The new trade row Washington initiated with Beijing is a sign of increasing US anxiety over its huge trade deficit. Such a combative mood will not help solve its problems.

 

On Friday the US Department of Commerce announced that a preliminary decision had been made to apply the anti-subsidy law on some China imports, which means a penalty duty will be slapped on specific items.

 

The department said the move is being made to offset the subsidies the Chinese government has granted to some manufacturers.

 

The decision alters a 23-year old US practice of not applying its duty law to non-market economy countries, including China, according to Washington's standards.

 

The rare move, understandably, comes from increasing US concerns over its huge trade deficit. It is not surprising given the intensifying pressure on the Bush administration from the Democrats, who require bolder moves to narrow the US trade deficit.

 

The United States often resort to anti-dumping charges to protect industries battered by the global economy. When business interests have their say, the US has not hesitated to change established precedents.

 

With the latest move, Washington has gone against the consensus reached by leaders of both countries, which advocates resolving differences through dialogue.

 

Labeling China a non-market economy, the United States has quickly and wrongly labeled all Chinese sectors as non-market-based. It claims they are supported by government grants, bailouts or low-interest loans.

 

As China is improving its market economy, an increasing number of industries have become market-oriented. They have grown out of competition, not government subsidy.

 

The anti-subsidy measures will increase the cost of Chinese products sold in the US, but will not increase the competitiveness of US manufacturers. They will continue to operate at a disadvantage in competition with low-cost Asian rivals.

 

The higher cost of US manufacturing, together with the country's block on exports of its high-tech products, with their high value- added prices, is a fundamental cause of the trade imbalance.

 

The differential reflects the reality of the division of labor as the world economy develops, not the so-called unfair subsidy by the Chinese, or whatever, government.

 

(China Daily April 2, 2007)