Is It A New Local Protectionism To Encourage The Purchase Of Local Products?

In the context of the financial crisis, many local governments have introduced policies to promote local economic development, including measures to encourage residents to buy products from local enterprises.

The introduction of these measures has aroused heated debate. Some voices believe that this is the new local protectionism in the name of dealing with the financial crisis. Many people think that this is a very "government bailout" and a way to promote economic recovery.

Behind the controversy, what left people thinking about is the financial crisis. How should the pieces of the executive power of the government be arranged on the chessboard of expanding domestic demand?

The local government has frequently introduced measures to encourage purchases of local products. The financial crisis has brought great impact on the local economy.

Take Jilin Province as an example, although there are not many export processing enterprises in the inland area, the key industrial enterprises are difficult to sell because of the heavy industrial structure.

Automobile, steel, chemical fiber and other industries have been hit harder. Last year, export orders for auto parts were reduced by 60 million US dollars.

The difficulties faced by enterprises have increased the administrative aid to local governments, and a series of measures to promote economic growth have been introduced. Some provinces have issued a number of policies in a month.

Studying the initiatives of these local governments, we find that many local governments almost invariably promote consumption of local products as an important part of stimulating domestic demand and ensuring growth.

Anhui Province, in a document supporting the development of industrial economy, stipulates that enterprises should be encouraged to use provincial industrial equipment in accordance with the technical requirements of the project in the construction of infrastructure and technological pformation projects, and that party and government organs and institutions at all levels should be encouraged to purchase provincial production cars listed in the catalogue of independent innovation products of the province, encourage city taxis to use cars produced by local enterprises, encourage enterprises to actively use the steel products produced in this province, and promote the sale of agricultural machinery and fertilizer produced in this province to the rural market on the basis of promoting household appliances to the countryside.

Changchun, Jilin Province, issued a document entitled "the highest gold content in policy history". It encouraged enterprises to accelerate technological innovation and industrial restructuring through the financial crisis, and promoted industrial upgrading. At the same time, it also made specific provisions for supporting local enterprises, such as encouraging government procurement and counties, cities, districts and development zones to choose local vehicle products according to the prescribed standards when buying and scrapping and renewing vehicles.

For newly purchased local car products and users in Changchun, the inspection fee and verification fee will be waived.

Many of the eastern coastal areas, which are more impacted by this crisis, are actively encouraging the purchase of local products, which can often be seen in some provincial and regional leaders' speeches.

Hangzhou, the first city to distribute consumer coupons, also stipulates that in order to encourage consumers to buy local products, 4 types of local products, such as color TV, refrigerators, washing machines and mobile phones, can enjoy 18% concessions at the designated outlets, and 13% of them are subsidized by the financial sector.

Encourage the policy to arouse the challenge of "new local protectionism", and promote the intensive introduction of local product sales policy, which has aroused public concern and caused controversy.

Some media have questioned these practices.

Search on the Internet will also see many netizens posting different views.

The focus of the debate is whether this is a new local protectionism.

Mention of local protectionism is a headache for many enterprises.

At the beginning of reform and opening up, China has just entered the market economy. Local protectionism was once popular. It was described by the media as "the economy of the princes" and artificially formed some market blockades, which made the sales expansion of enterprises more hindrance.

With the development of market economy, these barriers are gradually being demolished.

But under the background of competing development everywhere, local protectionism cases also happen frequently.

A few years ago, in the form of red tape, the government of Hanchuan, Hubei, advocated the use of local "little silly Fairy" series of wine by the official reception, and decomposed the task in layers, and set up rewards and punishments, which was widely criticized by the public.

The case is still fresh in the memory.

On the Internet, many netizens posting believe that in today's increasingly mature market economy, the use of government administrative means to guide the consumption of real estate products, seems to have local protectionism suspicion.

"Preferential treatment for the purchase of local products makes it easy for foreign businesses to suffer losses."

A netizen posting said.

A writer named Wo Dao commented that in the prosperous economy, local protectionism is easy to be curbed, and in the current economic difficulties, this kind of selfish interests of local interests is most likely to spread.

Local protectionism has a certain degree of "infectious". Under the universal logic of unwilling to lose, local protectionism is likely to become an important measure to save the market everywhere.

In the context of the financial crisis, the government has questioned the way to protect local protectionism in expanding domestic demand. Many people believe that this is a temporary measure of "self-help" implemented by local governments under the financial crisis and should not be labeled with local protectionism.

A staff member of the general office of the Jilin provincial government told reporters about his personal view: "it should be said that the local governments made good intentions in formulating these policies, in order to make the enterprises better survive in the financial crisis, rather than protect the competitors in the competition with the foreign enterprises.

Moreover, many incentive policies are introduced in the case of a sharp shrinkage in demand market and difficulties in both local and foreign enterprises. Even if these policies do not exist, consumers will not rush to buy foreign products.

Bi Zinan, deputy director of the Institute of industry and finance of Northeast Securities Limited by Share Ltd, believes that supporting local products is a measure taken by local governments to tide over difficulties with the enterprises in the financial crisis. These policies are only encouraging, not mandatory, nor have they set artificial limits on foreign products.

"The government subsidies and concessions are actually also using the tax paid by local enterprises, which is a gift package sent by the government to enterprises, which can be regarded as an indirect way to help enterprises to offer discounts."

The relevant experts believe that, in view of the debate on local protectionism, on the one hand, local governments should be widely consulted when making such policies, make necessary adjustments according to their opinions, avoid the negative effects of policies as much as possible, and increase the propaganda effect of policy effects so as to make the society more aware of the relevant ideas and applicable scope of policy formulation. On the other hand, jumping out of this debate should also cause the government to think about how the administrative hand can play a better role in promoting domestic demand in the financial crisis.

"In the context of financial crisis, it is the time when the executive hand of government should play its full role. The key to this function is guidance."

Liu Houjun, an Administrative College of Jilin University, said that in promoting domestic demand, it should also play an administrative role in the following aspects: first, while helping enterprises expand their market space, they should also introduce policies that bring benefits to consumers and protect consumers' interests, and introduce more preferential measures to promote consumption upgrading in terms of vehicles, housing and household appliances.

The two is to encourage production enterprises to adjust their product mix, eliminate backward production capacity, ensure that consumers can buy more good quality and inexpensive products, and the three is to conduct more commodity docking activities in the form of exhibitions, so as to open up market outlets for local and foreign enterprises, expand channels at the same time, and promote the docking between production and marketing.

Wang Xiaonan: editor in charge