The Great Protectionist Walls of China

Under state control, many Chinese state-owned manufacturers are operating with the benefit of state-sponsored subsidies, including: rent, utilities, raw materials, transportation, and telecommunications services. That is not how we define a level playing field.

—Former U.S. Department of Commerce Secretary Donald Evans

Any time U.S. politicians try to crack down on China’s unfair trade practices, China and its growing band of Washington lobbyists quickly attack these politicians as “protectionists.” A common tactic is to wave the bloody shirt of the disastrous Smoot-Hawley tariffs that helped cause the Great Depression.

In fact, it is perfectly reasonable for the United States to challenge China on its unfair trading practices. Indeed, the only real protectionist in this debate is China.

China’s “Great Wall of Protectionism” features a complex web of direct and indirect subsidies together with an equally complex set of trade barriers that provide shelter to some of China’s most vulnerable domestic industries and agricultural sectors. In the realm of subsidies, if you want to start a business, wouldn’t it be nice if the government gave you cheap energy and water, free land, lavish research and development (R&D) grants, and whatever other capital you might need at bargain rates? Well, that’s exactly what the Chinese government does for its export industries.

Of course, in the wake of China’s entry into the World Trade Organization (WTO) in 2001, these subsidies and protectionist measures were supposed to melt away. However, China’s compliance with both the letter and spirit of the WTO has turned out to be as big a farce and fiction as much of what appears in the heavily censored, state-controlled Chinese press. That’s why around the world, more countries have lodged more antidumping and unfair trade complaints against China than any other nation! In this particular case, where there’s smoke, there is a raging fire.