Protectionism won't help
Updated: 2012-02-01 08:01
Trade protectionism against China is on the rise in the United States. The Obama administration has brought trade cases against China at nearly twice the rate of the previous administration, and it is also creating a trade enforcement unit to investigate the "unfair trade practices" of China and other countries.
Nevertheless, are these protectionist measures the right remedy for solving the US' grim unemployment problem?
The US economy has been in a downturn since 2008. And although its GDP in the second half of 2011 was finally back to the level it was in 2007, the employment rate still remains well below the pre-crisis level.
The US desperately needs to create jobs.
The main reason for its sluggish recovery is that the US is in a deep structural recession. Its financial institutions and residents all need time to restructure their balance sheets, deal with bad assets, and reduce their debt leverage ratio.
International trade and business outsourcing are not key factors causing the high unemployment in the US. From 2006 to 2009, the US trade deficits reduced by half, yet unemployment has doubled over the same period.
With insufficient domestic demand, the US government has anchored its hopes on exports to stimulate economic growth, pledging to double exports in five years by 2014. Over the past two years, the growth rate of US exports to China is much higher than the overall growth in US exports. So increasing protectionist measures and deliberately provoking trade friction with China will hurt the US.
As long as the law of the market is followed and the comparative advantages of different countries are brought into play, trade, outsourcing and investment among countries does not mean a country will take the jobs of another country. Instead it provides more job opportunities for all countries. Resorting to protectionist measures hinders international trade, outsourcing and investment, and ultimately harms all.
(China Daily 02/01/2012 page8)