The European Commission has officially declared that the current model of trade relations between the European Union (EU) and China is no longer sustainable. At a high-level meeting on Friday, the 27-nation bloc began drafting more aggressive trade defense mechanisms to address the issue of widening market imbalances caused by the dumping of cheap goods from Beijing.
Brussels' main concern centers on China's aggressive export strategy that is flooding European markets, thus undermining the competitiveness of local industries. This situation is exacerbated by China's domestic protectionist policies that are systematically excluding foreign-made products from its own market chain.
However, the plan to impose these new sanctions has caused deep divisions among EU member states. German Economy Minister Katherina Reiche issued a stern warning this week that any tough measures taken by the bloc should not affect the export access of European companies, especially the German automotive industry, to the giant Chinese market.
Meanwhile, a coalition led by France, Italy, Spain, the Netherlands and Lithuania is demanding stronger action. The group of countries has circulated a joint proposal calling on the EU to adopt new cross-sectoral trade defence instruments to curb China’s market dominance.
The final framework for the direction of EU-China relations is expected to be high on the agenda of the G7 Summit and EU Leaders’ Meeting in June. Meanwhile, Beijing has issued an official warning that any new economic sanctions from Brussels will be met with a proportionate response that could damage the transatlantic investment chain.
