EU to intensify China trade crackdown after hybrid car deal

Emboldened by hybrid car deal, Europe coalesces around tougher China stance

Brussels is preparing to intensify its crackdown on Chinese trade practices after concluding that its threats are beginning to produce results.

The shift follows the European Union’s surprise deal with China on hybrid cars last week, an agreement that was expected to ease pressure on Beijing. Instead, the deal has strengthened the view within Brussels that a tougher approach can work.

EU adopts a two-track approach

Those driving trade policy for the bloc now believe the European Union has arrived at a two-track formula. Intensive dialogue with China is seen as having delivered results and is expected to continue.

At the same time, the European Union plans to continue countering what it sees as distortive policies in China. The approach therefore combines negotiations with stronger action against Chinese trade practices.

France and Germany’s warning

There is a clear sense in Brussels that Beijing responded positively to a threat issued last week by France and Germany, the EU’s two biggest members. The two countries threatened to quickly close the market to Chinese firms.

The episode marked a dramatic pivot from Berlin, which is by far China’s biggest trade partner in Europe. Germany has previously opposed assertive measures, according to the source.

The hybrid-car agreement has therefore not brought a broader easing of pressure on Beijing. Instead, it has encouraged EU policymakers to continue dialogue while intensifying efforts to challenge policies they regard as distorting trade.

Source: South China Morning Post