China Adapts “Buy Chinese” After Against Railing U.S.

Despite bitter criticism out of Beijing in February when American lawmakers passed a stimulus package that contained a “buy American” provision, the Chinese government has directed its localities to do much the same.   

State-run media in China began reporting on the “buy China” clause this week, complete with full-throated defenses of the measure even after calling the American version “poison” and warned that the American measure could spark a “trade war.”   

According to those sources, the Chinese government’s economic planning agency, the National Development and Reform Commission, handed down an edict requiring any projects using part of China’s $586 billion package to obtain official permission before using any imported goods. 

"Government investment projects should buy domestically made products unless products or services cannot be obtained in reasonable commercial conditions in China," says the order, dated June 1. "Projects that really need to buy imports should be approved by the relevant government departments before purchasing activity starts." 

The move is completely legal under China’s current membership in the World Trade Organization.  Since joining the organization in 2001, the nation has yet to sign the organization's government-procurement agreement.  That would have prevented Beijing from implementing such a policy that some view as discriminatory.   

One of those groups is the American Chamber of Commerce in China, who labeled that move as “protectionist.”   

"Chinese and U.S. companies and workers have much to gain from strong engagement, and much to lose from protectionism," the group said in a statement.  In all fairness, the U.S. Chamber of Commerce opposed the “buy American” clause as well.   

Not everyone can say they have been able to avoid the label of hypocrite, however.    "History and economic theory show that in facing a financial crisis, trade protectionism is not a way out, but rather could become just the poison that worsens global economic hardships," China's official Xinhua news agency said in February.   

Even China’s Commerce Ministry spokesman was not immune from taking not-so-thinly veiled shots at the U.S. for the “buy American” measure.   

"There still are countries that are including conditions in their stimulus plans that require the purchase of those countries' goods," Yao Jian told reporters. "We are deeply worried."  

Some observers have speculated that the Chinese measure may be retaliation for the “buy American’ clause.  But, that seems unlikely due to the fact that China has a long and well-known past of implementing protectionist measures that distort trade.   

Even before passage of the “buy China’ clause, China’s criticism of the “buy American” provision was akin to the pot calling the kettle black. The nation is well known for manipulating its currency - purposely undervaluing it in order to drive down the price of its exports. In addition, China is well-known for subsidizing its manufacturing sector as well as dumping products into foreign markets to drive down the price - all forms of economic protectionism that distort trade and make Chinese products unnaturally competitive.  

The decision to include the “buy America” provision in the bill was the right one and all the lawmakers that fought for its inclusion in the bill should be commended.  Without it, American money would be spent enriching the people of China, Brazil and Japan rather than our own suffering citizens. 

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