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Solution to trade war

Publication Date : 22-08-2012

 

China is insisting that the United States cease using protectionist measures to shield its renewable energy industry, a step that foreshadows intensified trade disputes between China and its chief trade partners.

The Ministry of Commerce has ruled that some of the policies the US has adopted to support its renewable energy industry go against World Trade Organisation anti-subsidy rules and is calling on the US to rectify those policies.

China has long been the victim of protectionist policies adopted by foreign countries, especially in recent years.

According to an International Monetary Fund report released in April, China suffers more harm than any other country in the world by its trade partners' trade remedy measures.

In the past, the country has tried to furnish evidence proving that its enterprises were not dumping their products on foreign economies. Meanwhile, it has begun to invoke WTO rules to protect its legitimate rights.

As such cases become more common, it is easy to predict that more trade disputes will arise between China and its trade partners.

That should come as no surprise, especially as such disputes are seen more often throughout the world during this time of economic stagnation. At such a time, it is important for the parties in these disputes to respect WTO rules and settle their differences in a rational manner.

That said, the current disagreement about the new-energy sector should also be a warning to domestic enterprises. The industry has expanded rapidly in recent years, and a number of Chinese enterprises now have larger presences in foreign markets. Despite their larger size, domestic new-energy companies lack essential technologies. When the industry was gaining prominence worldwide some years ago, they found it easy to obtain larger market shares in foreign economies by exporting low-end products to such places. But when market conditions soured, they quickly were suspected of dumping.

While US authorities should rectify their policies, Chinese enterprises should position themselves better in the global market by becoming stronger competitors in the field of technology and offering higher-value products.

 

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