China has warned of countermeasures as Germany and France push for a tougher EU trade response to Beijing, raising the risk of fresh tensions between two major trading partners
China warned that it will take a “resolute response” to protect its industries if the European Union moves ahead with restrictions targeting Chinese companies or products.
The warning comes after reports that some EU member states are preparing a joint document calling for a new tool to tackle what they see as unfair trade practices and allow the bloc to take stronger action against China.
The proposed tool could be modelled on the US Section 301 trade mechanism. The US uses Section 301 to investigate what it considers unfair trade practices by other countries and can impose measures in response.
China’s Commerce Ministry said the reported EU proposal was a “typical protectionist and unilateralist measure”. It warned that such a move could disrupt China-EU trade.
The ministry also said that putting pressure on China while continuing talks could hurt mutual trust and affect the broader consultation process.
China weighs possible countermeasures
China has not announced specific measures it would take if the EU moves ahead.
However, state-backed newspaper Global Times reported that Beijing could use a broader “policy toolbox”. This could include anti-discrimination investigations, security probes into industrial and supply chains, and investigations into the impact of foreign subsidies.
More from BusinessThe warning was linked to a report by Noah Barkin, senior adviser on Europe-China ties at the Rhodium Group.
Barkin said Germany and France were working on a joint paper that would call on the European Commission to speed up the development of an instrument similar to the US Section 301 mechanism.
The proposed tool would give the EU more power to respond to trade practices it considers unfair.
Europe takes a tougher approach to China
The latest dispute comes as the EU is taking a tougher approach to its trade relationship with China.
Brussels has been pushing Beijing to address the large trade imbalance between the two sides. European officials have also raised concerns about Chinese industrial overcapacity and the impact of Chinese imports on European manufacturers.
The EU has already used its existing trade-defence tools against Chinese products.
In September, the European Commission imposed anti-dumping duties of between 40.5 per cent and 67.1 per cent on imports of pea protein from China after an investigation into alleged dumping and injury to European producers.
EU countries have also been discussing possible measures on imports of some chemicals and plastics.
The wider issue is the growing pressure on European industries from lower-cost Chinese products. European governments are seeking ways to protect domestic producers while keeping trade with China open.
Why the US-style tool matters
A Section 301-style mechanism could give the EU another way to respond to trade disputes with China.
The EU currently relies on instruments such as anti-dumping and anti-subsidy investigations. A broader tool could give Brussels more flexibility in dealing with trade practices it considers unfair.
The move also comes as the global trade relationship with China is changing.
The US and China have recently extended their tariff truce, creating some space for further trade talks. At the same time, Europe is considering stronger measures of its own.
