On Sunday, May 26th, French Finance Minister Bruno Le Maire stated that the global economy is facing the risk of China’s surplus of low-cost export products. At the same time, the Group of Seven (G7) finance ministers also criticized China’s excess production capacity.
Le Maire, in an interview with Bloomberg TV on Sunday, said, “China is producing increasingly cheaper industrial equipment, which poses problems for our (global) economic model because this not only threatens the European Union and the United States but also the global economy.”
“We need to address this issue,” he added.
The G7 countries are coming together to launch a more stringent and unified resistance against China’s excess production capacity, calling the Chinese Communist Party’s policies a threat to domestic manufacturers in various countries.
On Saturday, G7 finance ministers concluded a two-day meeting in Stresa, northern Italy, releasing a joint statement expressing concerns over China’s comprehensive use of non-market policies and practices. These policies and practices are seen as damaging workers, industries, and economic flexibility.
The statement further indicated that officials will “consider taking measures to ensure a level playing field in line with principles of the World Trade Organization.”
This marks an escalation in the G7’s use of more neutral language in addressing trade issues in their joint statements.
Prior to the G7 finance ministers’ summit, President Biden of the United States announced a significant increase in tariffs on a range of Chinese imports this month, including electric cars, batteries, computer chips, and medical products. Biden also maintained the tariffs implemented during the Trump administration while raising tariffs on other Chinese goods. For example, tariffs on electric cars were increased fourfold to over 100%, and semiconductor tariffs were doubled to 50%.
On Saturday, Italian Minister of Business and Industry Adolfo Urso suggested that the European Union should follow the United States by imposing tariffs on Chinese products to protect its industries. “If we do not want the European industry to be eliminated, it is inevitable to impose higher tariffs on Chinese products,” he said.
Urso specifically mentioned the automotive industry, stating that the significant increase in U.S. tariffs could lead to China redirecting its exports to Europe, thereby harming EU industries.
Currently, the primary destination for China’s electric vehicle exports is EU countries, where tariffs range from 5% to 10%. Over the past three years, Chinese exports of electric vehicles to Europe have surged by 851%.
An EU investigation into subsidies for electric vehicles is nearing completion, which could result in defensive measures against Chinese automotive exports. However, potential EU tariffs are expected to be lower than those of the United States.
According to EU regulations, investigations must be completed within 13 months. This means that the EU could impose provisional tariffs by July and final tariffs by November.
During the G7 finance ministers’ meeting, Le Maire also emphasized the need for member countries to strengthen information sharing and jointly assess China’s industrial policies. He insisted that the EU possesses all the necessary tools to rebuild a fair competitive environment.