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��Home>>China Observer
China's increasingly embarrassing role as factory of the world
www.chinanews.cn 2006-04-14 16:30:32
Chinanews, Apr. 14 - Wang Shichun, Director of the Bureau of Fair Trade
for Imports and Exports under the Ministry of Commerce (MOFCOM), revealed
lately that, affected by such factors as the rising trend of
protectionist sentiments in international trade and increasingly fierce
competition in global markets, China is encountering more and more trade
frictions and has entered a stage of high frequencies of trade frictions.
The situation is becoming ever more complicated, and trade frictions
involving China show four major symptoms.
First, the categories of goods involved in trade frictions keep
expanding, mainly in China's advantageous labor-intensive products such
as light industrial, textile and electromechanical products. Moreover,
after China reached agreements with the EU and the US on the textile
issue, the conflict on textile products between China and other
developing countries may become more acute. Recently, overseas markets
have been paying close attention to China's iron and steel exports and
successive frictions might arise in this industry.
Second, as trade frictions between China and developed countries become
more and more frequent, trade frictions with other developing countries
also show an uptrend. At present, foreign trade remedy investigations
initiated by India, Turkey, South Africa and other developing countries
account for 60% of all such actions against China.
Third, in terms of protectionist approaches in foreign trade,
anti-dumping remains the most frequently used trade remedy against China.
Some WTO member countries quote the 16th clause of China's WTO agreement
to initiate many safeguard investigations against China. In addition,
developed countries limit imports of China-made products by means of
technical trade barriers, technological criterion, inspection and
quarantine, and other non-duty barriers and methods.
Fourth, trade frictions are gradually expanding from the commodity sector
to the service trade, investment and intellectual property right (IPR)
sectors, from the micro layer of enterprises to the layer of macro
systems. China faces more pressure, particularly on the issues of the RMB
exchange rate and IPR protection.
Why has a major manufacturing country become a severely afflicted focus
of trade frictions in the world? Xinhua News Agency quotes an expert
comment that under the background of globalization, China has become a
crucial destination of industry transfer, and its comparative advantages
decide that its products are extremely competitive and have considerable
impact on relevant industries of other countries. Therefore, China has
become a natural target of trade frictions.
As a major manufacturing country, China plays an increasingly
embarrassing role, facing one trade friction after another on the one
hand and shrinking profit as a result of falling prices on the other
hand. Its exports are surprisingly large in volume and coverage, but this
not only brings the ill fame of dumping but also leads to consumption of
resources and environment pollution.
Such an embarrassing situation shows that while China is a big
manufacturing country, it is not a powerful one. In global industry
chains, China's current production mode falls on the link of processing
and assembling which feature low added value and low technological
content.
Famous economist Wu Jinglian believes that an overlarge proportion of
investment leads to overly rapid growth of production capacity and
eventually inadequate demand. Therefore, enterprises run into more
difficulties in operation and rely more and more on exports, which in the
end stir up trade frictions between China and its trade partners.
An MOFCOM official pointed out that transformation of growth patterns,
independent innovation and corporate brand establishment are the only way
for China to grow from a big manufacturing country into a powerful one.
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