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2nd Jul 2022

EU ready to help China fight protectionsim

  • The EU trade commissioner welcomed China's support for globalisation and free trade, but said it must be backed up by action (Photo: European Commission)

The EU is ready to stand with China in the fight against protectionism, but Beijing needs to reform to be fair to investors, EU trade commissioner Cecilia Malmstroem said on Monday (7 February).

"If others around the world want to use trade as a weapon, I want to use it as a tonic; a vital ingredient for prosperity and progress," she said without mentioning US president Donald Trump by name, who has been promoting protectionist policies.

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"If rising protectionism from elsewhere is a threat to the Chinese economy, we stand ready to engage and fight against it together. If others are closing their doors, ours are still open. As long as the trade is fair," she told a business conference on EU-China relations in Brussels.

Malmstroem commended Chinese president Xi Jinping's speech at the World Economic Forum last month, where the Chinese leader stood up for globalisation and multilateralism.

However, the trade commissioner added that China needed to back up rhetoric with reforms.

"That would really indicate taking a stronger role in the world," she added.

Malmstroem said that "many barriers and irritants" remained in the EU-China trade relations, which were "far from balanced".

She highlighted that reform plans announced four years ago to give the market a more decisive role in the economy and reinforce the rule of law and independence of the judiciary have not materialised.

Malmstroem added the European investors were increasingly concerned about "the deteriorating situation on the freedom of expression and association".

After the US, China is the EU's second biggest trading partner, and the EU is China's largest.

Trade with China was worth one fifth of EU imported goods but only one tenth of its goods exports.

Chinese investment flows into the EU rose to a record high of almost €40 billion last year, while EU investment into China fell to a 10-year low of less than €8 billion.

Malmstroem said she hoped the issue could be addressed with an EU-China investment agreement now under negotiation.

She said she hoped the EU could see a "new impulse" in talks this year.

The deal would mean better market access for European investors, a level playing filed "without discriminations based on origin or ownership", and "greater certainty, transparency, fairness".

She stressed that the European Commission had recently proposed measures that would reinforce EU trade defence tools, among them possible higher tariffs, faster investigations against China, but negotiations are ongoing on that between member states and the European Parliament.

These instruments are aimed at reducing the damage Chinese overcapacity in steel has caused to European businesses.

Last month, Malmstroem lashed out against Trump, saying that new efforts to reimpose trade barriers were "doomed to fail" after the US president withdrew from the TPP agreement, a free trade deal between 11 Pacific region countries.

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