In accordance with the report by the Development Research Center of the State Council, China will become the main objective of trade protectionism, and this behavior will make the exporting environment worse in China.

The nation’s export sector saw a rapid growth since China joined WTO in 2001. The surplus trade helped the country gather $1.95 trillion in foreign exchange reserves, which ranked the first in the world. In 2008, the surplus trade reached 295.46 billion Yuan, due to this situation, many foreign countries started to adopt their trade protectionism measures.

A six-month ban on toy imports from China has been carried out by the Indian government on Jan 23. Meanwhile, Chinese government claimed that China would file a case at WTO against the ban to import Chinese fowls.

The Ministry of Commerce reported that China is still one of the countries that are under anti-dumping probes since 1995.

This report also said that US government’s ‘Buy America’ clause caused a rise of trade protectionism all around the world.

A study released on March 17th by the World Bank showed that 17 of the G20 group have launched trade-restricting measures since last November.

At the G20 summit that was held on November 15th, Leaders of G20 group countries agreed to avoid setting trade barriers, but, in contrast, up to 47 measures which restrict trade have been taken in those countries since the end of the meeting.

China’s commerce minister, Chen Deming, said that China would definitely say no to protectionism and would give some useful suggestions in trade talks held in Doha.

The report suggested that China still need to support the labor-intensive export sector because it could provide about 40 million job chances every year.

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It is obvious that trade protection is certain to rise, said Mei Xinyu, a trade expert form the Ministry of Commerce. The current situation will stay for some time, he said, referring to the lasting effects caused by the US stimulus package.

The package was passed late on Friday with the proposal of distributing tens of billion of dollars into public building projects, and tends to impose conditions, for instance, only US-made steel and products can be used.

Mei also said that China could be greatly suffered from the action since it is a major manufacturing exporter that supplied enormous goods to all the other countries.

The trade barrier comes when efforts are needed to fight the devastated economic crisis in more than fifty years.

It is impossible that protectionism will do any good to anyone, said Feng Jun, a Shanghai-based WTO expert,  the package is not feasible in the age of globalization since the world today is not the same as that of the 1930.

He added that the “buy American” plan “is impossible to work”. On the contrary, it would cause trade barriers. At the same time, “short-sighted” governments will constrains foreign products and overseas investments to protect jobs and industries within the country.

Mei doesn’t agree with the move that China will not use protectionism when implementing its $586-billion stimulus package. He urged Chinese government to create an even favorable field for domestic business under the WTO framework. “We should not wait to be a victim,” he said.

It is found that the number of anti-dumping and anti-subsidy investigations into Chinese products has increased. For example, India has made an announcement that it’s 17 “trade remedy” will be made to restrict Chinese products since October 2008.

Over the weekend, Group of Seven (G7) finance ministers promised that they will not use protectionism in the process of making efforts to stimulate their domestic economies to fight the world’s most awful economic crisis.

Italian Finance Minister Giulio Tremonti, the meeting’s host, said the other ministers insisted on offending protectionism. It is a specific dangerous thing not only for economies which is heavily based on exports, he said in Rome.

US Treasury Secretary Timothy Geithner made an assurance to his competitors that the $787-billion package would not break the US’s promise of free trade.

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“The first direct voyage across the Straits starts,” declared Shanghai Mayor Han Zheng at Yangshan Deepwater Port.

Ma Zehua, vice-president of China Shipping Group said the direct sea route will save cost and time for both sides of the Straits and strengthen their competitiveness.

The 8,500-TEU Xin Fei Zhou, of China Shipping, and the 4,500-TEU Yuan He, of COSCO, were two of the 20 ships that set sail across the Straits. Fifteen of them departed from six mainland cities and five from two Taiwan ports.

Because the sailing time of China Shipping and COSCO vessels was shorter than before, they reached Kaohsiung last Wednesday.

According to Sun Jianping, director of Shanghai municipal transport and port authority, the direct route from Shanghai to Kaohsiung is at least one-third shorter than the one ships use to transfer at Hong Kong or other hubs.

Wu Shuxiong from COSCO said a company could save at least $20,000 per ship each trip owing to the shorter route. That means they can save at least $1 million a year.

Huang Jianping, in Tianjin, a captain of Oceania, a COSCO ship that set sail to Kaohsiung last Monday afternoon, said a company would save about $7,500 and 16 hours per ship each trip. The Oceania reached Kaohsiung last Wednesday, too.

At least one cargo ship will set sail from Tianjin to Taiwan every week, according to COSCO President Li Shaode.

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It was also said that the gala dinner was a good opportunity to exchange business ideas during the global crisis.

