The Impact of Trade Protectionism on China’s Export Enterprise

The Impact of Trade Protectionism on China’s Export Enterprise

1. Introduction

The past several decades are commonly viewed as a period of widespread liberalization within the international trade. Besides, since reform and opening up in China from 1978 to now, over 30 years, China's economy has remained about 10% of high-speed development which called the creation of the "China miracle" (JU, 2008). During this era, China also became a big orient export country, which occupies a large place in the international market. Thus, American people considered that China export pose an economic threat to the United States even to the world. Other countries tried to use trade protectionism to limit the export from China and boost their own economy recovery. Trade protectionism means that government set up some specific barriers to trade in order to protect its own economy. However, it has a negative impact on China’s export enterprise, especially for small and medium-sized companies, so the countermeasures should be taken to resolve this issue. The purpose of this article is to explore several problems that trade protection bring to China’s export enterprises at first and then focus on some effective solutions to help these companies.

1. Situation

Because of the trade protectionism, China’s private exporters from different kinds of industry are suffering obvious reduction of profit, and they are mainly reflected in labor-intensive, low-cost exporters, tight liquidity and a low level of great ability for the cutting-edge technology (Ju, 2008). Nowadays, the form of trade protectionism became border, not only by tariffs and quotas but also by domestic subsidies, technical barriers, food safety barriers, Intellectual property barriers, green barriers and more. China export enterprises face many difficulties as follow.

1. Challenges to China’s export enterprise and countermeasures  

1. Anti-dumping legislation

One of the problems is that, after China’s entry into the WTO, there has been a rapid increase in the number of anti-dumping initiations against China, which limit the export products of China (Shen and Fu, 2014). Zeng and Liang said: “Antidumping cases are usually initiated by domestic producers who charge that foreign companies are selling at ‘less than fair value’ and, in most cases, at prices below those in their home markets” (2010). Besides the tariff, they required additional tax and frequently subjected to anti-dumping investigation which increases a huge cost of China’s export product. The reason that they carry out anti-dumping legislation is that the price of China’s product always lower than foreign countries’ local piece, so that it will influence their local economy and commercial profit. Thus, the anti-dumping legislation might increase the cost of China’s product and make China’s company lose the lower-price advantages in the international market. In addition, Most China’s small and medium-sized companies lack of other advantages except low price and lack of experience to negotiate or litigation with foreign companies, which lead them to be compelled to quit international market.