Volkswacht Bodensee - China surplus pushing EU to take 'offensive' trade measures: business lobby

The report by the European Union Chamber of Commerce in China underscores the turbulence in economic ties between the key trading partners, as they navigate heightened uncertainty sparked by Beijing-Washington tensions.

Data this week showed that China's global exports in the first 11 months of the year outpaced imports by more than $1 trillion, reaching the historic milestone even before December.

A significant portion of that surplus was generated by shipments to the European Union, which last year ran a trade deficit with the country of more than $350 billion.

China is "continuing to export ever greater quantities of goods to the EU -- in part to compensate for weak domestic demand relative to supply growth", wrote the EU Chamber of Commerce in China in a report Wednesday.

Beijing is also "failing to address several long-standing concerns that European companies have about the country's business environment", it added.

The trends mean that "China is pushing the EU to take a more offensive approach to its China policy than it currently does", the report said.

The warning comes less than a week after French President Emmanuel Macron said Europe would consider adopting strong measures against China -- including tariffs -- if the trade imbalance was not addressed.

It also follows the Chamber's publication of a survey earlier this month showing that one in three member companies were looking to shift sourcing out of China in response to tight export controls introduced this year by Beijing.

The measures, which sent shockwaves across global manufacturing industries, include licence requirements for shipments of rare earth elements crucial to automobiles, defence equipment and other items.

Beijing maintains its steps were necessary for national security, though they were widely viewed as retaliation in its trade war with the United States, now paused in a precarious truce.

"The rare earths situation was a wake-up call for Europe," said EU Chamber of Commerce in China president Jens Eskelund at a media event this week ahead of the report's release.

"You cannot assume that you will not inadvertently become collateral damage to someone else's fight," he added.

The predicament is "scary" for companies and governments alike, said Eskelund.

"It's no longer just trade disputes; it's been veering into security, and that is a different discussion."

E.Burkhard--VB