As Beijing remains mum, trade relationships suffer

Beijing issued a predictably defiant statement late last week after the US announced unusually tough punitive tariffs in an ongoing dispute over what it considers unfair government support for China's solar panel industry.

Rather than sit back and wait to react in this and other similar disputes, China needs to adopt a more proactive approach by taking steps to address its trading partners' concerns, which usually involve generous levels of State-support for Chinese companies.

Equally important, Beijing needs to be more open in such matters by making announcements and aggressively publicizing each of its new actions, crafting a public relations campaign to show politicians, business leaders and the broader public it is serious about ending or at least curbing such State-supported policies.

The latest development in the US-China trade dispute over solar panels came late last week, when the US Department of Commerce recommended punitive tariffs of between 30-250 percent for imported Chinese panels. That recommendation surprised many, as just two months earlier the Obama administration had recommended much milder punitive tariffs of 3-5 percent.

While Beijing remained relatively mute after the March decision, it was quite vocal after higher figures were announced, saying it was displeased by a decision that it said lacked fairness. This kind of reaction is typical of Beijing, which is always happy to issue angry comments whenever someone does something it considers unfair or runs counter to its goals.

But this solar dispute didn't happen overnight, and Beijing has had plenty of time to see last week's decision coming and take steps to prevent it.

The actual spat started almost a year ago, when US politicians opened a hearing into unfair trade accusations after several US panel makers went bankrupt amid a sector downturn that was exacerbated by what manufacturers said was unfair support by Beijing for its panel makers. US and European rivals complained that Beijing unfairly subsidized its industry, which now supplies more than half the world's solar cells, through a wide range of State-support policies, from export rebates to low-interest bank loans.

A formal complaint soon followed after the hearings, with an actual investigation by the US Commerce Department beginning in October - now a full seven months ago.

The low punitive tariffs announced in March could be interpreted as a sign that the US was willing to compromise on the matter if China took steps to address some of its concerns. If that was the case, Beijing's lack of response to that signal perhaps prompted the US to take a harder line.

Regardless of US motivations with its tougher tariffs, the fact remains that China's reactive approach to its trade disputes, and also many of its diplomatic clashes, may have been suitable for its previously closed society but is much less practical as it tries to assume a place on the global stage. If it wants to become a serious player in world politics and the global economy, it needs to take a more proactive approach to settling disagreements, and do so in an open way that lets others know it is taking their concerns seriously.