Just as central bankers in major economies are expressing concerns about emerging inflationary pressure, suspicion is rising that China will export inflation to the rest of the world.

Though a surprising counterpoint to the unfounded accusation that China was an exporter of deflation several years ago, the new scepticism towards Chinese exports unfortunately smacks of the same myopia that fails to put in perspective the impact of China's rise as a global manufacturing power.

Worse, growing protectionism that actually pushes up prices in developed countries is fuelling the fabricated charge that mistakes Chinese exports as the source of inflation.

The ongoing anti-dumping measures the European Union (EU) has taken against Chinese shoe producers are such a case in point.

On Tuesday, a delegation of Chinese shoemakers attended a hearing organized by the European Union Trade Commission on the levying of anti-dumping taxes on Chinese shoes. Since April 7, the EU has levied duties on leather shoes made in China. The European Commission (EC), the EU executive body, has phased in a 4.8 percent duty that will rise to 19.4 percent over the next six months.

The hearing offers Chinese shoemakers a chance to mount a joint defence against the EU anti-dumping duties. It is also being held for the EU side to give serious consideration of China's request and make active efforts to ensure qualified Chinese shoemaking companies acquire the market-economy treatment they deserve.

Previously, the EU had hastily overruled the market economy status of all relevant Chinese shoemaking companies and imposed uniform provisional anti-dumping duties on the whole industry of China.

Chinese shoemakers have since suffered from this unfair treatment. If these protectionist duties are not ended soon, European consumers will definitely end up paying more for shoes. And if that brings about inflationary pressure on EU economies, China should by no means be blamed as the exporter of this inflation.

Instead, by integrating its huge and cheap labour force into many global manufacturing systems, China has actually acted as an important force that keeps global inflation at bay in spite of a sharp rise in energy and commodities prices in recent years. The comparative advantage of the country's low labour costs will continue to work in the coming years in producing shoes, clothes and a wide range of other manufactured goods. It is thus counterproductive to take protectionist measures against competitive made-in-China products.

China remains only a price-taker in international raw material markets. Meanwhile, Chinese exporters do not enjoy much pricing power compared with international buyers. As a result, the profits of many Chinese manufacturers have been substantially eroded by both rising raw material costs and falling export prices.

Under such circumstances when unfair duties against Chinese exports are boosting local prices, protectionist trade policies in those countries are themselves a cause of inflation.

(China Daily June 23, 2006)