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"buy China" Policy Set To Raise Tensions

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http://www.ft.com/cms/s/0/66454774-5a7c-11...?nclick_check=1

China has introduced an explicit “Buy Chinese†policy as part of its economic stimulus programme in a move that will amplify tensions with trade partners and increase the likelihood of protectionism around the world.

In an edict released jointly by nine government departments, Beijing said government procurement must use only Chinese products or services unless they were not available within the country or could not be bought on reasonable commercial or legal terms.

“From a domestic political perspective this makes some sense because local governments do tend to favour foreign products in some categories,†Dong Tao, chief China economist for Credit Suisse, said. “But given how important free trade is for China’s economy this is not the right message for them to be sending to the rest of the world right now.â€

Just a few months ago Beijing was raging against a proposed “Buy American†clause included in the US economic rescue package.

“Some countries raised clauses to prioritise the purchase of products of their own countries in their economic stimulus packages,†Yao Jian, a Chinese commerce ministry spokesman, told reporters in February. “We express deep concern about these [measures] ... under the current financial crisis, measures issued by all countries should not cause negative impacts, and especially they should not send out wrong messages.â€

Most economists agree China’s economy is starting to recover as a result of its aggressive stimulus package but the country is still struggling with unemployment and fears widespread layoffs could lead to serious social unrest.

“The whole world is dying to see China spread its orders around and save their economies,†said Mr Tao. “But what this policy reflects is heightened anxiety about these job pressures and the potential for social unrest.â€

The edict was issued jointly by the legislative office of the State Council, China’s cabinet, the national development and reform commission (the country’s powerful state planning agency) and the ministries of industry and information, supervision, housing, transport, railways, water resources and commerce.

The new edict bans local governments and departments from discriminating against domestic suppliers in their procurement. Foreign companies operating in China argue that the opposite is in fact true and that they have been largely cut out of procurement related to the government’s stimulus package.

“We are puzzled by this discussion, especially since most European companies operating in China are locally incorporated and have not benefited directly from the government’s stimulus package,†said Joerg Wuttke, president of the European Union Chamber of Commerce in China. “Requiring government procurement to favour Chinese goods and services certainly won’t help to address China’s trade surplus of €170bn.â€

Trade data in recent months show import volumes, particularly of raw materials, have stabilised and started to increase strongly, while exports have stabilised but remain very weak following precipitous drops in both exports and imports since the fourth quarter of last year. China’s trade surplus rose 15.7 per cent to $88.8bn in the first five months from the same period a year earlier.

“Any movement – overt or subtle – to discriminate against foreign products and services is protectionist and an inefficient use of stimulus funds,†said James Zimmerman, partner with the international law firm of Squire Sanders & Dempsey in Beijing.

Gentlemen start your import tariffs.......

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“We are puzzled by this discussion, especially since most European companies operating in China are locally incorporated and have not benefited directly from the government’s stimulus package,†said Joerg Wuttke, president of the European Union Chamber of Commerce in China. “Requiring government procurement to favour Chinese goods and services certainly won’t help to address China’s trade surplus of €170bn.â€

LOL! These pillocks have no idea have they? Puzzled? Learn the Chinese for ****** you.

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slightly rlated - did anyone see Paul Masons china report on Newsnight last night. 2nd part is on tonight if interested.

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A government choosing to favour services produced in-country rather than imported isn't protectionist... it's common sense.

We have the british Navy having ships made in holland and france because it's 10% cheaper, meanwhile we pay the housing benefits and dole money of all the people made redundant from the scotish shipyards. Duuurrrrrrr hello?

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slightly rlated - did anyone see Paul Masons china report on Newsnight last night. 2nd part is on tonight if interested.

Yes. What a sh1thole.

I think they're doomed.

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So a record collapse in global trade due to failure in credit market is now going to be accelerated by protectionism. That will do wonders for global economic recovery.

I think we need to invent a new word to describe the stupidity of it all.

VMR.

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China were asying back in 2004 they would reduce their trade surplus. So far it just invovles buying up

American companies and raw materials.

The world gets asset stripped and is given worthless dollars in return.

Does anyone else think the world has gone mad? Its like 6 Billion children have been left in the house whilst the parents have gone away for a while.

VMR.

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A government choosing to favour services produced in-country rather than imported isn't protectionist... it's common sense.

We have the british Navy having ships made in holland and france because it's 10% cheaper, meanwhile we pay the housing benefits and dole money of all the people made redundant from the scotish shipyards. Duuurrrrrrr hello?

+1

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So a record collapse in global trade due to failure in credit market is now going to be accelerated by protectionism. That will do wonders for global economic recovery.

You've probably missed the window for the moment on Raytheon.

There's still upside left in General Dynamics to my eye.

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