China does not play by the usual rules of business

It is not the author's intention here to provide a detailed expose on the hazards of doing business with China. The awareness that China does not play by the rules is growing as many Western businesses in China have become victims, not just of unfair practices by Chinese manufacturers and businessmen, but also by active Chinese government collusion in such schemes. Then there is the question of China's protectionism, which is a gigantic and unimaginably complicated system, featuring not only the standard state subsidies9 of exports industries, but a host of practices designed not only to undercut competitive foreign made goods but to confuse Western businessmen and politicians intending to reform it.

Subsidies come in forms of preferential bank loans among other practices. Another method is import substitution. The Chinese government rigs the market so that items being imported are produced domestically even if the cost is greater. China is also a master hand at other much cruder forms of protectionism. One U.S. government report catalogued the bewildering array of devices that China employs to block imports from the U.S. and other countries: prohibitively high tariffs from 35 to 150 percent, import licenses, import quotas, import restrictions, and certification requirements. In some cases after pressure from Congress or some federal agency, Chinese trade bureaucrats removed barriers on imports with great fanfare while simultaneously but quietly installing new barriers against the same imports. China's business "partners" hope that after China's entry into the WTO this will all change, but it is doubtful if China will ever give up such advantageous practices when Western leaders are unwilling to antagonize China, much less penalize it for offences far greater.

The Commerce Department figures released this year on March 19, showed a record US$369.7 billion difference between America's imports and exports during 2000 a 39 per cent jump on 1999. China led the way, selling some US$83.8 billion more than it imported. This trade deficit figure of $83.8 billion with China is the latest in a series of dramatically rising annual figures in the last half-decade. In the Japanese case, the deficit climbed slowly for three decades until it began falling in the mid-nineties. In China's case the imbalance seems to have struck almost overnight. In the entire postwar history of trade competition, by contrast, Japan never came close to putting the United States in such a disadvantaged position. Yet we might recall the Japan phobia that affected America in the eighties, exemplified by Michael Crichton's book and the film, RISING SUN, even though Japan was essentially a small, peaceful island nation, a democracy and a particularly close ally of the USA a near client state as far as defense was concerned. China is not only the world's most populous nation, but one that is avowedly hostile to democracy in general and the United States in particular. It is also, unlike Japan, a nuclear power that is everyday increasing its military power and aggressively pursuing an expansionist policy.

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