Restructuring is the fundamental way to tackle trade frictions: expert

14:56, November 23, 2009      

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Economic restructuring is China's strategic task and the fundamental way to solve the growing trade frictions challenging China, Sang Baichuan, a researcher form Beijing-based University of International Business and Economics told the People's Daily, adding that the growing trend of trade frictions is closely related to China's export structure, which is consisted mainly of low-end labor-intensive manufacturing.

In the first nine months of 2009, 19 economies launched 88 probes into Chinese products, involving 10.2 billion U.S. dollars of export goods. The two figures were 29 percent and 125 percent respectively higher than the same period last year. The 88 probes against Chinese products included 57 cases of anti-dumping, nine cases of anti-subsidy, 15 cases of safeguard actions and seven cases of special protection.

Sang explained that low-end labor-intensive manufacturing relies on the cost advantage of labor, land and resources and its requirements on technology and capital are not very high. "This resulted in low barriers both to entry and exit."

If the import of Chinese products is restricted, substitute good can easily be found. If China's cost advantage is weakened, investors may move to other countries or regions with lower costs. Low costs of trade remedies also spurred growing probes against Chinese products.

"Economic restructuring is the fundamental way out," said Sang. With the development of China's economy, Chinese companies should speed up innovation and cease core technology to stand at the high-end, rather than struggling for the meager profits of labor-intensive products.

By People's Daily Online
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