China has rejected recent comments from the European Union’s top trade official criticizing its economic practices, with Beijing arguing that the soaring bilateral trade deficit is the fault of the bloc’s own export controls.
(Bloomberg) — China has rejected recent comments from the European Union’s top trade official criticizing its economic practices, with Beijing arguing that the soaring bilateral trade deficit is the fault of the bloc’s own export controls.
“The EU restrictions on export of high-tech products to China in recent years directly limited the EU’s ability to tap the potential of export to China and led to unbalanced trade,” the Chinese Ministry of Foreign Affairs said in a statement Tuesday. The surplus “is a natural result under the combined influence of different industrial structures, industrial specialization, ways of trade and external factors.”
In an interview with the Financial Times this week, the European Commission’s trade chief, Valdis Dombrovskis, said the deficit with China had reached a “staggering” level and that he would be pushing Beijing to reduce barriers to European goods when he traveled there in September. “The level of openness from the Chinese side is not the same as the level of openness from the EU side.”
The EU had planned to sign an investment accord with China that would seek to level the playing field for European firms in the world’s second-largest economy. But that deal was frozen in 2021 after the two sides imposed sanctions on each other due to accusations of human rights abuses in the Xinjiang region in China.
Since then, European firms in China have become increasingly pessimistic, with a record 64% saying in a June survey that it had become more challenging to do business in the country.
The EU is mulling new curbs on outbound investments for strategic rivals such as China in sensitive sectors like semiconductors that could enable Beijing to build a world-class chip industry. Earlier this year, the Dutch government said it would prohibit Europe’s most valuable technology company, ASML Holding NV, from shipping some of its machines to China.
China’s trade surplus with Europe soared during the pandemic as Europeans bought more goods such as personal protective equipment or electronics to allow working from home. From 2020 to 2022 the surplus more than doubled, hitting $277 billion last year. That has since narrowed somewhat as European demand has cooled, with the surplus falling to $19 billion last month, according to Chinese data released Tuesday.
The statement by Dombrovskis echoes that of French Finance Minister Bruno Le Maire, who recently said in Beijing that his nation was looking to “get better access and more balanced access to the Chinese market.” Former US President Donald Trump was also highly critical of the deficit with China, with the trade deal signed in January 2020 meant in part to address that imbalance.
The Chinese statement did not detail which specific restrictions it blamed for undercutting European exports, but during the trade war with the US, China also said that it would import more from the US if Washington would drop restrictions on the export of high-technology goods.
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