The Chinese authorities recently announced the initiation of an anti-dumping investigation on imported polyoxymethylene (POM) from the European Union, the United States, Japan, and Taiwan. Experts point out that this move by China is a retaliatory measure with political calculations amidst trade frictions with the West, but it may accelerate the decoupling between the West and China, a situation that China does not want to see.
According to a statement from the Chinese Ministry of Commerce on Sunday, the investigation on POM, also known as polyformaldehyde or polyoxymethylene copolymer, aims to look into dumping practices from the mentioned regions. The investigation period covers from January 1, 2023, to December 31, 2023, with a deadline set for May 19 of the following year, extendable by six months under special circumstances.
Polyoxymethylene, being a type of engineering plastic, serves as a substitute for metals like copper, zinc, tin, and lead in various applications such as automotive parts, electronic appliances, industrial machinery, daily necessities, sports equipment, medical devices, components, and construction materials.
In response to China’s investigation, the European Commission spokesperson overseeing EU trade policy stated that they hope China ensures compliance with all relevant rules and obligations set by the World Trade Organization. The EU will carefully review the investigation details before deciding on any follow-up measures.
Trade tensions between China and the West have been escalating. President Joe Biden announced on May 14 that tariffs on Chinese electric vehicles would be raised significantly to 100%, along with new tariffs on computer chips, solar cells, and lithium-ion batteries.
Previously, the EU had launched multiple investigations into whether Chinese manufacturers were dumping subsidized goods on their market. In October last year, the EU Commission initiated an anti-subsidy investigation on imported Chinese electric vehicles, where temporary measures against Chinese electric vehicles could be imposed after nine months into the investigation.
David Huang, a Chinese-American economist, mentioned that China’s sanctions target high-end POM imports annually from Europe, the US, Japan, Taiwan, totaling about 400,000 to 500,000 tons with a trade value of approximately $2 billion. He noted that the investigation is specific, affecting Western companies with production facilities in China, while low-end POM used in domestic cheap electric vehicles is not impacted.
The impact on Western companies is limited as the annual import volume does not exceed $2 billion. China relies on POM imports by around 50%, with domestic production of lower quality. Taiwan’s National University’s Associate Professor Sun stated that the sanctions are a countermeasure towards the EU’s tariff increase on China’s new products, aiming to strike a balance in chemical imports.
He highlighted the difference between Western sanctions for market stability versus China’s politically calculated retaliation without affecting their own market. The ongoing mutual sanctions risk disrupting the supply chain, an outcome neither China nor the world wants.
Regarding China’s motivation for the dumping investigation, Lai Rongwei, CEO of the Taiwan Inspirational Association, mentioned that POM imports mainly fuel China’s automobile industry and represent a significant trade battleground with the US and Europe. This trade retaliation signifies both economic and political competition between China and the West.
He noted that China’s approach follows a tit-for-tat negotiation strategy, pressuring the West by highlighting unfair practices while seeking negotiation opportunities. Lai suggested diversifying reliance on the Chinese market to counter economic sanctions effectively and reduce dependence risks.
As international investments in the Chinese economy decline, the trend indicates a cautious approach without complete decoupling, emphasizing a risk mitigation strategy among global players.