EU Draws Trade Battle Lines with China


Ursula von der Leyen

**Sounding the Alarm**

Europe’s top official, Ursula von der Leyen, has issued a stern warning to China, demanding fair play in trade practices. Following a similar stance taken by US Treasury Secretary Janet Yellen, von der Leyen has called on German Chancellor Olaf Scholz to take a firm stance during his upcoming trip to Beijing.

European companies, she asserts, must be granted equal market access in China as their Chinese counterparts enjoy in Europe. Her concerns extend to overcapacity and unfair competitive tactics employed by Chinese businesses.

Yellen has echoed these sentiments, suggesting that the US may not hesitate to impose tariffs against China if its flooding of international markets with subsidized green energy products continues unabated.

**The Bone of Contention: Chinese Overcapacity**

Chinese overcapacity has become a major source of diplomatic tension. The US and its allies allege that China’s excessive production and subsidized goods are harming domestic businesses. However, China maintains that its rise in green technology industries, such as EVs, solar panels, and batteries, is a result of innovation and not unfair subsidies.

Yellen has highlighted that other nations may consider imposing trade restrictions if a resolution is not reached.

**Europe’s Cautious Approach**

While the European Union supports the principle of fair trade, it has been hesitant to implement the same tariffs as the US, considering its strong economic ties with China. Germany, in particular, is wary of targeting China’s EV industry due to concerns about retaliation against its own automotive sector, a major export to China.

Chancellor Scholz has expressed skepticism about the need for tariffs, despite an ongoing EU investigation into allegations of Chinese EV dumping in Europe.

**Chancellor Scholz’s Mission to Beijing**

Chancellor Scholz is scheduled to visit China this Sunday, accompanied by ministers and business executives. The visit aims to build on his previous trip in November 2022 and strengthen diplomatic ties between the two countries.

During his three-day visit, Scholz will meet with President Xi Jinping and Premier Li Qiang. Key topics on the agenda are expected to include trade, climate change, and the ongoing war in Ukraine.

**Balancing Trade and Diplomacy**

The upcoming meeting in Beijing is a delicate balancing act for Germany and the EU. While they seek to address unfair trade practices, they must also maintain productive relations with China, a crucial economic partner. Chancellor Scholz’s ability to navigate this diplomatic tightrope will be closely watched by both sides.

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