Economy is exceptionally available for free! Want access to more exclusive content like this? Discover all the benefits of Euractiv +.
Euractiv is part of the Trust ProjectThe pledge by the self-proclaimed “Tariff Man” to
impose steep duties on all US imports may
have prompted Brussels and Beijing to
ease trade ties to limit the potential impact
on their export-oriented industries.
But frictions between the EU and its second-largest trading
partner show no sign of abating, amid persistent European
concerns about state-subsidised Chinese exports and Beijing's
growing economic and political ties with Russia.
At a time when Europe is already confronting a host of grave
economic and fiscal challenges – the crisis in German industry
and the France's exploding deficit among them –a worsening of
trade ties with China is the last thing the continent needs.
Notwithstanding last night's announcement that an EU-China
summit will be held later this year, evidence of rising trade
tensions has been on full display over the past week.
On Tuesday, the European Commission accused Beijing of
“systematically discriminating” against EU medical device
producers in bids for public contracts and warned it could
retaliate by banning Chinese firms from its own public
procurement market.
The allegation followed the EU executive's decision last week
to impose "definitive" (i.e. five-year) anti-dumping tariffs on
Chinese mobile access equipment, which is critical for the
installation of electrical and telecoms infrastructure, as well
as titanium dioxide, a key ingredient in household goods like
paints and plastics.
The duties were imposed on the same day that China’s Ministry
of Commerce condemned the “selective enforcement” of the
EU’s Foreign Subsidies Regulation (FSR): legislation that
Brussels has repeatedly wielded to launch probes into state-
backed Chinese firms over the past year.
The recent spat follows the EU executive’s controversial
imposition of levies on Chinese electric vehicles (EVs) last
year, which prompted an enraged Beijing to impose retaliatory
duties on EU brandy exports.
“Without a doubt, EU-China relations are getting worse,” said
Tobias Gehrke, senior policy analyst at the European Council
on Foreign Relations. “And I think this is recognised by both
sides," he added.
Consumptive woes
The first, they said, is Beijing’s persistent failure to address problems deriving from its state-subsidised, export-oriented industrial model.
This, they explained, has triggered a global glut of Chinese goods that has disproportionately harmed Europe’s open economy, which is currently reeling from a host of other ailments, including high energy prices, elevated interest rates, and slowing demand.
Indeed, the problem seems to be getting worse: official customs data released earlier this week showed that China’s global trade surplus grew to almost $1 trillion in 2024, with year-on-year exports to the EU up by 8.8%.
Analysts also warned that China’s own economic weakness means it is unlikely to address its industrial overcapacity in the most obvious way: by boosting domestic consumption.
They also pointed to leader Xi Jinping’s ideological opposition to European-style “welfarism”, as well as high debt levels and low per capita income, as major obstacles to sustained fiscal stimulus.
“It's not so easy [to boost domestic demand],” said Alicia García-Herrero, senior fellow at the Bruegel think tank. “They would need to radically change their economic model.”
Russian relations
Since Russia’s full-scale invasion of Ukraine in February 2022, total China-Russia trade has surged from $147 billion in 2021 to $244.8 billion in 2024, according to official Chinese customs data published earlier this week.
García-Herrero said that EU policymakers would be "stupid" to believe that the growing ties between Moscow and Beijing will be reversed over the coming years – although she conceded that it's unlikely that most EU leaders still believe this is a genuine possibility.
“It's been too long, waiting for Godot, and China has not come,” she said.
Her comments were echoed by Gehrke, who warned that Trump could force Europe to adopt Washington’s more hawkish line on Beijing in order to avoid tariffs on EU exports and remain under the US security umbrella.
The famously transactional Republican has repeatedly accused China of "stealing" US jobs and intellectual property, and condemned EU countries for failing to spend more on their own defence.
“I think Europe is so exposed to Russia's military threat that Europeans will throw in everything with Trump,” Gehrke said. “There is no alternative to the American security umbrella at the moment, so trade issues become secondary," he added.
An abandonment of the WTO-led order?
But García-Herrero said such defensive EU measures were unlikely to trigger significant retaliation from Beijing.
"[China is] confronted with a very, very harsh international environment, even in some emerging economies," she said. "They need to export to Europe".
García-Herrero added that a potential benefit of Trump's presidency could be that Brussels reduces its commitment to the World Trade Organisation-led trade order, long abandoned by Beijing and Washington.
"The silver lining... is that Europe, because of Trump, might get out of this straightjacket of the WTO," she said. "It's not that I don't like the WTO, [but] I don't like the fact that we are the only ones in this straightjacket."
Other analysts, however, were slightly more sceptical about the possibility of Europe abandoning its commitment to rules-based trade.
“I don't believe that Europe will completely throw out its adherence to the WTO regime," said Varg Folkman, a policy analyst at the European Policy Centre. "But maybe we’ll hear a little bit less talk about being compliant all the time."
Folkman also stressed that, despite current and potential future tensions, much of Europe's trade with China remains "pretty harmonious".
"There still are a lot of Chinese firms doing business in Europe," he said.
[Edited by Owen Morgan/Daniel Eck]
No comments:
Post a Comment