BEIJING Nov 14 China's top trade and investment
officials are railing against what they call a rising tide of
global protectionism t h at blocks its major companies from
expanding overseas and further integrating into the global
The officials, speaking on the sidelines of a week-long
Communist Party Congress, said protectionism was emerging across
the world, not just in the West. It damaged global growth,
frayed relations and could see China focus its investments in
neighbouring Asian nations, the officials said.
"We are against it," Industry Minister Miao Wei told
reporters on Wednesday when asked what he thought about
protectionism as he left the Great Hall of the People after the
closing session of the congress.
Commerce Minister Chen Deming had set the tone earlier last
week, deriding the "Cold War mentality" of Washington lawmakers
who urged U.S. firms in a landmark report last month not to do
business with two top Chinese telecom equipment makers because
of risks to national security.
He was followed by Lou Jiwei, chairman and CEO of China
Investment Corporation, who told Reuters a rise in protectionism
was forcing a rethink at the country's $482 billion sovereign
wealth fund, which would not spend money in countries "that do
not welcome us".
"There are other places to invest," Lou said.
Asia is a particularly favoured option for CIC, thanks to
some of the fastest rates of growth and development in the world
- which are themselves levered to China's own economic dynamism.
Li Ruogu, president of the Export-Import Bank of China,
which is a main source of loans for Chinese firms investing
abroad, complained of "added layers of protectionism" being
stacked up against China's increasingly outward-looking
Comments in between from bosses of some of the biggest
state-owned enterprises - all of which have a Communist Party
secretary at the top of their management structure - have
reinforced views in some quarters that Beijing is becoming
increasingly sensitive to protectionism.
Fu Chengyu, chairman of China's oil giant Sinopec Group
, said in London on Tuesday that politics made deals in
the West increasingly difficult.
Sinopec's rival, CNOOC Ltd, is struggling to win
regulatory backing from Canada's government for a $15.1 billion
bid for Nexen Inc. A decision has been repeatedly
delayed even though it has been approved by shareholders.
Even before the congress started, officials from
government-run think-tanks that directly feed into policymaking
had spoken to Reuters about a perceived rising tide of
protectionism and how China might best try to turn it.
China's trading partners, in turn, complain that
state-backed companies they compete with globally get unfair
support from Beijing - either through subsidies, tax breaks,
cheap bank loans, or a deliberately undervalued currency.
Since joining the WTO in 2001, China has had 29 complaints
of unfair trade practices brought against it. Around two thirds
have been launched by the United States and the European Union,
with others coming from a mix of developing and developed
Foreign analysts though see recent rising rhetoric driven by
political transition in both Washington and Beijing, a rash of
troubled cross-border takeovers and the toughest conditions in
three years for the country's export-focused factory sector.
"This is playing to a domestic audience in the sense that a
lot of manufacturers, a lot of exporters, aren't doing too well
and they are putting pressure on the Ministry of Commerce to do
something," Alistair Chan, an economist at Moody's Analytics,
"There isn't a lot that the government can do to help global
demand, but one thing they can do is advocate for less
protectionism. In terms of an actual trade war, I think that
risk is quite minimal."
China's economy depends heavily on trade and investment
flows. Exports were worth about 31 percent of GDP in 2011,
according to World Bank data, while an estimated 200 million
Chinese jobs are in the export sector or supported directly by
China's rapid rise to become the world's biggest exporter
and its second biggest economy in the space of barely three
decades since landmark economic reforms began in the late 1970s
have sparked concerns among the developed economies it is
eclipsing and the emerging markets which it dwarfs.
The U.S. election campaign was notable for China-bashing.
Defeated candidate Mitt Romney had promised to label Beijing a
currency manipulator if he won and while President Barack Obama
was less confrontational, he cited his credentials as bringing
more trade cases against China than his predecessor.
There is a widespread view in the United States that trading
with China has caused American firms to slash jobs.
The Economic Policy Institute, a think-tank focused on the
needs of low- and middle-income workers, reckons that 2.7
million jobs were lost in the United States between 2001 and
2011 as a result of increased trade with China - 2.1 million of
them in manufacturing industry.
Meanwhile research from consultancy Rhodium Group in
September analysed 600 Chinese direct investment transactions in
the United States between 2000 and 2012, concluding that U.S.
units of Chinese majority-owned firms directly supported 27,000
Assuming a steady investment trend, Rhodium reckons that
number would jump to 200,000-400,000 by 2020.
Beijing is targeting outbound direct investments of $560
billion between 2011 and 2015.
Analysts estimate China could spend $2 trillion globally on
FDI in the next 10 years, a salivating proposition for many of
the world's top economies struggling for growth and employment
opportunities - but a risk for politicians who see
government-backed entities on the hunt for strategic assets,
Andrew Morris, managing director of UK fund firm Signature,
reacted to news earlier this month that CIC had taken a
10 percent stake in Heathrow Airport by lambasting the British
government for not doing more to preserve "our nation's prized
assets... being hoovered up by 'foreign powers'."