China should not use protectionism to mitigate the impact of the financial crisis; it should work with other countries to push the WTO Doha talks forward and when necessary resort to the WTO's dispute settlement mechanism, said Chinese trade experts and officials at a seminar in Beijing on Tuesday.
China is facing declining foreign trade and rising trade disputes in the global economic downturn. This is especially prevalent due to the deep recession of its major trading partners, the EU, US and Japan.
China's foreign trade shrank 29 percent and foreign investment inflow decreased by nearly 33 percent year-on-year in January.
"We are not sure whether the so-called investment protectionism and financial protectionism which retain capital within the border are behind the decline of China's FDI, but we have to pay attention to that," said Dr. Lin Guijun, Vice President of the Beijing-based University of International Business and Economics.
Lin is concerned about the increasing uncertainty on the external environment as a result of the mounting protectionism. "We need a stable external environment for our development", he said, warning that China should keep wary about possible protectionism pressure from the US which may attack China's foreign exchange rates and industrial policies.
That uncertainty has shown up, but not only from developed countries. Yu Benlin, Deputy Director-General of Bureau of Fair Trade for Imports and Exports in the Ministry of Commerce, confirmed that China is currently facing rising trade frictions, including both developed and developing countries. Other emerging economies like India launched more trade probes into Chinese products than any other country in the world in 2008 and recently banned imports of made-in-China toys.
"Trade frictions are most likely to be triggered by protection measures which go against multi-lateral trade rules and measures which, though without breach of the domestic laws or multi-lateral trade rules, will restrict bilateral trade flow in practice." said Yu.
It is widely held that a more open and free world trade system is in China's interest and will help the recovery of the world economy. Therefore, China should cooperate with other countries to push the WTO Doha round forward so that agreement can be reached as early as possible.
Yu reiterated the Chinese government's commitments on further cooperation and consultation with its trading partners in the fight against protectionism. "We recognize that fundamentally our relations with our trading partners are cooperative, complementary and reciprocal to each other," he added.
A high-level Chinese business delegation led by Commerce Minister Chen Deming is in Europe to buy equipment and services there. In his article on Wall Street Journal recently Chen said China would "continue to increase imports and send buying missions abroad for large-scale purchase of equipment, products and technology".
Before that, the Ministry of Commerce had announced "no protectionism" measures to deal with trade frictions, focusing on dialogue and cooperation between China and its trading partners at the level of government and guilds.
Yu stressed the importance of cooperation between Chinese and foreign guilds. He explained that trade protectionism is practiced by government intervention while trade friction cases mainly involve industry. If industries can solve problems themselves, there is no need of government intervention.
He pledged that the government would encourage and facilitate dialogue and cooperation between Chinese guilds or commerce chambers and their foreign counterparts.
But China will also take the cases to the WTO if it finds its trading partners are using protection measures against WTO principles, said Yu.
WTO has declared in early February that it will review new trade policies adopted by its members in the financial crisis. The Ministry of Commerce has stated that China would "actively participate in that review."
There is also voice for using or threatening to use retaliatory measures to deter protectionism policies imposed on China. "We should retaliate if necessary," said some experts.
By People's Daily Online