Buy China Policy - Is Protectionism on the Rise?

A Buy China policy? Really? I thought everyone was already buying Chinese products, but apparently not enough - at least not in-house in China itself. This could be a blip on the radar or an interesting longer-term dynamic. Remember, some of the blame of what turned a bad recession into the Great Depression was protectionism. The U.S. has already rankled its largest trading partner [May 19, 2009: Trade Wars Brewing in Economic Malaise, even Versus Those Pesky Canadians] with "Buy America", so as this recession / recovery drags on, and job growth is especially difficult to manufacture, I'd expect to see more of this across the globe.

But from China? Really? Weren't we all waiting for China to save us with their spending / stimulus / yellow brick road? Hmmm...chartreuse shoot.

Via FT.com

• China has introduced an explicit “Buy Chinese” policy as part of its economic stimulus programme in a move that will amplify tensions with trade partners and increase the likelihood of protectionism around the world. In an edict released jointly by nine government departments, Beijing said government procurement must use only Chinese products or services unless they were not available within the country or could not be bought on reasonable commercial or legal terms.
• The government also said it was launching an investigation in response to complaints from domestic industry associations which accuse local governments of favouring foreign suppliers in procurement related to the country’s Rmb4,000bn ($585bn, €421bn, £356bn) economic stimulus package.
• The new edict bans local governments and departments from discriminating against domestic suppliers in their procurement. Foreign companies operating in China argue that the opposite is in fact true and that they have been largely cut out of procurement related to the government’s stimulus package.
• “From a domestic political perspective this makes some sense because local governments do tend to favour foreign products in some categories,” Dong Tao, chief China economist for Credit Suisse, said. “But given how important free trade is for China’s economy this is not the right message for them to be sending to the rest of the world right now.”
• Just a few months ago Beijing was raging against a proposed “Buy American” clause included in the US economic rescue package. “Some countries raised clauses to prioritise the purchase of products of their own countries in their economic stimulus packages,” Yao Jian, a Chinese commerce ministry spokesman, told reporters in February. “We express deep concern about these [measures] ... under the current financial crisis, measures issued by all countries should not cause negative impacts, and especially they should not send out wrong messages.”
• “The whole world is dying to see China spread its orders around and save their economies,” said Mr Tao. “But what this policy reflects is heightened anxiety about these job pressures and the potential for social unrest.”

Comments

[Sovestor:]

Protectionism or not, investing should be simplified. Investing should be simpler. Invest for the long-term using low-cost index fund and hold it for 15-20 years, ignore market volatility, and don't forget to diversify.

Jun 18 03:41 AM

[HaavBline:]

Finally, the Chinese has decided to join the developed world and follow the American leader.

They finally understand the meaning of "If you can't beat them, join them!". Since we are sticking with our "Buy American" policy and they figured they can't make our congress change anything. (Nobody can.) They will just have to join the most advanced country in the world and copy our "Buy xxx" program.

Someone please investigate whether they are infringing on our Interlectual Property Rights.

Jun 18 09:51 AM

[TonyP4:]

There is nothing wrong for Chinese to buy Chinese products, same as Americans buy American products.

However, we should encourage free trade - i.e. buy the products better from aboard when we cannot produce them cheaper without setting up any barrier.

Jun 18 09:59 AM

[Alphameister:]

Blame the imbecilic US Congress if protectionism increasingly rears its ugly head around the world.

Jun 18 11:25 AM

[Mike Conlon:]

I don't think the Chinese want to waste their yuan on Chinese crap products, they'll leave that for Americans with useless paper!

Jun 18 03:44 PM

[Sober Realist:]

So much for China "saving the world." When Chinese leaders say to "buy Chinese," their state-led directives have the teeth of capital punishment behind them. Everthing down to cigarette butts will be scrutinized:
Chinese Ordered to Smoke More to Boost Economy

"Local officials burst unannounced into a middle school in Hubei province one afternoon and started sifting through the staff-room’s ashtray to enforce a ban on rival cigarette brands. The "cigarette marketing team" discovered three "non-compliant" cigarette butts and subjected the school to "public criticism" for "undisciplined practices," London’s Telegraph reports. Officials and teachers in Hubei province will be fined if they "fail to meet their targets" or are caught smoking brands from neighboring provinces. One village was ordered to purchase 400 cartons of cigarettes a year for local officials. "The regulation will boost the local economy via the cigarette tax," said Chen Nianzu, a member of the Gong'an cigarette market supervision team. In total, Gong'an officials and teachers have been ordered to puff 230,000 packs of Hubei-branded cigarettes."
www.telegraph.co.uk/ne...

Jun 18 04:54 PM

[coreopsis:]

It'd be rather fascinating (obviously it's impossible) if from the intellectual point-of-view, we could eliminate or otherwise greatly reduce China-US trade.

Let's say, no more Boeing aircraft, Washington state apples, soybeans, whatever. A simple moratorium. China/rest of the world trade continues. Let's cheer the last man standing!


On Jun 18 09:59 AM TonyP4 wrote:

> There is nothing wrong for Chinese to buy Chinese products, same
> as Americans buy American products.
>
> However, we should encourage free trade - i.e. buy the products better
> from aboard when we cannot produce them cheaper without setting up
> any barrier.

Jun 19 01:21 PM