The rally since March in global equities has been underpinned by the massive policy response from governments round the world. How ironic, then, that the very policies promoting global growth – fiscal spending, tax breaks, bank bail-outs, etc – could ultimately be diluted by government initiatives supportive of protectionism.

Protectionism has become a growth industry, with numerous nations – including the US – opting for various direct and indirect barriers to trade since the global financial meltdown of September 2008. The World Bank notes nearly 90 new restrictions on trade since October 2008. Of the G-20 nations, 17 countries have implemented some type of trade protectionism since pledging not to in November 2008. Recent trade infractions range from iron and steel tariffs in Russia, to massive automobile subsidies in the US and Europe, to agricultural restrictions in Argentina and Brazil. Everyone, so it seems, is doing it, with China the latest to embrace a “buy local” platform. Beijing has introduced an explicit “Buy China” policy that requires government procurement to be focused only on Chinese products or services unless they are not available within the country or cannot be bought at a reasonable commercial price. The new polices have sparked a sense of unease in Washington, but with the $787bn US fiscal stimulus package choked full of “Buy American” provisions, the US does not have a leg to stand on when it comes to opposing “buy China” initiatives.