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10th Dec 2016

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EU-China trade relations 'distorted,' MEPs say

  • China's trade surplus with the EU was €168.8 billion in 2010. (Photo: dolmansaxlil)

The European Parliament adopted a non-legislative resolution on the imbalance of trade relations between the EU and China on Wednesday (23 May).

The imbalance, claims the report drafted by Liberal MEP Marielle de Sarnez, is due primarily to barriers placed upon European firms wanting to enter the Chinese market. China's trade surplus with the EU was €168.8 billion in 2010.

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“We have to protect EU businesses from problems such as trade barriers, counterfeiting and monetary dumping,” said Sarnez.

Complex regulations and lack of transparency make it nearly impossible for EU companies to participate in Chinese public procurement, her study says.

The non-respect of intellectual property rights also acts as a deterrent to foreign investors. The US Senate on Tuesday announced, for instance, that more than a million fake electronic parts from China have been found in US military aircraft.

Tensions are also flaring up on China’s quasi-monopoly on rare earths, essential to the European high-tech sector. The country has corned some 97 percent of the world’s rare earth production.

A report by the EU chamber of commerce in China found 43 percent of all foreign-based managers in China suffer from discrimination, up from 33 percent compared to 2010.

The chamber’s findings suggest China’s measures imposing further restrictions on opening markets “cast doubt on the determination to create lasting opportunities for all market players."

The EU exported €136.2 billion in goods to China in 2011, a 20 percent increase compared to 2010. For its part, China sent €292.1 billion of goods to Europe in 2011.

The trade deficit between the two has more than tripled in the last ten years and has caused concern among the European Commission. The EU had 55 anti-dumping measures and one anti-subsidy measure in force against Chinese imports in 2011 alone.

The Chinese yuan, says Sarnez' report, is also undervalued and non-convertible and borders “on monetary dumping on an unmatched scale”. Consequently, China has accumulated some €2.5 trillion in foreign exchange reserves and is now buying up some EU sovereign debt.

The EU is also unable to determine how deeply China has penetrated member states economies “be it in terms of investment or in terms of purchases of sovereign debt securities."

Meanwhile, the EU allocated €224 million in development assistance for China for the period 2007 to 2013. Some 200 million Chinese are still living below the poverty level.

The report, however, also acknowledges China’s grievances with Europe, citing the complex system of agricultural tariffs and EU-farm subsidies, technical barriers to trade, and restrictions imposed on foreign investments in some member states.

China’s growth was above nine percent in 2011 with some experts predicting it could become the world's largest economy within the next five to 10 years.

Some of that growth, claims the Parliament report, is built on forced labour and child labour.

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