Trade barriers are government-imposed restrictions on the movement of commodities or services across borders. Limitations to trade are sometimes overt, but they are primarily covert and undetectable. China imposes several taxes and regulations that make commerce difficult. There are two main obstacles to trade: tariffs and non-tariff trade. Import duties increase the cost of imported items as opposed to indigenous products, while non-tariff trade obstacles refer to supplementary payments. China’s forms of the trade include rules, restrictions, and license demands. China is among the most active nations regarding trade barriers compared to other nations, maybe due to the state’s efforts to safeguard the fragile nature of the country’s ongoing economic expansion.
Reasons why the Government of China Imposes Trade Barriers
China imposes trade limitations to protect domestic jobs. The process can be accomplished by putting restrictions against low-cost imports from other nations, which might quickly weaken domestically manufactured goods due to a cheap workforce and loss of employment among locals. The government of China also introduced trade restrictions by raising the price of imported commodities above those of domestically manufactured items and services (He et al., 2019). China charges high tariffs on imported items, decreasing consumer demand for such commodities, and making it impossible for foreign companies to raise prices. Additionally, the administration erects numerous trade obstacles to keep foreign goods out of the nation so that the developing industries can develop and prosper. China has the right to enforce regulations on specific corporations and even prohibit them from making deals in their own countries if the technique is insufficient. New firms are expanding but do not yet have a strategic advantage.
China’s government implemented trade restrictions to prevent the influx of manufactured commodities in other nations at prices under the average cost of manufacturing in the market or products that have been banned because of restrictions in other nations. However, the county’s economy benefits by preventing the circulation of commodities that could harm consumers’ well-being and impede economic progress (Liu et al., 2020). The administration can raise money from selling foreign products in the nation while simultaneously reducing their use by imposing trade barriers such as tariffs on the products.
Impact of Trade Barriers on Trade Balance, Employment and Economic Growth
The state’s imports and exports ratio makes up the commerce equilibrium. Whenever a nation erects protectionist measures, the trade balance is severely harmed because imports are dramatically reduced relative to exports due to the limitations. Trade restrictions, particularly in China, lead to high job opportunities (Zhu, He & Gu, 2021). However, domestic companies can produce more items and services while keeping out inexpensive imports from the global market, which leads to a considerable increase in domestic employment. Trade restrictions significantly reduce the country’s economic effectiveness, leading to reduced economic development. The principle of comparative advantage allows a state to manufacture products at a cheaper cost than its rivals. The government can deploy comparative advantage to permit international commerce because obstacles impact the balance and result in overall economic dysfunction.
Arguments for Trade Barriers in China
Trade barriers prevent China from competing fiercely with imported items that are developed more affordably than local ones, which would cause people to favor foreign goods. China puts trade restrictions to enable developing sectors to thrive in an economy which operates efficiently and has fair competition through the limitation of the oversaturated market with imported products and services. Trade restrictions can also help local industries grow and generate more possibilities for creating jobs for locals as the state limits the importation of cheap labor from other nations. Furthermore, trade limitations support domestic sectors and offer the necessary financial support to accelerate their development, which contributes to the expansion of the entire economy (Zhu, He & Gu, 2021). Trade limitations can lead to national security since the Chinese administration can erect restrictions to stop the importation of declined items from other nations that threaten the provision of products made locally. Trade restrictions are typically designed to safeguard domestic manufacturers or advance political objectives.
Arguments against Trade Barriers in China
Trade restrictions can eventually cause China’s imports to decline due to the smaller number of corporations providing the necessary products and services. As a result, it leads to the dominance of the economy and the imposition of higher pricing on local customers. Additionally, given that fewer manufacturers of products and services are available in the market, companies are not subject to any rivalry from alternative commodities and thus lack corresponding (Liu et al., 2020). China can face less rivalry because its industry is secure, regardless of whether companies create high-quality items or otherwise. Trade barriers ultimately lead to a weak economy that cannot accommodate ready and capable working citizens. Trade restrictions impact the state’s import and export flows, slowing industrial development. Costs are improved due to import tariffs for both consumers and businesses. A manufacturer or distributor might need to spend more money to get the products and run their company efficiently.
He, R., Zhu, D., Chen, X., Cao, Y., Chen, Y., & Wang, X. (2019). How the trade barrier changes environmental costs of agricultural production: An implication derived from China’s demand for soybean caused by the US-China trade war. Journal of Cleaner Production, 227, 578-588.
Liu, L. J., Creutzig, F., Yao, Y. F., Wei, Y. M., & Liang, Q. M. (2020). Environmental and economic impacts of trade barriers: the example of China-US trade friction. Resource and Energy Economics, 59, 101144.
Zhu, X., He, C., & Gu, Z. (2021). How do local policies and trade barriers reshape the export of Chinese photovoltaic products? Journal of Cleaner Production, 278, 123995.