Global Financial Crisis And Trade Protectionism

The financial crisis arising from the subprime mortgage crisis swept rapidly from one region to the entire world, from industrialized countries to developing markets, and from financial industries to entity economy in late 2007. As a result, import of advanced economic entities decreased dramatically, bringing down international trade in emerging markets and developing entities, which led to complicated situations with economic recession and trade decrease, economic crises and unemployment. Upon this, governments fell back to trade protectionism to stipulate their staggering economies.Affected by the recession of entity economy in advanced entities such as EU and Japan, and developing countries geographically around us, China's import experience a straight dunk, causing bankruptcies of medium to small sized foreign trade companies and related enterprises and a rise of unemployment. And all kinds of trade protection measures following the crisis made the situation even worse.This paper discusses the new characteristics of trade protectionism following the financial crisis and its impact on the social and economic development of China and economic globalization, reviews the emergence and development of trade protectionism, and WTO's schemes for eliminating trade protection gradually and promoting free trade. Upon all the analyses, the article puts forward its suggestions to China to make use of the WTO schemes to lessen and eliminate the impact of the crisis and the accompanying trade protection measures on its economy.The article is composed of four parts. Part I, Theories of Trade Protectionism, introduces the history and social and economic circumstances of theories of mercantilism, the infant industry argument for protection, the hyper-Keynesian policies and the neo-protectionism in trade policy. Part II, Trade Protection in the Financial Crisis and its Causes, through analyses of the Smoot–Hawley Tariff Act during the 1930s Great Depression, and the sub-prime mortgage crisis in 2007 and their relations with the encouragement to"Buy American", reveals the causes of trade protection in the crisis. Part III, Characteristics and Impact of the Trade Protectionism in the Financial Crisis, discusses characteristics of complexity, concealment, active government interference, etc., and their impact on the world economy, esp. on the Chinese economy. Part IV, Countermeasures to the Trade Protection in the Financial Crisis, puts forward the author's suggestions on measures that could be taken both by the state and businesses against the trade protection in the financial crisis.