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Provincial Wars Over Trade Concern Chinese

By Ann Scott TysonStaff writer of The Christian Science Monitor / October 18, 1990


CHINA'S leaders are battling an outbreak of regional trade protectionism that is carving the nation's economy into ``fiefdoms'' and reviving age-old fears of warlordism and political partition. Throughout the country, local governments backed by police and armed militia are waging inter-provincial trade wars by setting up illegal blockades against nonlocal products, Chinese officials say.

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``The current wave of protectionism is the worst in the last 40 years in terms of the variety of barriers and scope of products involved,'' says Zhang Caiqing, a Commerce Ministry official who monitors domestic trade. ``It exists to a certain extent in every province.''

From China's rugged northwest to the eastern seaport of Tianjin, regions have banned the import of scores of goods ranging from bicycles and washing machines to soap, according to officials and state press reports.

Local authorities in different provinces have set up thousands of checkpoints to screen incoming traffic along roads and waterways. The roadblocks collect so much cash through hundreds of indiscriminate fines and fees that some areas call them ``smokeless industry,'' official reports say. (See story below at right.)

To force consumers to shop locally, some regions have illegally minted their own currency. Others have ordered factories to buy quotas of native products and threatened to cut off the electricity of companies that smuggle in outside goods.

Trade protectionism is one response of financially strapped local governments to a nationwide austerity drive begun in September 1988. Austerity has caused China's worst market slump in a decade, doubling losses at state enterprises as the value of stockpiled goods leapt 50 percent to $23 billion. Regions are scrambling to shore up falling revenues and protect local jobs.

But the ``wattled walls'' rising between regions signify far more than a reaction to a sluggish market, Chinese officials say. Historically, they symbolize a resurgence of ancient, centrifugal forces that have challenged rulers of this vast country since Emperor Qin Shi Huang first unified China in 221 BC.

Internal documents have identified the rich, free-wheeling southern province of Guangdong as a possible hotbed for secession, Chinese sources say. ``The pursuit of [regional] interests, if unchecked, will lead not only to economic separatism but also to ... the creation of `impenetrable,' independent kingdoms,'' wrote Labor Ministry official Dang Xiaojie in a recent book entitled ``Economics of Bloc Authorities.''

Today, the trade barriers also represent the distortions of an economy caught between central planning and a market system, as China's leaders wrangle over whether to reimpose state controls or advance market-oriented reforms. Communist Party conservatives blame the blockades on a misguided dispersion of economic powers by the central government to regions since 1979. ``There has been too much decentralization,'' warned Yuan Mu, the conservative spokesman of the State Council, China's Cabinet, last month. ``Our urgent task is to correct decentralization, the carving up of the market, and regional blockades,'' Mr. Yuan told the official People's Daily.