Trade protectionism
Trade protectionism is on the rise around the world. In this context, it is of great significance for us to calmly respond to the challenges of the crisis by re-examining the history and connotation of trade protectionism, paying attention to its development trend in the current situation, and thinking about its impact on China.
Trade protectionism and the appeal of the international community
Protectionism in economics mainly refers to policies or doctrines that protect domestic industrial and commercial enterprises and workers by restricting or regulating trade. The World Trade Organization (WTO) tends to refer to various types of measures that distort import and export trade as trade restrictive measures rather than protectionist measures.
I understand that trade protectionism is a system of economic policies that inhibit trade between countries, and it protects domestic industries and markets from foreign shocks through a series of import and export restrictions. Different from legitimate trade remedy measures, trade protectionism is often discriminatory at the expense of the interests of trading partners, which is mainly manifested in the abuse of various protective measures and distorting normal international trade. Although trade protectionism harms the interests of other members, the measures it uses do not necessarily contradict international trade restrictions. Many of the measures are in line with the rules of the World Trade Organization and their own WTO accession commitments, some exploit grey areas where trade rules are not yet clear, and a few are neither reasonable nor legitimate.
Major countries and regions have generally expressed their opposition to trade protectionism on multilateral occasions. Leaders unanimously called for a boycott of trade protectionism and pledged to refrain from erecting new barriers to trade and investment in the future. At the Asia-Pacific Economic Cooperation (APEC) leaders' meeting and the World Economic Forum's annual meeting in Davos, strong voices against trade protectionism were repeatedly voiced. The ASEAN summit expressed its firm opposition to trade protectionism, pledged not to adopt new trade protectionist measures, and supported the promotion of the Doha Round of negotiations.
First, international economic organizations believe that trade restrictive measures have not been reduced. The WTO report notes that there are limited justifications for increased trade restrictions and trade-distorting measures as a result of the financial and economic crisis, and that there is a trend towards a "serious slide" towards trade protectionism as the global economic situation deteriorates further.
Secondly, the multilateral trading system still has an important role to play. Although the WTO and other existing international institutions have shown their weakness in dealing with the financial crisis, the majority of members still support the multilateral trading system represented by the WTO, and agree that it is an effective tool for all countries to coordinate and jointly respond to the financial crisis, and plays an irreplaceable and important role in opposing trade protectionism and promoting the recovery of economic growth. The direction of trade liberalization and the reform of the international division of labor system will not be reversed, and will move forward in twists and turns.
△ Attended the 6th Annual Consultation Meeting of the China-FAO South-South Cooperation Project at FAO
Third, China has consistently opposed trade protectionism in words and deeds. In the course of responding to the financial crisis, China has actively strengthened economic and trade cooperation with other countries, upheld the multilateral trading system, and overcome difficulties together. In the economic stimulus package that has been implemented, China treats domestic and foreign products equally, providing a lot of business opportunities for foreign companies. China has also organized a number of investment and trade promotion missions to Europe and the United States to demonstrate China's clear stance against trade protectionism with concrete actions. In particular, since 2018, the Chinese government has held the "China International Import Expo" every year to further open up the Chinese market, reflecting the new concept of open development, focusing on promoting open, inclusive, inclusive, balanced, and win-win economic globalization, building an open world economy, and promoting the healthy development and growth of global trade.
Implications for China
In the wake of the 2022 pandemic, the world economy is showing signs of stabilization, but the outlook remains highly uncertain. Various forms of trade protectionism are still emerging, and their influence on China is deepening day by day.
1. Trade protectionism is not conducive to the recovery of the world economy
Protectionism has resurfaced in the shadow of the financial crisis.
First, irregularities in trade protectionism have had a direct impact on global trade, resulting in an increase in worldwide trade frictions and intensification of trade disputes, and the subsequent obstruction of multilateral trade liberalization based on the World Trade Organization (WTO).
Second, the global division of labor, production system, and marketing system that have been formed are facing a breakdown, and it is difficult for countries participating in economic globalization to stand alone.
Third, developing countries are more vulnerable in an environment where trade protectionism is rife because of their relative weakness in terms of international status, regulatory instruments and financial resources.
