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EU-China trade tensions
Background
The European Union (EU) and China are two of the world’s largest trading partners, but their relationship has increasingly been marked by disputes, retaliatory measures, and mutual suspicion. The recent move by China to impose anti-dumping duties on European pork is the latest episode in a widening set of tensions.
Major Issues in EU-China Trade Relations
1. Anti-Dumping and Tariff Wars: The EU has frequently accused China of dumping products such as steel, solar panels, and electric vehicles (EVs) at unfairly low prices. In response, China has imposed countermeasures, including tariffs on EU pork, wine, dairy, and other agricultural products.
2. Subsidies and Market Distortions: The EU argues that Chinese state subsidies to industries like EVs, semiconductors, and renewable energy create unfair competition. China, however, sees EU investigations as politically motivated and discriminatory.
3. Technology and Strategic Sectors: EU concerns about overdependence on China in critical technologies (rare earths, batteries, solar panels) have led to investment screening mechanisms and restrictions. China views these moves as attempts to contain its technological rise.
4. Agriculture and Food Imports: China is a major importer of European agricultural products such as pork, wine, and dairy. Trade measures like cash deposits on pork imports hurt European farmers, particularly in Spain, France, and Denmark.
5. Geopolitical Alignments: The EU’s growing alignment with the United States on supply chains, Indo-Pacific strategy, and human rights (Xinjiang, Hong Kong) adds further strain. China interprets EU actions as part of a broader Western containment strategy.
6. Carbon Border Adjustment Mechanism (CBAM): The EU’s carbon tariffs penalize imports from countries with weaker climate policies. China argues this is a protectionist tool disguised as an environmental policy.
Causes of Tensions
Trade Imbalances: The EU imports far more from China than it exports, creating a large trade deficit.
Industrial Competition: China’s rapid expansion in EVs, steel, and solar industries threatens EU manufacturers.
Strategic Autonomy: Both sides are seeking to reduce dependence on each other in critical sectors.
Geopolitical Rivalry: Broader US-China competition heavily influences EU-China relations.
Impact
On Europe: European farmers, especially in Spain and France, face losses from pork restrictions. EU industries are challenged by cheap Chinese imports, though consumers benefit from lower prices.
On China: China risks losing access to advanced European technologies and high-value agricultural imports. Retaliatory measures may also raise domestic food prices, impacting Chinese consumers.
On Global Trade: Rising tensions could fragment global trade, pushing both sides to diversify partners. Other countries (e.g., Latin America for pork, ASEAN for electronics) may benefit as alternative suppliers.
Political Consequences: Deepening distrust could derail EU-China cooperation on climate change, infrastructure, and multilateral institutions. It also strengthens the EU’s tilt toward closer transatlantic cooperation with the US.
Synopsis
EU-China trade tensions stem from disputes over dumping, subsidies, carbon rules, and geopolitical alignments. While Europe fears unfair competition from China in industries such as EVs and steel, China views EU actions as politically motivated. The pork duties episode highlights how trade measures are used as leverage in a broader struggle for influence. These tensions affect farmers, consumers, and manufacturers on both sides, while reshaping global supply chains and reinforcing geopolitical divides.