The latest data shows that as the trade deficit between Europe and China significantly widens, the European Union has issued an emergency restriction signal to address the import of cheap Chinese goods and reduce the trade deficit between Europe and China.
Denis Redonnet, Chief Trade Enforcement Officer of the European Union, stated on Tuesday (July 14) at the European Parliament’s trade committee that the European Commission is prepared to introduce emergency measures.
Redonnet mentioned that if substantial progress is not made between the EU and China on the trade imbalance issue before the deadline in October, the European Commission will take “unilateral” trade defense measures to counter the import of cheap Chinese goods.
He further explained that in the “coming months,” the EU will continue to implement structural and emergency trade protection measures as necessary and legally permissible to curb the surge in Chinese exports. Structural measures include anti-dumping and anti-subsidy investigations, while emergency measures involve safeguards aimed at protecting the EU from sudden increases in imports.
Redonnet stated that the EU does not believe that Beijing will undergo structural reforms to its economic model. He elaborated that there are currently no signs indicating China is adjusting its macroeconomic policies, and there is no fundamental change in China’s economic structure issues.
Trade data released by China on Tuesday showed that in the first half of this year, China’s trade surplus with the EU increased by 23.7% when calculated in US dollars.
Based on official calculations, Germany, the largest economy in Europe, saw its trade deficit with China expand by 80.8%. German Chancellor Friedrich Merz reiterated on Monday (July 13) accusations of the artificial devaluation of the Renminbi. Some economists believe that the Renminbi devaluation is one factor leading to the significant increase in Chinese exports.
Last month, the EU initiated negotiations with Beijing aimed at reducing its trade deficit with China. However, trade tensions between China and Europe remain high as Beijing has repeatedly threatened retaliatory measures if the EU takes steps to close off the Chinese market for exports to Europe.
Redonnet told European Parliament members that “dialogue alone is not enough.” He added that the EU needs to decide how to “protect and preserve Europe’s industrial base.”
He also emphasized that the EU “considers that the Chinese economy now poses a global macro-industrial challenge to us and many regions of the world” and that the future outlook is “worrisome.”
While extensive consultations between the two sides may take place in the coming months, the EU may also introduce further protective measures. Last week, the EU imposed anti-dumping duties on imported passenger car and light truck tires originating from China, with rates ranging from 4.3% to 45.3%.
Redonnet stated that “it is highly likely that unilateral protective measures will be taken at the EU level.” He also noted that industries that are the “cornerstone” of the European economy are facing a situation of “surging” Chinese goods.
(The article referenced reports from the South China Morning Post and Euractiv, a media focusing on EU policies)