China warns of pro­tec­tion­ism as US trade row sim­mers

Muscat Daily - - BUSINESS -

Hanoi, Viet­nam - China warned on Wed­nes­day that pro­tec­tion­ism threat­ens global growth and cau­tioned ‘in­di­vid­ual coun­tries’ against iso­la­tion­ism, in a veiled ref­er­ence to the deep­en­ing trade spat be­tween Wash­ing­ton and Beijing that is be­ing closely watched across Asia.

The com­ments from China’s Vice Premier come as the world’s top two eco­nomic pow­ers edged closer to an all-out trade war af­ter im­pos­ing tit-for­tat tar­iffs on bil­lions of dol­lars of im­ports.

Ten­sions be­tween the UN and China were height­ened last week when US Pres­i­dent Don­ald Trump threat­ened to hit all China’s ex­ports to the US worth more than US$500bn as he dou­bles down on the ‘Amer­ica First’ agenda he says aims to pro­tect jobs and in­dus­tries from over­seas com­pe­ti­tion.

But with­out di­rectly nam­ing Trump or the United States, Vice Premier Hu Chun­hua warned against coun­tries go­ing it alone and up­end­ing the glob­alised trad­ing sys­tem.

“Some in­di­vid­ual coun­tries’ pro­tec­tion­ist and uni­lat­eral mea­sures are gravely un­der­min­ing the rules-based mul­ti­lat­eral trad­ing regime, pos­ing a most se­ri­ous hazard to the world econ­omy,” Hu said at the World Eco­nomic Fo­rum (WEF) in Hanoi.

“Self-iso­la­tion will lead nowhere and only open­ness for all rep­re­sents the right way for­ward,” he added.

The trade row has dom­i­nated dis­cus­sions at the WEF where South­east Asian lead­ers have made the case for fewer trade bar­ri­ers as Amer­ica re­treats from the re­gion un­der Trump, who has de­cried trade deficits in the re­gion.

The As­so­ci­a­tion of South­east Asian Na­tions (ASEAN) ‘is work­ing with like-minded part­ners to strengthen the rules-based in­ter­na­tional sys­tem’, Sin­ga­porean Prime Min­is­ter Lee Hsien Loong said.

“It un­der­pins growth and sta­bil­ity, but is un­der pres­sure.”

The trade tus­sle be­tween Wash­ing­ton and Beijing is be­ing closely watched across South­east Asia where some ex­port-fo­cused economies may be set to gain from the fall­out.

Ris­ing labour costs in China have al­ready pre­cip­i­tated a push into coun­tries such as Viet­nam and Cam­bo­dia, where Adi­das shoes, H&M T-shirts and Samsung phones are made on the cheap.

But the trade rum­ble has ac­cel­er­ated that process, with sev­eral Chi­nese firms turn­ing to the re­gion to pro­duce items from bike parts to mat­tresses in a bid to avoid US tar­iffs.

Al­though there could be a short-term boon to South­east Asia, some an­a­lysts warn the long-term may be less rosy.

The re­gion is ‘very ex­port-driven... so any shift to­ward more trade bar­ri­ers... is not good’, Ra­jiv Biswas, Asia-Pa­cific chief econ­o­mist at IHS Markit, told AFP.

ASEAN trade in­creased by a value of nearly US$1tn be­tween 2007 and 2014 and the bloc had a col­lec­tive GDP of US$2.76tn last year af­ter an en­thu­si­as­tic em­brace of trade lib­er­al­i­sa­tion - a marked con­trast to Trump’s poli­cies.

In one of his first post-elec­tion moves, the US Pres­i­dent pulled out of the sprawl­ing 12-na­tion Trans-Pa­cific Part­ner­ship (TPP), call­ing the trade pact a job killer.

The cur­rent edi­tion of the WEF, which closes to­day, is of­fi­cially fo­cused on how economies should adapt to so-called ‘dis­rup­tive tech­nolo­gies’ such as au­toma­tion and Artificial Intelligence that threaten to cull jobs in emerg­ing economies.

(AFP)

Chi­nese Vice Premier Hu Chun­hua de­liv­ers his ad­dress at the open­ing of the World Eco­nomic Fo­rum on ASEAN at the Na­tional Con­ven­tion Cen­ter in Hanoi, Viet­nam on Wed­nes­day

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