Monitor

YOU HAVE TO wonder sometimes whether there is an equivalent in Chinese to the English aphorism that people who live in glass houses shouldn't throw stones.

You particularly have to wonder about it when you hear Beijing announcing 'prohibitively high tariffs' on a range of imports from Japan as a tit-for-tat after Tokyo's decision to raise tariffs on some mainland farm products. Here we have the mainland economy soaring while the Japanese economy is in tatters, its industrial base eroded by foreign competition (much of it from the mainland) and its people clearly suffering. The rural vote is important to Japanese politicians and they had to make some concession to misery on the farm.

In such circumstances you would think the mainland could afford to be a little charitable, particularly with its admission to the World Trade Organisation, a tariff-cutting entity, still pending. But no, the instant reaction of the authorities in Beijing was to exact an eye for an eye and a tooth for a tooth. They are having none of this turn-the-other-cheek foolishness.

They are also, to change the metaphor, not looking at the glass house they inhabit. As the first chart shows, the mainland has boosted its share of total Asian exports from 8 per cent to more than 18 per cent over the past 15 years. Its exports are still growing while exports from almost every other country in Asia are declining.

Japan cannot do much about it, and squeals of pain from other Asian countries now seeing their export share eroded can also be scorned with ease in Beijing.

But the United States is another matter. The mainland says its trade surplus with the US is running at only (only!) US$2.5 billion a month. Washington says it is US$7 billion and we can safely treat Washington's figures as the more accurate.

Think of that. It is now well in excess of Japan's trade surplus with the US and the equivalent of HK$1.2 million a minute. The mainland's exports to the US alone are now worth more than three times Hong Kong's gross domestic product.

Meanwhile, the US has also run into economic difficulties, not least of which is a massive current-account deficit caused in good measure by all those imports from the mainland.

US Congressman are all in favour of free trade as long as it is in their favour. They are patriotic Americans first. They will brush the WTO aside in an instant if they too are goaded into demanding an eye for an eye and they will want their revenge in more than equal measure.

It is a fine precedent that the mainland has set for itself here. If it wants to throw pebbles at other people's glass houses it may get boulders crashing through its own.

Graphic: mon21xgbz