EU and China waging a subtle trade war

After claiming for years that austerity was “right thing to do”, before eventually admitting growth was in everyone’s best interests, you’d have thought Brussels would have learnt its lesson by now.

Not so … it seems.

For this week eurocrats went a step further and— having already exasperated many of the EU’s own members— they managed to alienate the one of the block’s biggest trading partners too, by slapping tariffs on cut-price Chinese solar panels.

China’s response was quick and calculated: it hit the bottle, so to speak, threatening sanctions on European wines.

The scrap has become so petty that even the country which started it, Germany, wants no part in the fight, while France, which will be hit the hardest by any Chinese wine tariffs, is posturing angrily on the point of principle.

Certainly the Chinese strategy is canny and it’s one the country has exploited elsewhere, in other regions and in other sectors: flood countries with subsidised, cheap goods until local producers go out of business.

After cornering that market the Chinese can then begin selling the goods at the price they like, given that the local competition has been annihilated.

To prevent such a situation, the European Commission is imposing a tariff on Chinese-made solar panels to bring their prices into line with local alternatives.

None of us is naive enough as to believe this week’s action has anything to do with solar wafers or Bordeaux wine.

The reality is China is by now the world’s second-largest economy.

Given its size and scale it should start playing by the rules but if it won’t Europe has no choice but to become more flexible.

Full article: EU and China waging a subtle trade war (Gulf Times)

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