Trade frictions between Europe and China are likely to escalate, particularly due to the growing ability of Chinese industry to achieve lower production costs in strategic sectors. This was stated by Jens Eskelund, President of the European Union Chamber of Commerce in China.
Trade as a security issue
“Europe cannot just accept that strategic sectors that form Europe’s industrial base are losing market positions because of prices,” said Eskelund, who was quoted by CNBC. “This is when trade becomes a security issue,” he added.
Chinese authorities are encouraging high-tech manufacturing in an effort to boost the country’s technological self-sufficiency. This is creating fears of excess production capacity and subsequent price wars, CNBC reports. According to Eskelund, the chamber of commerce is registering overcapacity in a number of sectors, including electric vehicle manufacturing, chemicals and metals.
Eskelund warnings about the future
“Not all of that capacity has started operations. This will be reflected in the markets in the coming years,” Eskelund said. “Europe and China need to have an honest conversation about what this will mean,” he added. Both countries need to find a way to maintain as much trade as possible, he said.
Manufacturing accounts for almost a fifth of total employment in the EU. “It is hard to imagine Europe sitting back and watching quietly as the de-industrialisation of Europe accelerates,” Eskelund said.
Source: Czech Press Office
