CHINA Trade policy helps some, hurts others

China is being accused of violating its end of the deal when it entered the WTO.
WASHINGTON POST
HARBIN, China -- Under a pale autumn sky, Chang Wuqing unloads sacks of soybeans from the cart of his rusted tractor, dumping them onto a scale at a roadside trading lot. He nods in satisfaction at the tally: One Chinese ton at 8 cents a pound, almost twice what his crop fetched last year.
Born and raised on an isolated patch of the northeastern China plain, Chang is not conversant in the ways of global trade. He does not know that soybean prices have spiked this year because China has recently restricted imports. He has not heard about the tankers left bobbing off the coast waiting for permission to unload or the charges from the United States that Beijing is unfairly protecting its markets to increase farm incomes.
What he does know is the feeling of tucking a stack of bills worth nearly $400 into the pocket of his work jacket -- enough to buy a cow. "Better than last year," he says, speaking with the restraint of someone whose 50 years have seen bad years follow good, People's Communes give way to private plots and the constant tyranny of the weather.
The other side
But if the flat fields beyond this city now nurture something akin to prosperity, the tree-lined streets downtown tell a different story. Shoppers elbow their way through supermarkets muttering about the rising price of pork, even as most are oblivious to its cause -- a shortage of soy meal used to feed pigs. They fret about the jump in the price of vegetable oil, the result of a scarcity in soybeans for crushing, which has spawned hoarding as far away as Shanghai.
At the dumpling shop he opened this fall, Han Fenzhong complains that the rising tab for these staple ingredients is carving into his income. "I can't increase my prices," he says. "People might stop coming."
Two years after China entered the World Trade Organization, agreeing to open its markets to foreign goods in exchange for the right to sell more of its products around the globe, a simmering battle over soybeans illustrates why many countries now accuse Beijing of failing to live up to its side of the deal.
Balancing act
The case also underscores the difficult balancing act confronting China's leaders as they make trade policy: Protectionism benefiting one group often harms another by limiting the availability of goods at a time when China's relentless growth is spawning increased dependence on imports. In this case, higher incomes for 35 million soybean farmers are being paid for via higher food prices for the rest of China's 1.3 billion people.
In the central province of Anhui, one of China's poorest, people are now paying one-fourth more for pork and 10 percent to 15 percent more for oil than they were three months ago. Farther south, prices have climbed steeper still.
Though China is barred under WTO rules from imposing an outright quota on the quantity of soybeans that can be imported, U.S. officials and global trading companies contend that Beijing has effectively done so through other bureaucratic methods: Shipments have been delayed and barred outright through the manipulation of food safety standards and arbitrary requirements for administrative permits.
They say China is using the same strategy to limit the entry of foreign competitors in many other industries, such as banking, insurance and auto parts.
"Let's don't try and get cute and find different ways to put up nontariff barriers," said U.S. Commerce Secretary Donald L. Evans during his recent trip to China, adding his voice to a chorus of recent criticism from Capitol Hill, the American Chamber of Commerce and the US-China Business Council. "We need to make sure that China understands that trade is a two-way street."
How they see it
China has dismissed assertions that it is violating WTO rules, insisting that all restrictions on imported soybeans have been imposed for legitimate reasons of food safety. "China has strictly fulfilled its commitments," said Foreign Ministry spokeswoman Zhang Qiyue, speaking at a recent press briefing.
Some Chinese policy-makers acknowledge that Beijing does use trade policy and other levers to protect farmers -- something they say makes China no different from the United States, which has been doling out agricultural subsidies for generations. In recent trade talks, developing countries stepped up their demands that the United States slash its own farm subsidies and tariffs.
Likewise, China's leadership is intent on propping up incomes for its 500 million farmers. China's ongoing transition from Communism to a market system has eliminated many government subsidies, and socialized health care and education, stoking discontent in rural areas.