According to Wang Nanjian, mayor of Jiangmen city, besides the agreement with the Chinese Manufacturers Association of Hong Kong in mid-November, similar agreements were signed with the Federation of Hong Kong Productivity Council during the gala for closer cooperation in trade and investment.

The city government will also sign agreements with Hong Kong General Chamber of Commerce and the Chinese General Chamber of Commerce, he added.

Both Jiangmen city and commercial organizations in Hong Kong will sponsor exhibitions, seminars and other business activities, Wang said, and the two sides will exchange latest trade and investment policies, market information and investment information with each other.

The gala party will bring meaning results for development of trade and economic cooperation between Hong Kong and the PRD region, especially for Jiangmen.

The city government of Jiangmen is planning to set up an industrial park exclusively for Hong Kong investors and sponsor a seminar on the development of advanced manufacturing industry in the PRD region in December, according to the mayor.

During the seventh dinner this year, John Tsang, financial secretary of Hong Kong SAR, haled the get-together and said that relations between Hong Kong and Jiangmen will definitely become closer.

Tsang called on Hong Kong businessmen to seize the good opportunity offered by the central and Hong Kong governments to expand business amid global recession.

Based on the official statistics, about 70% of the city’s total overseas capital is from Hong Kong’s investment which is over $8 billion. And there have been over 2,500 enterprises set up by Hong Kong investors in Jiangmen.

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More than 200 business leaders from Canada and about 400 from China attended the second Canada China Business Forum. The latest business agreements cover such areas as airplane systems, international education, renewable energy and the environment.

Having fostered bilateral trade relationship with China is becoming increasingly important in coping with global economic turbulence, said Peter Kruyt, chairman of the Canada China Business Council.

During the first Canada China Business Forum in 2005, the two governments set a target to increase bilateral trade to $30 billion by 2010. But this figure climbed to $30.38 billion last year. What is more, this figure is keeping increasing year-on-year of 15.1 percent, according to Chinese customs figures.

As President of Canadian Manufacturers & Exporters, Jayson Myers said that strong demand in the Chinese domestic market is attracting Canada to promote partnership and explore opportunities.

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The plan consists of political dialogue and cooperation in scientific research, technological innovation, education, trade and investment, culture, tourism, energy, environmental protection and the fight against climate change.

The Prime Minister said that he was eager to improve the friendship between Denmark and China, after arriving in Shanghai on Monday for a six-day visit to China.

Exports from Denmark to China doubled from 2003 to 2007, showing the fast growth of China as a prominent consumer market. Danish exports to China grew 40 percent in the first three quarters in 2008.

But according to the action plan, there is still a long way for Denmark to go to develop its economy in China. Rasmussen also said, “Denmark will lift trade barriers to promote its food products, as well as environmentally friendly technologies and services in China.”

Products and services in fashion, furniture, design and architecture will also be promoted.

Denmark will attend in the 2010 Shanghai World Expo, where it will exhibit many of its products. After three-day stay in Shanghai, Rasmussen will have talks with President Hu Jintao and Premier Wen Jiabao in Beijing.

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Compared with 2.4 percentage points in the nine months last year, goods and services trade contributed 1.2 percentage points to the country’s 9.9 percent GDP growth, said NBS spokesman Liu Xiaochao in a press conference yesterday.

Since last year, a large number of domestic exporters have gone bankrupt because the world economic slowdown, the appreciation of yuan, rising costs as well as tightened credit. The export growth of China in the first nine months dropped 4.8 percentage points year-on-year. Analysts said this slow growth will not only affect the Chinese economic, but also its neighboring economics. “With export orders declining, China will reduce its imports… This will create an impact on the rest of the Asian-Pacific region,” said Sherman Chan, researcher with Moody’s Economy.com

For instance, Australia man face a dramatically slowdown in resource exports, which is its major growth engine in recent years. Japan, South Korea, and the electronic-specializing Association in South Asia will feel the pressure of economy, too.

“The end of China’s dream run will mark the end of Asia Pacific boom,” Chan said.

The state Council has promised to raise the export rebate for textile, apparel and mechanical and electrical equipment exporters to stabilize the trade growth. According to Li Mingxu, it has been much clearer for the policy direction and the government will support the low-end manufacturing sectors if their profit margins are low. However, China’s trade growth would probably drop further at least in the first half of next year in spite of the help from government, according to Liu Jian, researcher with the Chinese Academy of International Trade and Economic Cooperation, which is affiliated to the Ministry of Commerce.

Many economists and international agencies have forecast that the US and European economies would only get out of the crisis in the second half of next year. Past experience tells us that government support is limited to such a situation. That is why the actual improvement of external environment is important to the economy, Li Jian said.

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China has been actively promoting free trade in recent years as the largest developing country in the world. The new agreement is the seventh FTAs China has signed with other countries and the first one with a developed country.