Generally speaking, trade protectionism will disrupt the international trade order, delay the recovery of the world economy, and be detrimental to the joint response of all countries to the international financial crisis.
2. Trade protectionism has a negative impact on China
The mainland's economy is highly dependent on foreign trade. This development model, which is highly dependent on external demand, means that the import risk is extremely high, and the transmission of external economic fluctuations is extremely strong.
The emergence and spread of trade protectionism, especially the policy orientation of the developed countries headed by the United States and Europe, to institutionalize and make it a long-term policy, will further aggravate the difficult situation of shrinking foreign demand on the mainland, and even cause the mainland to lose part of its export market, reduce the operational capacity and employment absorption capacity of some export-oriented enterprises, and weaken the development momentum of the mainland in maintaining the steady growth of foreign trade to a certain extent.
The mainland is the largest developing country in the world, with a large economy and a rapid development rate. The rapid improvement of China's international status and the continuous expansion of the international market have attracted great attention from some stakeholders. Various forms of the "China threat theory" have emerged one after another, and the spearhead of trade protectionism is often pointed at China.
In order to better integrate into the global economy, China has made the historic choice to join the World Trade Organization (WTO) and has made a commitment to a high degree of openness in a wide range of fields. While enjoying the fruits of trade liberalization, the mainland has also given up many rights, and compared with developed countries and even most developing countries, we have limited trade protection tools that we can use legally and compliantly, and are more likely to be challenged in terms of policy implementation.
3. Agriculture is more vulnerable as a weak industry
First, the mainland's national conditions and development stage determine that agriculture has a limited ability to withstand external shocks. The biggest national condition on the mainland is that there are many people and little land, and agricultural resources are scarce. This is the most important factor restricting the development of agriculture on the mainland. Compared with most countries, the scale of agricultural production on the mainland is small, and it is a subsistence industry. These realities determine that mainland agriculture is in a weak position when competing with large-scale, highly subsidized foreign agriculture, and has a weak foundation to withstand external shocks.
Second, the fact that the international competitiveness of China's agricultural products is not strong means that the ability of agriculture to resist trade protectionism is insufficient. Although the competitiveness of China's agricultural products has improved somewhat after more than 40 years of development after more than 40 years of rural reform, the overall international competitiveness is not strong, there are not many varieties of products with export advantages, and the scale of trade is not large. The level of large-scale, intensive, and standardized development of the production and processing of agricultural products is not high, the relevant industry organizations and public service organizations are not yet perfect, and the phenomenon of vicious competition occurs from time to time. More prominently, the competitiveness of a considerable part of the products comes from low labor costs, and is still at the bottom of the international division of labor chain, with the development of the economy and the increase of labor costs, its advantages are difficult to sustain.
Third, the highly open agricultural market and limited space for support and protection have constrained China's ability to take the initiative to respond. Unlike developed countries, which are able to legally use various means of trade protection, China has limited room for agricultural support and protection.
Enlightenment and response
The rise of a new round of trade protectionism is not only an abuse of the measures allowed by international trade rules, but also an act of circumventing the rules or directly taking advantage of the gray areas not covered by the rules. Many countries have been able to do so precisely because they are highly familiar with the rules, make full use of them, and take the lead in formulating them. Relatively speaking, China's capabilities and means in this area need to be further strengthened.
In the face of intensifying trade protection, China should take the initiative to respond and make a difference. It is necessary not only to take a clear-cut stand against trade protectionism and abide by the solemn commitments made, but also to enhance the ability to take the initiative to deal with trade protectionism, and at the same time, it is also necessary to make rational use of rules and strive for space for support and protection.
While dealing with trade protectionism, the Chinese Government should learn from the experience of developed countries in taking the initiative to protect weak industries, continue to strengthen the rational protection of the mainland's agriculture, improve its internal skills, improve its comprehensive agricultural production capacity, increase input, strengthen the construction of a socialized agricultural service system, and constantly consolidate and strengthen the position of agriculture as the foundation of the country.
Source: China Rural Network
Editor: Huo Ran
Supervisor: Guo Wenping, Xu Feng
Submission email: [email protected]