Chinese exporters will continue to face increasing trade frictions in the second half of 2013 and in 2014 amid escalating trade protectionism moves and an uncertain economic recovery, said a report released on Monday by PricewaterhouseCoopers China.

 

Regarding the prospect of trade remedy cases targeting Chinese exporters, Damon Paling, trade and customs partner at PwC China, told China Daily that there's an increase in the overall (trade-remedy) cases, not just the frequency of cases.

 

"And the second trend is that we probably see increasing trade friction from emerging countries, such as Mexico, Brazil and India," he added.

 

China was the most-frequent target of trade remedy investigations in the past 17 years. In the first half of this year, China was hit by a total of 39 trade remedy investigations from 15 countries and regions, which  "dented China's efforts to further expand its foreign trade", Xu Shaoshi, minister of the National Development and Reform Commission, China's top economic planning body, said in late August.

 

Xu added that the foundations of the global economic recovery are "still very fragile" with a sluggish recovery in developed economies and slow growth in emerging ones, which strengthened protectionist moves in trade and investment.

 

In 2012, 21 countries launched 77 trade remedy investigations against China with the total amount involved at about USD 27.7 billion. This was an increase of 11.6 percent year-on-year in the number of investigations and an increase of 369 percent in value compared with 2011, according to the Ministry of Commerce.

 

Overall trade in the world's second-largest economy rose 6.2 percent year-on-year in 2012.

 

Last year, emerging market countries launched 54 trade remedy probes against China, accounting for 70.1 percent of the total investigations.

 

Elton Huang, domestic market initiatives tax leader at PwC China, echoed that view, adding that a lack of innovative technology and manufacturing forecasting capabilities remain a weakness of some Chinese companies, contributing to an increase in trade friction.

 

"The gap between Chinese products' technical parameters and international standards still exists. Blind investment in production capability without proper forecasting mechanisms only leads to overcapacity," Huang said.

 

Chinese manufacturers and exporters should respond more proactively to disputes and investigations through revisiting business models and restructuring supply chains as both developed countries and emerging markets are taking action to restrict imports and encourage their own exports, PwC China said.

 

Regarding responses to trade remedy investigations, Paling said that in addition to preparing proactive responses to an investigation, meticulous planning is crucial to mitigating risks before an investigation is initiated. 

 

Best practices include making a self-assessment of dumping risks, understanding export measures and the overseas market environment, and exploring alternative export models, if needed.

 

Wang added that Chinese companies should firmly develop new competitive edges in branding, marketing and innovation while increasing investments in their export destinations to reduce friction risks.

 

Meanwhile, the Ministry of Commerce said on Monday that it will impose preliminary anti-subsidy duties of up to 6.5 percent starting on Sept 20, following much heftier anti-dumping duties — used for goods sold below 

 

market value — of 53.3 to 57 percent on US polysilicon in July. 

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