China Trade Barriers and Their Economic Effects

Based on the Chinese government’s standpoint, is it logical to impose the trade barrier?

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China is one of the most promising markets and it can affect the development of the global market. Palmer (2010) notes that the USA as well as other countries express their concerns as to China’s policies that favor Chinese companies at the expense of foreign firms. Thus, China continues its policies aimed at setting certain trade barriers and it introduces some “financial tools” in the local currency (Ditching US dollar, 2014, n.p.). It is necessary to note that setting trade barriers can have both positive as well as negative implications for the country. However, it is also possible to add that the Chinese standpoint is quite logical.

On the one hand, the country needs to be integrated into the global market to be able to export its products and benefit from trade links with other companies and countries. At the same time, complete integration can be quite hazardous as it can make the country vulnerable to another financial crisis. Therefore, China is trying to protect its interests and enable its economy to develop irrespective of some trends that occur in the global market. More so, the country also needs to support the development of its economy and, hence, it needs to support local companies.

Of course, in some cases, China might have supported local businesses at the expense of foreign (especially US and European) companies, which is inappropriate. International organizations such as the WTO have the necessary tools to make China or any other country more responsible. Thus, the policies aimed at keeping the Chinese currency undervalued can make the international regulator impose certain fines or restrictions, which can harm the Chinese economy. Thus, even though setting trade barriers is quite logical, it should be held in a reasonable way making sure that the economy is developing and all regulations are met.

Nowadays, China drives the global economy. So if the trade barrier is reduced, the Chinese economy will go down and affects the economy of the whole world. Do you agree or disagree with this argument?

There is a concern that if China reduces trade barriers, its economy can be negatively affected, which, in its turn, will lead to significant issues in the world economy. This statement can be true especially if the reduction of trade barriers will be significant.

On the one hand, Shedlock (2015) states that the US economy, as well as economies of several developed countries, are close to recession and China’s trade barriers contribute to this process. Exports from the USA to China have reduced significantly, which makes the US economy slow down its development. Other countries that are operating in the global market are also vulnerable and they also face a certain slowdown. This situation can potentially lead to another global financial crisis, as economies will be in recession.

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On the other hand, if China reduces its trade barriers, products from other countries will flee the Chinese market and Chinese businesses will be unable to compete (due to various reasons such as quality, price, and so on). Other countries’ economies will go stronger, but the Chinese economy is likely to be in recession. At present, China has become quite an important player in the global market and its recession can also lead to the slowdown in the development of other countries’ economies.

Therefore, it is clear that trade barriers are quite necessary to keep the balance and make sure that the economies of different countries are properly developing. Of course, excessive barriers can negatively affect the development of the global market, and countries as well as international regulatory bodies have to collaborate effectively with each other.

Reference List

Ditching US dollar: China, Russia launch financial tools in local currencies. (2014). RT. Web.

Palmer, D. (2010). China trade barriers a serious concern: US aides. Reuters. Web.

Shedlock, M. (2015). Unexpected collapse in Chinese trade; Expect more currency manipulation claims; Impact on US GDP. Web.

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