The rain is coming from the wind. This is how Chinese steel companies feel upon learning that the European Commission has confirmed the establishment of subsidies. The latest developments in the EU's "double reverse" case regarding organic coated steel sheets from China have sparked a strong reaction from the Chinese Ministry of Commerce, which publicly expressed dissatisfaction on the 16th. The ministry emphasized its commitment to monitoring the situation closely and reserving its rights under the WTO framework.
Experts interviewed by reporters warn that if the European Commission proceeds with imposing countervailing duties, it would not only harm Chinese steel companies but also impact downstream industries such as home appliances and automotive manufacturing. Moreover, the EU is expected to continue targeting China with aggressive trade measures in the near future, potentially escalating tensions and leading to a broader trade conflict in 2013.
In response to the ongoing investigation, the Chinese Ministry of Commerce submitted written defense arguments and urged the EU to abide by WTO rules, respect facts, and revoke any unjust rulings. Just a day before, the Financial Times reported that the European Commission accused China of providing unfair support to its coated steel producers through below-market pricing for raw materials and other subsidies like land use, water access, and loans. The report recommends up to 50% countervailing duties, setting the stage for potential sanctions.
This report will serve as a basis for further actions, and the European Commission plans to present it to member states this month to decide whether to take formal action against Chinese imports. Analysts warn that such measures could disrupt supply chains and affect global markets.
The EU’s tough stance toward China has intensified in recent years, with new trade initiatives targeting various sectors. Recent changes to the EU’s anti-dumping laws have made it harder for Chinese firms to gain market economy status, signaling a shift in policy. Additionally, the EU is investigating Huawei and ZTE over telecom equipment and raising import barriers in multiple sectors, increasing pressure on Chinese industries.
According to industry sources, the EU’s trade policies are increasingly focused on protecting domestic industries and advancing its re-industrialization strategy. Experts argue that these measures are driven by economic concerns, especially as the EU seeks to revive its manufacturing base amid the lingering effects of the debt crisis.
China’s rapid development in key sectors has made it a target of EU trade policies. For instance, the EU steel industry, which accounts for about 1.5% of GDP, faces severe overcapacity and declining demand. Similarly, the automotive sector is under pressure due to shrinking markets and increased competition from Chinese manufacturers.
Despite the tensions, the EU and China remain each other’s largest trading partners. However, experts predict that trade frictions will persist, particularly around subsidy issues. In 2011, the EU began intensifying its focus on Chinese subsidies, marking a significant shift in trade relations.
Overall, while the EU denies the possibility of a trade war, the path ahead remains uncertain, with rising risks of economic conflicts and deeper trade disputes between China and Europe.
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