Anti-foreign sentiments & protectionism rising

This rise in protectionism is part of the declining social mood. During the boom, people are more outgoing and adventurous and open to foreign things (and foreigners). In the bust, they become less so, and politicians take advantage of the situation, especially in democracies where pandering to voters is the norm (which is to say, almost all of them). Here's how the Chinese are increasing their aversion to foreigners:
Business Sours on China
China's relationship with foreign companies is starting to sour, as tougher government policies and intensifying domestic competition combine to make one of the world's most important markets less friendly to multinationals.

Interviews with executives, lawyers, and consultants with long experience in China point to developments they say are making it much harder for many foreign companies to succeed. They say the changes suggest Beijing is reassessing China's long-standing emphasis on opening its economy to foreign business—epitomized by the changes it made to join the World Trade Organization in 2001—and tilting toward promoting dominant state companies.

In the latest broadside against foreign firms, authorities in a wealthy province near Shanghai on Tuesday assailed the quality of luxury clothing brands from the West, including Hermès, Hugo Boss, Tommy Hilfiger, Versace and Dolce & Gabbana.

...Many foreign executives say they see an upsurge in economic nationalism, accelerated by China's world-beating performance during the recession and a new disdain for Western economic management.

...Beijing has long harbored suspicions the West wants to hobble its economic rise. Analysts say that lately, such insecurities have strengthened the hand of leaders who want to limit foreign presence in the economy.

While there are still proponents of openness, says Mr. Ross of WilmerHale, "there are louder voices pushing China to be more protectionist and to be more nationalist."
And we see the same anti-foreign sentiment in America, where the Democrats are bashing China over the currency once again. It's not all economics though. Last week, the Obama administration publicly slammed long-time U.S. ally Israel as part of a manufactured crisis.

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