China will stop at nothing to ensure that the rest of the world partakes in no protectionist measures, but they are perfectly happy to implement many of their own. China continually blocks access to its market, manipulates its currency, subsidizes entire industries and uses their state-owned companies to tilt the world’s markets in their favor.

A European business group has accused the Chinese government of failing to honor promises to the World Trade Organization – a policy it says has effectively barred European companies from key markets, Voanews reports. China’s European Chamber of Commerce is also pressuring Beijing to level the playing field for both its domestic and foreign competitors.
It has been almost a decade since China joined the World Trade Organization and committed to free trade with other countries. After all that time, Europe and America are still clamoring to get China to play fair by removing protectionist hurdles that impede foreign business.

The EU Chamber of Commerce points to the use of red tape and Chinese regulations that seek to bar foreign companies – especially in bidding for government procurement contracts, a key part of China’s state-controlled economy. China consistently props up its state-owned companies and utilizes them to gain control of key industries.

A very large development in the investment world is the potential takeover of Potash Corporation by BHP Billiton. Based in Canada, Potash Corp. is the world’s largest potash producer and the second and third largest producer of nitrogen and phosphate, three primary crop nutrients used to produce fertilizer. At the end of 2007, the company controlled 22% of the world’s potash production capacity, 2% of nitrogen production capacity and 6% of phosphate supply. China has recently urged its state-owned companies to interfere with the hostile takeover and acquire ownership for themselves.

China has a very large stake in the outcome of this potential takeover. China is the second-biggest importer of the crop-nutrient potash and if a state-owned company acquired Potash Corp., China would lower prices to benefit their own supply needs. They would do so to the direct detriment of Potash’s workers, their community, competitors and all those who would be affected by an unnatural price reduction for China, representing yet another time China has sought to control and manipulate the market to their advantage.

The Chinese government quietly adopts policies aimed at encouraging exports while curbing imports, even though China, as one of the world’s largest exporters, has aggressively criticized protectionism from other countries.

“China is not only continuing but accelerating many of the protectionist approaches they’ve taken in the past to promote economic development,” said Michael R. Wessel, who was appointed by Nancy Pelosi, the speaker of the House, to the United States-China Economic and Security Review Commission.

The U.S. has three options: 1) Do Nothing; 2) Complain; 3) Counter China’s protectionism. We obviously cannot afford to do nothing as we have been doing for too long, and the forum for our complaints would be the WTO, which consistently rules against the U.S. and takes years to reach conclusions. This leaves us with only one option: countering Chinese protectionism with protections of our own.

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