The alarm bell of US protectionism rings loud
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E-mail Xinhua, September 30, 2012
A recent decision by U.S. President Barack Obama to block a Chinese-led corporation from owning American wind farms exposes the weakness of the U.S. claim that it is the most open market in the world.
Obama on Friday issued a rare presidential order to bar the Ralls Corp., a company owned by Chinese nationals, from purchasing four wind farm projects, fearing that Ralls "might take action that threatens to impair national security."
Obama's decision was based on a report by the Committee on Foreign Investment in the United States (CFIUS) that claimed that the purchased wind farm sites are all within or near restricted airspace at an naval training base.
Ralls offered another side of the picture, saying that only one of the four sites was in restricted airspace and there were other foreign wind farms in the same area.
It is not the first time that Chinese companies have fallen prey to American claims of causing national security risks.
A 2005 plan by a Chinese oil giant to bid for the Unocal Corp. was aborted due to an administrative order by the Bush administration that also cited national security risks.
Another recent case featured Huawei and ZTE, the Chinese telecom companies that were accused of stealing American trade secrets through backdoors in equipment sold by both companies.
However, the Ralls case has been the first for an U.S. president to block since 1990. The decision came at a moment when Obama is striving to consolidate his lead in a closely contested presidential election. Therefore, there was no surprise that he took such a tough stance on China at this moment.
Although a Treasury Department statement said the Ralls case is "not a precedent with regard to any other foreign direct investment from China or any other country," the presidential order would inevitably signal a disturbing message to other foreign investors, no less the Chinese ones.
Whether or not this stance would help Obama win more support is unclear, because historically speaking, such decisions would not benefit either country.
The recent tire special protection case shows clearly how American continued anti-market intervention could harm both economies.
A report by Peterson Institute for International Economics, entitled "US Tire Tariffs: Saving Few Jobs at High Cost," revealed that though creating a maximum of 1,200 manufacturing jobs, the total cost to American consumers from higher prices resulting from the tariffs on Chinese tires, which stood at around 1.1 billion U.S. dollars, not only offset the benefits, but harmed the American economy.
China has long called for more open markets and opposes protectionism. It is crucial for the world's two largest economies to work together to uphold the principle of free trade during this moment of global economic crisis.
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