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China running up against hostile foreign markets

Lu Xiaoming writes from Beijing
China is running up agalhst hostile .foreign markets as it tries to double its export volume to 200 billion dollars by the end of the decade. A surge in ana-dumping Charges against Beijing has Chinese officials claiming trade protectionism by Western governments.
"It is only because China is most vulnerable," says Zhang Yuqing, Director of the Anti-Duinping Division of the Ministry of Foreign Trade and Economic , -Cooperation (MOFTEC).
China has grown for the world’s 32nd largest exporting nation in 1978. to.its current position of 11th. Zhang notes. That growth has been fuelled by 15 years of export expansion at an annual fate of 16 per cent compared to a global average of eight per cent, he adds. "When a hog gets too fat. there comes the slaughterer," Zhang said quoting a Chinese proverb.
Dumping is the international trade language used when exporters are accused- of selling their goods on foreign markets
below the post of manufacturing them. •
According to MOFTEC figures. in the past 15 years upto June, a total of 172 antl-dump-Ing cases were filed against China in 27 countries. After only two cases against China in the 1970s. the frequency -Increased 'to Six a year In the T980s and has .soared to an annual rate of 22 in the 1990s.
In the first half of this year. 19 anti-dumping cases were filed against Beijing. At 54, the European Union has the largest number of cases against China followed by the United States with 50.
For the Chinese officials the. charges are not about dumping but trade protectionism. They say that although the completion of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) promises a freer flow of trade and the GATT menjbers have been obliged not to increase customs duties and import quotas. anti dumping remains a handy hedge for trade restrlc-
•tion. .
Zhang points out that an.ti-. dumping charges are on the rise around the world not just against China. The country’s vulnerability comes from the perception that It is not a market economy despite the .efforts of econojnic reform in recent years, he adds.
Labelled a non-market economy. China Is perceived as a country where the state controls electricity cost, commodity prices, salaries, foreign exchange rate and whatever else may affect the cost of a product, and consequently, its domestic price.
The domestic price of a product from a non-market economy is not accepted as fair price in an anti dumping investigation. which means other so-called surrogate countries are called upon to compare their prices with the exporting price of the product in question to decide whether or not dumping has taken place.
The surrogate countries
serve as elastic rulers," says Zhou Shijlan, Deputy Director of the Beijing-based International Trade Institute. They are picked up randomly."
Zhou recalls a case while working in the Chinese Embassy in Washington when both China and India were charged with dumping — at the same price — some construction products. The Chinese goods were slapped with a duty of nearly 12 per cent when surrogate countries Japan and France ruled they were dumped while Indian products were left unchanged.
Two countries with similar development level sell the same product with the same price to the same market at the same time," Zhou says. "One Is dumping and the other is not. What would you call this if not prejudice?"
Considered even more outrageous by Beijing was a move by Mexico in April 1993 when 10 categories and thousands of Chinese products were slapped with duties ranging from 18 to
1, luo per cent. Some of the products involved cannot be produced tn Mexico while others have never been exported to the country.
"This Is absurd." says Dong Yl. a MOFTEC official who deals with legal affairs in trade with Latin American countries. He explains that an anti dumping petition normally comes from local industries who feel injured by less expensive Imported substitutes. But a country which does not produce a certain product should not be questioning the price, Dong says.
To the dismay of Chinese trade authorities. China lost most of the anti-dumping cases against its products, with many of the cases undefended due to legal expenses and a lack of ex-"pert legal counsel.
Export losses are estimated at billions of dollars. A pending petition against China's shoe exports to European Union Is threatening to decimate the country's annual two billion dollars footwear export market.
Faced with mounting" antidumping cases and economic losses. Chinese trade authorities have taken some action. Guidelines for responding to dumping charges were brought into effect and within a year regulations for punishing exporters who sell products at lower than production cost will be put in place.
Officials Also stress that market elements ate rapidly increasing in the economy to the point that more than 90 per cent of commodity prices in the country are already determined by the market.
While local manufacturer^j and exporters are getting familiar with the procedures of antidumping Investigations making them more adept at dealing with the charges, officials say foreign antidumping authorities are also gainlflg a better understanding of the transitional Chinese economy. — Gemini News
iM’Xiaoming works for China Features tn Geytng.