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Protectionism: To Promote or Protest?

While state media may like to peddle the notion that “‘Buy China’ is ‘fair and competitive’ (RT @China_Daily [1]: China denies protectionism allegations http://tinyurl.com/m6fgrk [2]4:05 PM Jun 18th from TweetDeck), others may beg to differ…

Not long ago China was promoting openness, and protesting “Buy Amercian” moves in the US, so it came as a bit of a surprise when state media reported an official “Buy China” policy on the back of the stimulus spending plan. Some of the background was noted in these tweets:

– Stimulating protectionism! RT @ftchina [3]: ‘Buy China’ policy set to raise tensions http://tinyurl.com/l97anc [4]6:00 PM Jun 16th from TweetDeck”

– Stimulus protectionism dangers – NYT: Lesson for China in Smoot-Hawley http://bit.ly/dZUm5 [5]6:48 AM Jun 18th from TweetDeck

While we already had reports of local content requirements and protectionist policies, they were, until now, of an “internal” nature. It seems that local sentiment – and, perhaps worse than expected economic data – are the cause, as we have reported:

– Uncertainty linked to “buy Chinese” policy? – “China’s Economy Is in ‘Critical’ Phase of Recovery” http://bit.ly/pLEY5 [6] 12:36 PM Jun 17th from TweetDeck

– A stimulated forecast of 7.2% – WSJ: World Bank Ups China 2009 GDP Forecast; Cautious On Recovery http://bit.ly/tbV8X [7]6:46 AM Jun 18th from TweetDeck

Certainly lending does not seem to have slowed, so it seems that there is still work to be done.:

– RMB6 trn lending already in 09. RT @caijingonline [8]: Fear the Dark Side of China’s Lending Surge http://t.caijing.com.cn/Zkhda4 [9]7:48 AM Jun 19th from TweetDeck

In addition, we noted a major corruption probe (it is not the only one), and think this could be a warning to others who are being handed big stimulus budgets to spend wisely, or risk the consequences:

– Big trouble in Binhai RT @aimeenbarnes [10]: “China Fires Top Official for Key Industrial Zone” in Businessweek http://tinyurl.com/kkv4m9 [11]9:42 PM Jun 17th from TweetDeck

If nothing else, the overt protectionist move will stimulate debate…