China versus US on trade protectionism

Donald Trump has clearly signalled a far more protectionist stance on trade. He is scrapping the Trans Pacific Partnership, and wants to renegotiate the North American Free Trade Agreement.

In his inauguration speech Trump said:

For many decades, we’ve enriched foreign industry at the expense of American industry; subsidized the armies of other countries while allowing for the very sad depletion of our military; we’ve defended other nation’s borders while refusing to defend our own; and spent trillions of dollars overseas while America’s infrastructure has fallen into disrepair and decay.

We’ve made other countries rich while the wealth, strength, and confidence of our country has disappeared over the horizon.

One by one, the factories shuttered and left our shores, with not even a thought about the millions upon millions of American workers left behind.

The wealth of our middle class has been ripped from their homes and then redistributed across the entire world.

But that is the past.

From this moment on, it’s going to be America First.

Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families. We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs. Protection will lead to great prosperity and strength.

I will fight for you with every breath in my body — and I will never, ever let you down.

We will follow two simple rules: Buy American and hire American.

He followed that with “We will seek friendship and goodwill with the nations of the world” which may be a hard deal given his rhetoric on trade.

In contrast Chinese President Xi has recently talked in support of globalisation and against protectionism at the World Economic Forum in Davos.

“Protectionism is like locking yourself in a dark room, which would seem to escape wind and rain, but also block out the sunshine. No one is a winner in a trade war.”

NZ Herald: China’s Xi warns against trade war in defense of globalisation

Xi used his speech to support a global economic order that has helped fuel China’s almost four-decade economic boom.

The Chinese president called on the world’s business and political elite to address the problems of globalisation, without turning away from economic trends that have fueled decades of growth.

Leaders should address the excesses of growth, such as growing wealth gaps, while embracing new industries and innovation, he said.

“There is no point in blaming economic globalization for the world’s problems because that is simply not the case, and that will not help to solve the problems.”

“The history of mankind has shown us that problems are not to be feared. What should concern us is the refusal to face up to the problems.”

Globalisation has lifted a huge number of people out of poverty in places like China and India, but it has created problems as Xi acknowledges.

With the US under Trump clamping down on trade agreements this will force China to look for other markets, and gives China an opportunity to become more dominant around the world.

More introspection and trade protection may work for the US,  and the world needs a healthy US economy, but the rest of the world may also learn to get by more with less US trade and influence.

In Communist China now more pro free trade than the US David Farrar says:

What a funny world where we live where the leader of the Communist Party of China is more pro free trade than the leader of the Republican Party of the United States.


It is a major turnaround, but i don’t know why one should be sad about it. When one door closes another opens – New Zealand has long experience with trying different trade doors.

It will be interesting to see how this pans out.

Leave a comment


  1. Alan Wilkinson

     /  22nd January 2017

    China itself has to become less dependent on exports and continue to grow its internal economy so ironically its interests are not so dissimilar to Trump’s agenda.

    • David

       /  22nd January 2017

      Not going to happen. China is now built on a mercantile export policy with an over valued currency resulting in the cash that flows into China from export, flows back out as property investment in the west.

      Not to mention the vast internal debt.

      Trying to untangle that mess will be destabilizing for China, so that is the very last thing they will do.

      • Fascinating comment David, thanks for making it …

        So in a sense Xi’s defence of globalisation is as ‘political’ as Trump’s offence in protectionism?

        And China, of all places, may be the ultimate example of private profit, public risk [debt]?

        If we’d had a more rational balance of public & private, capitalist & ‘socialist’ [whatever] for the last 30+ years, Oxfam estimates an additional 700 million people would have been “lifted out of poverty” …

        Although I must say I find the idea of exchanging a [potentially] sustainable money-less village or community or regional eco-system for $1 or $2 per day wage slavery as a very dubious measure of progress …

      • Alan Wilkinson

         /  22nd January 2017

        It is going to happen, but of course gradually, not at a stroke. China has already clamped down on outflow investments. An internal debt can be dealt to via inflation. China has external assets, not debt.

  2. patupaiarehe

     /  22nd January 2017

    To get some perspective, take a look at this
    That ship sails between China & the US, taking goods in one direction & empty containers in the other. I’ve heard that there are 6 others, doing the same circuit…

  3. Take a look back at the investment China is making on the resurrection of the “Silk Road: and the “Single Belt” strategy before dismissing their mid to longer term development. Their estimated growth of 6.5% in GDP is significant. Look also at what Xi is doing to Macau’s money laundering stream. his pressures on Hong Kong, Singapore and Taiwan. An overvalued currency, yes, but what about the $US? At least they are anti-Islamic extremists and have a Global vision similar to 19th Century Great Britain and know that “he who rules the heartland rules the world” Trumps Wall pales in comparison to what China achieved, how many thousands of years ago?


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