A trade war with China may be “unavoidable”, the European Union’s top diplomat Josep Borrell has warned.
Speaking at an event in Spain on Tuesday, he said: “We mustn’t be naive, we have no interest to get into a trade war … but maybe it’s unavoidable, it’s also in the logic of things.”
Borrell, who is set to retire in October, said cheap Chinese-made products including electric vehicles were being diverted to the European market because of higher tariff rates in the United States.
“They [the US] don’t ask us when they ban the import of Chinese cars, they’re not going to ask us where those Chinese cars are going if they’re not going to the US … I am sure they will go to the European market, and this is generating a competitiveness issue with our industry,” he said.
This week the European Commission proposed definitive tariffs of up to 36.3 per cent of Chinese-made electric vehicles.
A day later, Beijing launched an anti-subsidy probe into EU dairy imports, adding to existing anti-dumping investigations into brandy and pork products.
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Chinese-made electric vehicles face additional EU import tariffs of up to 38%
Chinese-made electric vehicles face additional EU import tariffs of up to 38%
With EU leaders vowing to protect their markets from subsidised Chinese competition and Beijing pledging to “take all necessary measures to resolutely defend the legitimate rights and interests of Chinese companies”, a trade war looks to be increasingly inevitable.
Despite this, Borrell – who will leave his role once the European Parliament confirms his likely replacement, former Estonian prime minister Kaja Kallas – said the EU should avoid “systematic confrontation” with China.
He insisted the bloc had no interest in “containing China’s rise”, adding: “We cannot embark on systematic confrontation with China.”
He noted that Chinese Foreign Minister Wang Yi had frequently pushed back against the EU’s characterisation of Beijing as a “systemic rival”.
“Europe must not oppose itself to China’s rise, because this rise is a fact – China … is at the cutting edge of all technology,” Borrell said.
“They are not only selling cheap T-shirts, they are competing. To oppose ourselves to the rise of China as a power is impossible – China is a great power.”
He also expressed scepticism about the prospect of reviving an EU-China investment deal that has been in the deep-freeze since MEPs refused to ratify it over sanctions on EU lawmakers.
Beijing imposed the sanctions in response to the EU’s own penalties on Chinese officials over alleged human rights abuses in Xinjiang, accusations that China denies.
“There has been a change of composition and some of the MEPs who are sanctioned are no longer MEPs, but the new ones are not going to change their stance.
“So if there is no lowering of the sanctions, I cannot tell the European Parliament to ratify the agreement. It is sad, we will lose, but these are the political restrictions that exist – and it’s not going to change,” Borrell said.
He was also asked how Europe would react if Beijing launched military action against Taiwan, but said he did not believe that was the most likely scenario.
18:59
Why the EU, US are concerned about China’s overcapacity
Why the EU, US are concerned about China’s overcapacity
“The consequences for the world of an open conflict in Taiwan are something we cannot even imagine. I don’t believe a situation like this is going to happen,” Borrell said.
“But we always ask for the respect of the status quo, the avoidance of provocation, and defending … the one-China policy. There’s only one China, and we don’t recognise the independence of Taiwan, but we do have economic and cultural relations with Taiwan, and it’s always important to highlight this.”
Beijing views Taiwan as part of China and has never renounced the use of force to bring it under its control. The EU’s refusal to recognise Taiwan as independent is line with the policy followed by most countries.
