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No 'Buy China' rule for stimulus plan

THE central government will not mandate a "Buy China" policy under its economic stimulus plan in response to a US proposal that might restrict some purchases, a senior Commerce Ministry official said yesterday as he urged other countries to resist trade protectionism.

"In a time of globalization, no one country can satisfy its own market with its own production," Vice Commerce Minister Jiang Zengwei told a press conference in Beijing.

"Every country should develop international trade, as only by doing so can each nation make the best use of the distinguishing features of its economy," he said.

The remark came after some US law makers proposed a "Buy American" provision in a stimulus package now under consideration by Congress that would require major spending projects to favor US iron, steel and manufactured goods over imports.

The US Senate last week watered down the provision in the latest version of its stimulus bill after the measure was challenged by governments from the European Union to Canada. With US President Barack Obama warning of a trade war, the bill was reworded to say America will comply with existing trade agreements. A final stimulus bill is still being negotiated.

Jiang said China would treat domestic and foreign goods equally, as the nation tries to boost domestic consumption to spur economic growth at a time when exports and investment are declining.

He pointed out that, although more than 80 percent of China's goods come from domestic sources, the country still needs to import industrial raw materials, luxury items and farm products.

Zhang Xiaoji, a foreign economic relations researcher at the Development Research Center of the State Council, a think tank under the Cabinet, also warned of the perils of protectionism.

China, which relies heavily on exports, will suffer a heavy blow if trade protectionism grows in the face of the deepening global crisis, he said.

Zhang told Xinhua news agency that China's own massive stimulus package will "certainly give a shot in the arm to the country's imports."

"We should not only oppose trade protectionism in other countries but also support global trade ourselves," he said.

China unveiled a 4-trillion-yuan (US$586 billion) stimulus plan in November to boost domestic demand and spur growth. Most of the investment is directed at infrastructure.

The Ministry of Commerce yesterday unveiled several new measures designed to invigorate the domestic economy, including lowering distribution costs by supporting the logistics sector and developing goods that are less expensive and more reliable, particularly for the rural market.

The ministry also plans to improve the quality and quantity of the largely underdeveloped small-scale retailers in the countryside to spur spending and create jobs.

China's 700 million rural population was targeted recently by the government's economic stimulus measures.

About 20 million rural migrant workers have lost their jobs in recent months, and farmers in the nation's north are being battered by a severe drought.

Vice Commerce Minister Jiang said he believes there will be substantial consumption growth as soon as the stimulus plan is fully functioning.


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