumping cases targeted China, and half of the anti-subsidy investigations were conducted on Chinese goods, although the value of the cases accounted for only a tiny part of China's total exports.

"Trade protectionism will be a long-term sore for Chinese exports," said Sun.

The Chinese government has vowed to expand imports in the next five years to balance trade, and also to reduce the risks of trade protectionism.

"We imported a lot of parts and components from worldwide. This helped us strengthen competitiveness in technology and avoid trade remedy cases," said He Zhenlin, vice-president of Sany Group.

"Adding investment and setting up more factories overseas to create jobs locally is another way."

The Chinese government is encouraging local companies to invest abroad, and from January to September, the nation's overseas direct investment grew by 12.5 percent year-on-year to $40.8 billion.

Investment into developed nations saw remarkable growth. In the first half, investment in Europe hit $3.3 billion, exceeding the total for all of last year, according to a report by the US Rhodium Group.

If some large proposed deals in the energy, gas and PC sectors are completed, the total could be as high as $8 billion this year, it predicted.

China Daily

(China Daily 10/29/2011 page1)