IF YOU cannot stand the heat, get out of the kitchen. The advice of the deputy governor of the People’s Bank of China to American trade protectionists was that brutal: give up making shoes, quit sewing shirts and even consider abandoning your farms.

Chinese labour costs a tiny fraction of what Americans are paid, so do not even try to compete, said Li Ruogu to Yanks who complain that China’s undervalued currency distorts competition. Instead, he instructs Americans to make more aircraft and hi-tech things and sell them to China to settle the US-China trade deficit.

Trade in textiles is going one way — from east to west and the river of cheap shirts, shorts and bras is about to flood. On January 1 the last remaining textile quotas are extinguished, the final act in a process agreed ten years ago. The free-for-all will hugely benefit China and India, reckons a World Trade Organisation (WTO) study, which forecasts China taking half the world’s rag trade. China is expected to triple its market share in North America while India will quadruple.

In Europe, we are preparing for the avalanche of underwear — there were talks between EU and Chinese officials yesterday in Beijing. But while American Congressmen still holler about sweatshops in Shanghai, we Europeans are sanguine about the plight of our seamstresses. We abandoned their cause years ago.

The Chinese banker is disingenuous — the argument is not really about jobs in Europe or America. Europe’s remaining quotas account for just a fifth of total EU textiles and clothing and are rarely applied. It is not mills in Lancashire but factories in Morocco and Bangladesh that are the focus of talks in Beijing. As the quota system was being slowly unstitched, Europe offered the poorest countries preferential access to EU markets. While Chinese exporters strained against the quota barriers, a trade-distorting EU policy favoured the weakest. With China unleashed, workers in Africa are threatened.

World trade is no longer a struggle between rich and poor but between poor and poorest. Italy can absorb a few thousand redundant embroidery workers but in Bengal the unravelling of textile quotas could mean widespread destitution.

A similar argument is being advanced this week against reform of the EU’s sugar regime. Europe’s system of quotas and price support for sugar beet was challenged by Brazil and declared illegal by a WTO tribunal. The European Commission has proposed deep cuts in subsidies and trade in production quotas, a system that would benefit the most efficient producer. Ten EU states object, insisting on “a fair distribution of production on the whole EU territory”. These states, including Finland, Greece, Portugal and Hungary, want more import controls and the brunt of the cut in quotas to be borne by Europe’s sugar exporters.

And so it would be fair. One lump of sugar for Finland, one for Ireland, one for France and so on. Never mind whether Finland is a great place to grow sugar beet. The same argument is put forward by Oxfam in support of the continuation of preferences for African sugar cane growers. Countries such as Mozambique and Zambia benefited from the discredited EU sugar regime with special access to the propped-up prices. Having argued against the regime that discriminated against Brazil, an efficient sugar producer, Oxfam now argues for price supports for poorer African producers.

It will not wash. Sugar cane could be good business for Mozambique but only if it can hold its own with Brazil. It is silly to support sugar production in frosty Finland when it is efficiently grown in the tropics, but Finns are fellow Europeans. There is less rhyme and no reason to use preferences and price supports to maintain uncompetitive farmers in Mozambique. To be fair, Oxfam also argues for targeted aid and technical assistance to establish an African sugar industry. Aid and cheap credit can kick-start businesses. But when have price supports done anything but create dependence and promote uncompetitive behaviour?

China cannot be negotiated away but in time, Chinese labour, too, will become uncompetitive and the best defence against China’s exports is to attack its closed markets, tariffs and quotas.

A LUMINOUS NOSE FOR A GAS SHORTAGE?

But when the sun was low in the West,
The Dong arose and said:
“What little sense I once possessed
Has quite gone out of my head!”

And he paid $1.2 billion for gas valued at $700 million.

Denmark’s Dong is no fancy of Edward Lear but an energy utility with 100,000 Danish customers. Even so, the price offered by Dong for 10.3 per cent of Ormen Lange caused one or two BP staff to sit down for breath.

Is Dong mad? Those in Whitehall who pooh-pooh the risk of a gas shortage might look again. We could be about to witness a scramble for gas as lights go out, leaving only a Dong with a luminous nose.

When awful darkness and silence reign
Over the great Gromboolian plain,
Through the long, long wintry nights . . .

carl.mortished@thetimes.co.uk

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts