VINACHEM

China seen posing ‘longer competitive challenge and a sort of strategic challenge’ in important industries, and this could reinforce the EU as a US ally.

China represents a major economic challenge for Europe this year as the country has the European Union market in its sights amid industrial-overcapacity issues at home and an economic-growth slowdown, panellists said at a German think tank event on Wednesday.

Trouble spots in the world’s second-largest economy were expected to pressure Chinese manufacturers into shipping excess factory goods to Europe at low prices, per the views voiced at the Mercator Institute for China Studies (Merics) 6th China Forecast conference.

Meanwhile, panellists at the live-streamed event said they expected the US to remain a European ally, despite all the unknowns surrounding president-elect Donald Trump’s foreign policy.

Conference speaker Julia Friedlander, CEO of Atlantik-Brucke, an advocacy group for German-American relations, said China poses a “longer competitiveness challenge and a sort of strategic challenge” because of what she called a stated intent to outperform Europe.

“From the competitiveness side, the explicit attempt [is] to out-compete Europe in key industries,” Friedlander said. China is particularly “consistent” with policies on electric vehicles and hi-tech goods, she said.

China is staring down the barrel of overcapacity this year, meaning some Chinese exports may be “redirected” to the EU, where they would not all be absorbed, cautioned Elena Suarez Sanchez, senior international relations adviser for lobby group BusinessEurope.

China-EU trade of US$762 billion last year rose just 1.6 per cent over 2023, according to customs data from both sides.

The two partners are major producers and buyers of EVs. China’s EV shipments to Europe last year sparked an anti-subsidy investigation that ended in October with duties of up to 35.3 per cent on Chinese exporters.

Beijing, saying the tariffs represent “unfair competition”, responded with a complaint to the World Trade Organization and with levies on European brandy imports. Beijing was also considering whether to raise tariffs on large-engine European motor vehicles.

The European bloc has conducted separate anti-subsidy probes into Chinese solar panels and a Chinese train maker.

China should boost domestic consumption by turning over “control” of the economy to its people, suggested Matt Turpin, a visiting fellow from the US-based Hoover Institution.

I think that the US will continue to be one of our major allies.

The absence of such a shift is “placing everybody else’s economy at risk” and making the EU-China relationship “very contentious”, he said.

BusinessEurope’s Suarez added: “I think that the US will continue to be one of our major allies.” Both sides, she said, face “challenges when it comes to the China issue”.

Trump’s second term comes with “huge uncertainty” about what he will really do, Suarez said. He will be inaugurated on Monday.

Merics also released survey results showing that two-thirds of 843 experts from 58 countries believed China’s 2025 economic growth would be less than 5 per cent. More than two-fifths of respondents said domestic property issues were the biggest risk facing China.

In light of potential threats, Friedlander advised the 27 EU members to align more staunchly behind Brussels.

Of the survey respondents, 70 per cent expected China to steer its 2025 foreign policy to enhance cooperation with non-Western partners, but get closer to EU member Hungary, which has taken a relatively friendly stance toward economic cooperation with China.  – Source: scmp.com –