EU Steps up Pressure on China Over Trade Deficit

The European Union (EU) is increasing its efforts to address the growing trade deficit with China, learning from past mistakes and adopting new strategies to tackle the issue. Former European trade commissioner Karel De Gucht emphasized the need for stronger measures as he reflected on the inadequacy of previous actions taken by the EU. In 2013, an investigation into alleged Chinese subsidies for solar panel production resulted in insufficient antidumping duties, ultimately leading to the demise of Europe’s solar panel manufacturing sector.

To avoid repeating this mistake, the EU has launched two new anti-dumping investigations into China this week. These investigations target titanium dioxide exports and aerial work platforms, following a probe into alleged Chinese electric vehicle subsidies initiated in October. These actions are part of a larger push by the EU to bring about changes in Chinese trade policy and practices.

The EU is now being proactive in its assessment of subsidies to Chinese electric-vehicle manufacturers, aiming to address the issue before it significantly affects its own market. The commission is also considering various measures across industries to gain support from European businesses and member governments, ensuring that any potential Chinese retaliation affects a wider range of sectors.

Furthermore, the EU has equipped itself with new tools to handle trade-related issues, including an anti-coercion instrument that allows it to retaliate against countries imposing trade embargoes due to political issues. Additionally, the EU now has the authority to block investment by companies funded by foreign governments and restrict procurement contracts for markets closed to EU bidders. The EU is also working on an EU-wide export controls regime to strengthen its position.

These efforts by the EU are a response to concerns over China’s dominant role in green supply chains and critical raw material exports needed for industries such as electric car batteries, solar, and wind energy systems. The EU is also troubled by the widening trade deficit, particularly in light of the conflict with Ukraine and China’s support for Russia.

While the EU has historically been divided on its stance towards China, there is a growing consensus among EU leaders to take a tougher approach. The EU is now united in realizing China’s significance and expects concrete actions from China to address the trade imbalance. Brussels policymakers have noted some positive signs of response from Beijing, including efforts to address complaints from the European Chamber of Commerce in China.

However, there is a risk of escalation as China may overreact to the EU pressure, potentially triggering a tit-for-tat trade dispute. It remains to be seen how China will navigate these challenges and whether the EU’s approach will yield the desired results.


What previous mistake did the EU learn from in its dealings with China?

The EU failed to take strong and timely action when investigating alleged Chinese subsidies for solar panel production in 2013, causing Europe’s solar panel manufacturing sector to collapse.

What are the new anti-dumping investigations launched by the EU?

The EU has initiated investigations into Chinese exports of titanium dioxide and aerial work platforms. These investigations are part of a broader effort to address trade imbalances with China.

What tools has the EU equipped itself with to handle trade-related issues?

The EU now has an anti-coercion instrument to retaliate against countries using trade embargoes for political reasons, the ability to block investment by companies funded by foreign governments, and the power to restrict procurement contracts for closed markets. The EU is also working on an EU-wide export controls regime.

What concerns does the EU have regarding China’s role in green supply chains?

The EU is concerned about China’s dominance in critical raw material exports needed for industries like electric car batteries, solar energy systems, and wind energy systems.

What is the EU’s position on China’s trade practices?

The EU is adopting a tougher stance on China’s trade practices, with a united front among EU leaders. The EU expects China to demonstrate concrete actions to address the trade imbalance.