Friday, February 20, 2009

Hey China...Protectionist BUY AMERICAN Actions Are Coming...DEAL WITH IT

The Editor of Chinaview, Mu Xuequan wrote a whiny Editorial (setting the stage for Hillary's visit) complaining about the Buy American language in the Stimulus Bill signed into law by President Obama. Of course, he fails to mention China's protectionist economic policies while bemoaning ours...get over it Mu, we Americans on Main Street have had enough, and trust me...once riled, once we raise our voices, our DEMOCRATIC GOVERNMENT (reluctantly sometimes) listens to us. That $787 Billion Stimulus is going to be paid for WITH OUR MONEY, so keep your grubby little paws where they BELONG....tell President Hu to go fuck himself if he thinks he is going to get a large piece of Stimulus pie for China. If some of us here in America have our say about matters, China is about to lose its "Most Favored Nation"trading status, and is about to find out what happens when we Americans send a clear signal to retail outlets that we do not want to see shit made in China littering store shelves...simply stated, all the trade agreements in the world ARE WORTHLESS if citizens start voting with their pocketbooks. We have the ability to break the back of China's Economy, and this American would love nothing better than to see CHINA BROKEN.
Commentary: Trade protectionism no spur for world economic recovery 2009-02-19 05:51:16 Print

by Ye Shuhong, Li Rong

BEIJING, Feb. 18 (Xinhua) -- The "Buy American" provisions in the 787-billion-U.S. dollar economic stimulus bill that U.S. President Barack Obama signed into law Tuesday, will deal a hard blow to world endeavors in saving the economy.

According to the legislation, the "Buy American" provision prohibits the purchase of foreign iron, steel and manufactured goods for any stimulus-funded infrastructure project.

The provisions, contradicting the principles of fair trade and posing potential hurt to developing economies, run against the general trend of intensified coordination and cooperation across the world community in efforts to tide over the economic crisis.

Most economists believe it is a better choice for world economies to simultaneously adopt expansive fiscal policies, enlarge government spending and save the global market via free trade, which they said would stimulate increasing returns to scale and result in a virtuous cycle for the global economy.

On the contrary, resorting to trade protectionism will only trigger a vicious cycle worldwide, they said.

However, for the ideal scenario of collective increasing returns to scale to be realized, the world's economies should enhance dialogue and cooperation on the basis of complete mutual trust.

The "Buy American" provisions in the U.S. package threaten to undermine the cooperation of trading partners based on mutual trust and will likely cause them to hesitate in implementing measures to save or open the market, or even force them to resort to trade barriers.

As a result, the effects of the ongoing crisis might linger longer or even expand in extreme cases.

Faced with the widespread global financial crisis, many countries have invested heavily in boosting their economies, or are at least preparing to do so. Enterprises in the United States also have their eyes focused on these stimulus packages, hoping to benefit from them.

However, the gigantic U.S. economic recovery package has virtually shut the door on developing countries, raising the possibility of tit-for-tat treatment from those economies.

According to The Washington Post, the major economies in Europe and Asia have all released their stimulus plans, which might benefit U.S. enterprises if they participate in them. However, the "Buy American" provisions in the plan are obviously geared toward protecting U.S. enterprises, which will hurt the feelings of other economies and raise the risk of similar treatment from them.

Developing economies, including the emerging ones, have become an important engine for world economic development, and no revival plan can do without their cooperation and support. It is thus unrealistic to exclude the many developing economies from any stimulus plan.

In a recent article in the Wall Street Journal titled "(U.S.) Congress wants a trade war," Princeton University economics professor Burton Malkiel pointed out that, "Buy American provisions invite retaliation by other nations, and the spread of "beggar thy neighbor" policies throughout the world."

The steady growth of developing economies would offer more opportunities for developed economies to recover. Justin Yifu Lin, the World Bank's chief economist, recently repeated his call for a coordinated global stimulus to get the world economy out of deep recession.

Developed economies mired in downturns should not close their doors for self-protection, urged Lin. Rather, they should try to help emerging economies expand their domestic demand to speed up world economic recovery.

From that perspective, the "Buy American" provisions in the U.S. stimulus package are no doubt short-sighted.

Editor: Mu Xuequan

No comments: