The cracks in China's trade relationship with the United States were showing long before America's announcement this week of pending import restrictions on Chinese textiles.
As major trading partners, both sides are buying more than ever from the other, although the increase in Chinese exports has been steeper. The US buys about a quarter of all the goods China manufactures, running a trade deficit of US$103 billion last year. Hoping to stem what it sees as a growing tide of Chinese goods, the US has for months been rallying international opinion behind its case for a rise in the value of the yuan. Now that the campaign has met mixed success, the US is opening another front.
The irony is that the new sanctions are made possible by a provision China agreed to in order to enter the World Trade Organisation. The anti-surge mechanism allows any WTO member to impose temporary quotas on Chinese textile imports if they are causing market disruptions. The three categories included in this week's announcement account for relatively little of the bilateral trade, but the US move signals a dangerous turn towards protectionist tactics, one that stands a greater chance of sparking a trade war than even this summer's strong rhetoric on the yuan.
Under the WTO's multi-fibre agreement, import tariffs on textiles will be lifted by 2005 - and China is expected to be the biggest winner. American companies which manufacture clothing and textiles will see this week's decision as a sign the Bush administration will be willing to step in to protect them from competition when the barriers come down. Other American industries which have been petitioning for redress, including furniture makers, will be emboldened.
To a great extent, the tough talk on the yuan and the imposition of textile sanctions, much like the steel tariffs which have recently been declared illegal by the WTO, are attempts to appease powerful domestic lobbies worried about job losses. As the US presidential campaign gathers pace, playing to the industrial heartland that put him in office has to be a consideration for Mr Bush. If he fails to do so, his opponents surely will. Yet some American business groups are sceptical the textile restrictions will bring back jobs - seeing it as more likely they will be diverted to other low-cost centres in Asia and Latin America - while others fear rising prices.
The decision allows some room for manoeuvre, as it calls for negotiations before the sanctions come into force. But it does cast a shadow over Premier Wen Jiabao's visit to the US next month, during which he is expected to announce large-scale purchases from the US. It would be a shame if protectionism were allowed to disrupt the world's most important bilateral relationship.
