China cautious on trade protection cases

China cautious on trade protection cases

On April 28, 2005, Chinese Department of Planning and Finance and International Trade and Economic Corporation Research Institute of Ministry of Commerce jointly released "China's Foreign Trade Report of 2005 Spring" at Chinese Export Commodities Fair in Guanghzhou, capital of China's southern Guangdong Province. Looking back to year 2004 and the first quarter of 2005, the report forecasts a gloomy future regarding the foreign trade of China. The report anticipates an increase in trade protection cases against Chinese commodities, which is not a surprise at all. China remained as an interim member of the World Trade Organization (WTO) for three years, from 2001 to 2004. Now, the period is over and the WTO asks China to reduce tariffs from 10.4% in 2004 to 9.9%. China is determined to become a permanent member of the WTO. Therefore, the central government has recently enacted the measures and decreased the export tax rebates on certain steel products. The country has also taken some steps to reduce the import tariffs, and further started to improve its economic relations with India and Taiwan. However, the growth in the Chinese economy continues to worry the US and the EU ountries which put the blame of their sluggish economies on China mostly. The US is paving the way to start an inspection on China's exports subsidy policy, while the EU is re-considering to apply a quota on Chinese textile. The steel exports of China also started to worry the American and European producers at the beginning of 2005 but the recent measures on the steel export tax rebates will reduce the Chinese exports, thus cool down the steel makers in the US and EU. China's economy has reached 64% of the US economy and became the second largest economy of the world in terms of its GDP, but its imports also increased. China has become America's fifth-largest export market after Canada, Mexico, Japan and Britain. Furthermore, China owes much of its rapid economic growth to two main factors; large-scale foreign and domestic capital investment, and rapid productivity growth. Annual utilized Foreign Direct Investment in China grew from $636 million in 1983 to $64 billion in 2004. The cumulative level of Foreign Direct Investment in China stood at $563 billion at the end of 2004. Under these conditions, the government of China gives the message that the country will continue to its reforms, and also recommends the companies to act more carefully in order to prevent any illegal dumping situation.