The President of the European Commission, Ursula von der Leyen, has warned that the bloc is ready to utilise every method at its disposal to safeguard its economies in the event that China does not grant equitable access to its markets. Ms von der Leyen voiced concerns over the inundation of the European market with heavily subsidised Chinese goods such as electric cars and steel which, she argues, exceeds global demand.
The Commission President made these comments following negotiations with President Emmanuel Macron of France and President Xi Jinping of China in Paris. This meeting was part of Xi Jinping’s first visit to the bloc in half a decade, which will also see him travel to Serbia and Hungary.
According to Ms von der Leyen, for commerce to be balanced, reciprocal access to markets is vital. She conveyed optimism about the potential for further progress whilst also asserting the bloc’s readiness to activate its trade defence mechanisms if necessary.
As an example, she referred to the International Procurement Instrument, established in 2022, and used most recently to initiate an inquiry into China’s procurement of medical devices. Depending on the results of the investigation, Brussels could potentially limit Chinese involvement in tenders due to lack of reciprocity.
Emphasising that the EU must not tolerate market-distorting methods that could lead to deindustrialisation, Ms von der Leyen also noted the increasing hard stance that the EU has been taking on trade dealings with China. This reflects US worries about state-sponsored overproduction in the green industry.
The EU’s tougher stance was brought to fruition with the launching of a probe into Chinese electric vehicle subsidies in late 2023, which could result in the imposition of new tariffs by July. Further scrutiny is being applied to other sectors, including wind energy, solar power, and railways.
The allegations of overproduction have been refuted by China, which has accused the EU of protectionism. France has been a vigorous supporter of the EU’s more assertive approach. Asian trade rebalancing has been identified by the French finance minister, Mr Bruno Le Maire, as a key element of the EU’s move away from “happy globalisation” towards a stronger trade policy. During a recent speech outlining his vision for Europe’s future, French president Mr Macron urged the bloc to resist foreign subsidies and favour its own strategic sectors, including AI and green technology.
China is refusing to be a bystander as Europe strengthens its assertiveness. In the first month of the year, Beijing initiated a probe into alleged dumping practices in the liquor industry, which could significantly impact French cognac manufacturers. Amid President Xi’s recent visit, these makers have requested a resolution to the matter, highlighting the risk posed to 70,000 French jobs, both direct and indirect, linked to this beverage.
When German Chancellor Olaf Scholz made his trip to China last month, the Chinese leadership managed to resist his call to cut back on what many Western bureaucrats regard as surplus production capacity.
European Commission President Ursula von der Leyen has urged Beijing to attend to its “structural overcapacities”, as it “persistently subsidises its manufacturing industry” and domestic demand remains stagnant. “A China that plays by the rules benefits everyone,” she stated, pledging that, “Europe will hold firm on the difficult choices needed to secure its economy and safety.”
Just before President Xi’s arrival at the Elysee Palace on Monday, French Minister of Economy, Finance and Recovery, Bruno Le Maire, agreed on a pact with the French car industry aiming to secure and elevate Electric Vehicles’ (EVs) production in France. This involves pledges to keep monetary incentives for consumers restricted to vehicles having the smallest ecological impact – effectively excluding many Chinese EVs.
However, alongside President Xi’s visit, French President Emmanuel Macron aims to mix diplomacy with disagreements to attract Chinese investment to support France’s internal automotive industry.
While speaking with French car sector representatives, Mr Le Maire showed the government’s approval of China’s BYD Co establishing factories in France, as Japan’s Toyota Motor Corp did previously. “Both BYD and the Chinese car industry are welcome in France,” he declared.
Moreover, Ms von der Leyen revealed her and Mr Macron’s appeal to Mr Xi to use his sway over Russia’s Vladimir Putin to cease the war in Ukraine. She added that China’s position on this conflict is influencing relations between Beijing and EU. She also mentioned that China can aid in curbing Iran’s missile and drone proliferation.
-Bloomberg