The recent dumping charges against Chinese manufacturers have blocked China's exports into foreign markets. In the past, the Chinese government and businesses did very little when accused of dumping, but this needs to change if this obstacle is to be removed.
While the European Union's anti-dumping charges against nine Chinese color TV manufacturers are being appealed, the EU has begun investigating Chinese energy efficient light bulb manufacturers for dumping. In June, the US slapped Chinese concentrated apple juice producers with an anti-dumping tax and in August, accused Chinese steel producers of dumping.
According to the Ministry of Foreign Trade and Economic Cooperation (MOFTEC), anti-dumping lawsuits against products made in China have witnessed a huge increase in recent years. There were 53 anti-dumping cases between last year and the first half of this year, and another 10 cases are being prepared, affecting nearly US$1.5 billion in Chinese exports.
Since 1979, when the Europeans accused Chinese saccharin manufacturers of dumping for the first time, the dumping lawsuits against Chinese manufacturers have grown. By last February, a total of 376 dumping lawsuits have been filed against Chinese products, affecting at least US$10 billion in Chinese exports.
US$1.5 billion or US$10 billion isn't a big chunk of China's total export, but the dumping charges have a deeper negative effect. The Chinese color TV manufacturers have been sued by the EU for tens of millions of US dollars. Further more, with a 44.6 percent anti-dumping tax slapped onto Chinese TVs, aside from being locked out of the European market, it is very difficult to determine how much the Chinese TV manufacturing industry has lost.
As China's exports grow, the dumping issue will be a long-term issue challenging MOFTEC and Chinese businesses due to the following four reasons.
First, in the intense competition on the global markets, especially when the global economy declines, economic protectionism will gain its ground. Some countries will overuse the dumping charges.
Second, some countries have adopted discriminatory policies against China. Although China began reforms and opening up 20 years ago, it is still considered a non-market economy by some today. They use unreasonable methods to determine whether China dumped its products.
Third, over the past 20 years, China's foreign exports have grown rapidly, at a clip of 13 percent a year, which is nearly 100 percent higher than the increase in global trade.
Fourth, the overall added value of China's exports isn't very high, so Chinese manufacturers try to make their profits by the quantity they sell.
Ma Yu, assistant researcher at the Economic Department of MOFTEC, proposed to handle the dumping allegations on two levels: the government level and the business level.
The Chinese government has done a lot of work in this area in the past few years. The EU, New Zealand and the Philippines have removed China from their lists of non-market economies. When they determine whether Chinese products have been dumped in their market, they consider each case separately.
The recent "Sino-Korean Garlic Trade War" is an example of the threat of using this kind of "an eye for an eye" strategy. But this is not a long-term solution and both sides end up losing.
Chinese businesses need to realize that they must not back off from confrontation when accused of dumping, like they did in the past. Retreat will only lead to dead ends.
China's accession to the WTO will help resolve the dumping issues. First, China will have the right to say on trade issues, which will help protect its legal rights. Second, China can use the world economic organization to resolve trade disputes.
(People’s Daily)
