European Commission President Ursula von der Leyen has warned China that the European Union is prepared to make full use of its trade-defence instruments unless Beijing takes concrete steps to rebalance its increasingly lopsided trade relationship with Europe.
President Von der Leyen made the remarks on Thursday, August 27th, during a speech to French business leaders at the annual Rencontre des Entrepreneurs de France organised by MEDEF at Roland Garros in Paris.
The Commission President said that the EU’s trade deficit with China has now reached almost €1 billion per day and increased by another 10% at the beginning of this year. For the first time, every single EU member state is now running a trade deficit with China.
Chinese imports into the European Union have increased by 45% over the past five years, while European exports to China are declining. President Von der Leyen also said that Chinese companies can receive subsidies of up to eight times those received by comparable companies in OECD countries, giving them a significant advantage over European competitors.
“China is a key economic partner,” President von der Leyen said, reiterating the EU’s policy of “de-risking without breaking ties”. However, she warned that being an economic partner does not mean Europe should accept permanent trade imbalances.
The European Commission has significantly increased its use of trade-defence measures against Chinese products. More than 30 new trade-defence investigations were opened over the past year, almost three times the historical average. Many of these investigations concern Chinese manufacturers benefiting from state subsidies or dumping products onto the European market below sustainable market prices.
“Dialogue with China remains necessary. But it must produce results. And when dialogue is not enough, we must be ready to make full use of our instruments,” President von der Leyen told the conference.
Tensions between Brussels and Beijing have increased substantially as Europe attempts to protect its industrial base from a growing wave of cheap Chinese exports. China has meanwhile retaliated against several European measures and recently instructed Chinese companies not to cooperate with certain EU investigations.
The European Commission has set October as a deadline for achieving tangible progress with Beijing on rebalancing trade. Trade Commissioner Maroš Šefčovič has previously warned that the relationship cannot continue on its current trajectory without substantial changes from the Chinese side.
The EU also retains stronger instruments should the dispute escalate further, including its Anti-Coercion Instrument, which allows Brussels to impose restrictions on public procurement, trade, investment and other areas when a foreign state uses economic pressure against the Union.
Link to full speech here.
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