A trade war is "inevitable"

According to Mr. Jens Eskelund, Chairman of the European Chamber of Commerce (EuroCham) in China, with the current tense situation, a trade war between the European Union (EU) and China will be "inevitable"

EU tariffs on Chinese electric cars are expected to come into effect later this month. (Source: AFP)

"A full-blown trade war is increasingly likely if nothing changes," Jens Eskelund said at a meeting on October 9.

The announcement came a day after China formally imposed provisional anti-dumping measures on imports of spirits from the EU, targeting French brands including Hennessy and Remy Martin, days after the 27-nation bloc voted to impose tariffs on Chinese-made electric vehicles (EVs).

China's Commerce Ministry said a preliminary investigation had determined that dumping of spirits from the European Union had caused "significant damage" to its industry.

As Beijing accused Brussels of “blatant protectionism”, Mr Eskelund urged Chinese authorities to look at the bigger picture and seriously examine European concerns about the government ’s policies.

“I think the electric car drama of the past several months has been a distraction from the broader issues at play in bilateral trade. There is clearly a huge increase in Chinese exports, fueled by domestic deflation. In the first seven months of the year, Chinese exports to the EU soared to an all-time high while imports from the EU fell sharply,” Eskelund cited.

According to the official, since 2017, China's economy has grown by 40%, but during that period, Europe's exports to China have fallen by 30%.

Chinese government data shows that producer prices – the cost of goods at the factory gate – have fallen for 23 consecutive months, leaving companies with no choice but to export their products abroad.

This has led to a surge in imports of high-tech goods into Europe, which by Western standards is relatively open to Chinese products.

Meanwhile, recent efforts by the Chinese government to boost consumption in the world's second-largest economy have so far failed to produce the expected results.

Beijing's stock market continued to fall after data on economic stimulus measures released failed to meet expectations, leaving many investors indifferent to the Asian country's growth prospects.

In Europe, moves by Asia's top economy are also being closely watched as deflation and weak consumer demand are seen as key factors fueling the dispute between Beijing and Brussels.

Although analysts are still avoiding using the term "trade war", the increasing tensions between the two sides are expected to soon bring China and the EU closer to the spiral of fierce trade disputes.

China's Commerce Ministry said on October 8 that Beijing is investigating dumping activities among EU dairy and pork producers and is considering raising tariffs on "imported large-engine gasoline-powered vehicles."

Technical negotiations between the two sides on an agreement on electric vehicles are ongoing. Most recently, the European Commission (EC) rejected several requests from Chinese chambers of commerce to set minimum prices for imports from the country.

An industry source also revealed that there is still a "big gap" between what Chinese negotiators are willing to offer and what the EC is willing to accept.

Source: https://baoquocte.vn/chu-cich-eurocham-trung-quoc-mot-cuoc-chien-thuong-mai-la-khong-the-tranh-khoi-289670.html