China's Export Surge Tests Europe's Resolve in Trade War

(CNA Taipei, 22nd) European leaders are seeking new powers to counter a flood of Chinese exports that is hurting European industry. The Wall Street Journal reports that European countries are weighing whether they are ready for a trade war with the Chinese government.

The report states that an increasing number of European leaders say subsidized Chinese products and an undervalued yuan are putting the EU economy at risk. After U.S. President Donald Trump expanded U.S. tariffs last year, the European market became increasingly important to China, and Europe has thus felt more pressure from Chinese exports.

By 2025, the EU's trade deficit with China soared to a record 360 billion euros (approximately 13 trillion New Taiwan dollars), and it is expected to reach about 400 billion euros this year. Furthermore, Europe is increasingly wary of the Chinese government's support for Russia's war in Ukraine.

Sources say that to counter China, the European Commission is seeking more powers to take trade measures against entire industrial sectors. The commission is also urging EU leaders to use the EU's existing trade defense tools.

Officials are considering granting new statutory powers that would allow for a firm stance against China if an economic sector is suddenly flooded with cheap imports. Additionally, any new tools would need to be easy to trigger to avoid the lengthy debates between national governments that have hindered European action in the past.

Luxembourg Prime Minister Luc Frieden said at an EU summit last Thursday that China poses an "existential threat to our industry." Even Germany, whose economy has long depended on exports to China, is wary. German Chancellor Friedrich Merz said the Chinese government has undervalued its currency by as much as 30%, calling it a "huge competitive disadvantage" for Europe.

For years, the EU has urged China to change its export-oriented growth model. European Commission President Ursula von der Leyen has proposed a strategy to reduce the risks of economic ties by diversifying supply chains and export markets. However, the EU's trade deficit with China is soaring, and it remains heavily reliant on China for products, including critical raw materials.

Von der Leyen said last Friday that the European Commission "will work on developing new tools, for example, diversification tools," to help companies curb trade risks. She also said the EU should be more proactive in using its existing trade powers.

However, divisions are expected over the extent and speed of action. Past efforts to curb economic risks have met with setbacks, as some countries, including Germany and Spain, have continued to benefit from trade and investment ties with the Chinese government in recent years.

Previously, the EU has attempted to counter China, including imposing tariffs on Chinese-made electric vehicles. However, it took the EU a year to complete its anti-subsidy investigation and implement the tariffs.

China is also wary of the trade policies being discussed by European countries. A social media account operated by a Chinese state broadcaster said last month that if the EU introduces new trade defense tools, China might launch anti-discrimination and supply chain security investigations. (Editor: Zhu Jianling / Lu Jiarong) 1150622

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