Yesterday the mainland's vice-minister for commerce, Jiang Zengwei, vowed Beijing would not operate a 'Buy China' policy to discriminate against imports.
His pledge will encourage foreign executives, who have been worried the mainland government will try to protect local industries from competition during the downturn, for example by requiring infrastructure contractors to buy only domestically made equipment and materials.
But his stance should also hearten domestic companies. Although supporting domestic producers might sound like a sensible idea, protectionist policies from Beijing would do the mainland economy far more harm than good.
At first glance, it might not look like it. External demand is crumbling. In December, mainland exports were down 2.8 per cent compared with the same month in 2007. And judging by yesterday's trade data from Taiwan, it looks as if things will get considerably worse before they get any better.
Because Taiwan's exports typically consist of sophisticated components sent to the mainland for final assembly before onward shipping, Taiwan's exports usually lead the mainland's by several months.
With Taiwanese exports down a sickening 44 per cent last month, the outlook for mainland export figures is increasingly grim. Economists at Goldman Sachs are forecasting a 25 per cent year-on-year slump for January (see the charts below).
Although part of that decline will be attributable to Lunar New Year distortions, it would still be understandable if mainland officials concluded that Chinese companies needed all the help they could get and decided to shut out imports to support domestic demand for local products.