The mutual benefits are obvious with the signing of the free trade. The amount of two-way trade between China and New Zealand reached 5.9 billion in 2007, rose by 10 percent to the previous year.

As there is almost no tariff on both sides, it is believed that businesses in China and New Zealand will get more opportunities for seeking the benefit of the two people. The signing of the deal also sets a good example for trade talks China is having or will have with other developing and developed countries.

It shows that joint efforts can help countries overcome differences in their development levels and further their cooperative relations as well as economic growth. More importantly, successful implementation of these FTAs will blow heavily to protectionism.

As the most populous country in the world, China enjoys a huge advantage of low labour costs. However, protectionism pressures against China have been increased in many developed countries as the country has registered a ballooning trade surplus with its rise as a global manufacturing power. Such a trend is harmful to the growth of free trade around the world.

The new FTA certifies evidently that China has not slowed its pace to integrate itself with the global economy after entering into WTO. Obviously, being recognized by a developed country as a closer trade partner shows the determination of China to free trade.

Hopefully more developed countries will follow the example of New Zealand, and recognize China’s full market economy status. In one word, closer trade ties will definitely work better in accelerating economic growth than protectionism.

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Wang Ying, a division chief of the grassroots organization and capacity building department of the All-China Federation of Trade Unions (ACFTU), said more than 4,100 major foreign companies run by the Fortune 500 are doing business in China.

She said that until now 82 percent of the companies have set up trade unions, and the figure would come up to 90 percent by the end of this year. As of July, in less than 50 percent of the Fortune 500 firms workers had been able to form trade unions.

Wang attributed this substantial change to a three-month national unionization campaign that began in June.

The ACFTU is directly supervising the formation of trade unions in 10 of the Fortune 500 firms.

Currently, Maersk Logistics, Lotus, IKEA, TNT, Kodak, FedEx, Home Depot, Emerson, Canon, Sony and ABB have trade unions.

“Most of the foreign companies have been cooperative, as they are clear that they must abide by China’s laws if they do business in China,” she said.

She said the ACFTU had also been resisted by some foreign companies especially American companies.

“Some US companies, such as Wueth, Microsoft, 3M, AstraZeneca and Pwc, have been quite uncooperative and have applied various excuses to delay the formation of trade union, ” she said.

“Workers do not need to be approved by their employers to establish trade unions, because the Trade Union Law, issued in 1992, entitles them the right,” she said.

“However, the support from the employers is important in practice in forming unions.”

She said over this issue both the American Chamber of Commerce and the Japanese Chamber of Commerce and Industry in China have expressed their support for the ACFTU.

According to the law, employers must allocate 1 percent of workers’ pay for trade union funds. Wang said that 40 percent go to the superior trade union while 60 percent remains in the company.

Senior ACFTU official Yang Honglin said that misunderstanding about trade unions still exited among foreign companied.

“Trade unions in china not only protect workers’ rights and interests but also are good for the development of a company,” she said.

ACFTU vice-chairman Sun Chunlan said on a press conference yesterday in Beijing that the ACFTU is initializing another nationwide push for collective wage negotiations.

She said that through the negotiations all the 108 Wal-Mart in China had signed collective contracts with their workers by Sept 16.

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But according to a UN report, this year FDIs across the world will drop 10 percent from the record high of last year because major companies have scaled back their investment plans.

Global FDIs rose 30 percent to $1,833 billion in 2007, even though the international financial crisis became evident midway through the year. Mergers and acquisitions (M&A), major avenues of global capital flow, have already slowed down remarkably, with their value in the first six months being 29 percent lower year-on-year.

Last year, China attracted $83.5 billion FDIs, the highest among developing countries and sixth in the world, said the World Investment Report, prepared by the UN Conference on Trade and Development (UNCTAD).
FDIs are increasingly targeting services, high-tech industries and high value-added businesses in China. About half of last year’s capital inflow went into the service sector, compared with 28 percent in 2003. Besides, the number of foreign-invested research and development centers in China has risen from about 700 in 2004 to more than 1,200 this year.

This situation shows multinationals have changed their stance of considering China as a competitive market rather than a low-cost production base. On the other hand, it reflects the government’s emphasis on attracting quality FDIs.

Brazil, Russia, India, the US and China are the five most attractive destinations for global investors, shows a survey conducted by UNCTAD. And China was in the top of the list because of its strong economic growth and improved investment environment, UNCTAD official Liang Guoyong said. The global crisis will do harm to financial agencies, forcing them to curb their investments, he said. Financial companies’ problems will shrink liquidity and tighten credit for firms in other sectors too, which means the financial storm will influence the entire business environment.

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