Commentary by Xinhua writer Peng Tianxiao
BEIJING – As European commissioners prepare to discuss the bloc’s trade ties with China, they should recognize that resorting to protectionist measures will ultimately prove counterproductive, while mutually beneficial cooperation remains the most effective path forward.
Since the start of the year, the European Union (EU) has been constantly updating its “trade defence arsenal,” introducing multiple restrictive measures targeting Chinese enterprises and products.
Most recently, by planning to force European companies to diversify suppliers, the bloc is steadily piling up investment barriers and institutional discrimination, with China bearing the brunt.
Such protectionist moves by Brussels continue to disrupt trade and economic cooperation between the two trading partners, further clouding the prospects of the overall bilateral partnership.
In fact, the EU’s decisions will do little to alleviate its concerns or solve any problem. As 99 percent of European businesses are small and medium-sized enterprises, any move that could raise production costs threatens to undermine the continent’s industrial competitiveness.
Moreover, given the structural complexity of global supply chains, especially in advanced manufacturing, attempts to “de-risk” or decouple will only result in significant costs and disruptions.
Europe’s trade concerns also stem from the declining competitiveness of its manufacturing sector. Yet rather than cultivating new engines of growth to revitalize its industrial base, the bloc appears to be taking the wrong approach by increasingly framing economic issues through a security lens.
China has firmly reiterated that the EU’s unilateral actions are suspected of violating World Trade Organization (WTO) rules and would cause substantive harm to China-EU economic and trade relations, disrupt global industrial and supply chains, and ultimately weigh on Europe itself.
Beijing does not want a trade war with the EU, yet it will take resolute countermeasures should the EU further target Chinese companies or products.
Still, China has consistently maintained that, given the broad economic complementarities between the two sides, mutually beneficial cooperation offers the best path out of Europe’s current economic malaise.
Actions speak louder than words. A recent survey of the European Union Chamber of Commerce in China showed that European companies are doubling down on manufacturing in China despite the EU’s de-risking push. Nearly one-third of respondents reported further onshoring in China, while 68 percent said they were either maintaining or expanding operations there.
China is also ready to solve trade issues with the EU through talks. Beijing is currently engaged in WTO negotiations with the bloc over the EU’s plan to implement new steel tariffs from July 1 this year.
Beijing has consistently viewed the EU as a key partner. Cooperation between the two sides is not the source of Europe’s current difficulties; rather, it represents an important opportunity for the continent to regain economic momentum.
The EU may believe that adopting a tougher stance on China will help arrest its industrial decline and safeguard its global standing. In reality, however, such a course would amount to a costly strategic miscalculation – one whose ultimate consequences Europe itself will have to bear.
– Xinhua
