2009-02-18

Buy Local

One of the arguments against blocking free-trade is that, if it's so beneficial for the U.S. to restrict trade with China, Europe or Japan, won't it be just as beneficial for New York to restrict trade with California or Michigan? While the U.S. federal government now leans towards protectionism and the Chinese central government pushes free trade, the states and provinces are reversed.
Provinces trot out 'buy local' campaigns
The government of Anhui, a relatively poor province in eastern China, has one of the most specific "buy local" policies, according to a notice dated Feb 11.

Anhui ordered car manufacturers to buy steel from within the province. Construction and home appliance manufacturers must "cooperate" with local steel giant Ma'anshan Steel beginning in March, and power plants must buy coal from within Anhui from April onwards.

"Provincial governments are a bit nervous these days and may try to fall back on this type of planned approach," said Macquarie Research analyst Henry Liu, adding that local governments often try, and fail, to promote the local steel mill.

"But construction companies aren't stupid. They want the best price. Everyone works for a profit these days."

...In many Chinese provinces, the leading firms may be partly owned by the province, creating an incentive for provincial governments to protect their own as they struggle to maintain economic growth.

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