List of objections. The normalisation process in Euro-Chinese relations was summarised in this column yesterday and must, necessarily, go both ways: the EU recognises the role China has earned in world governance; China's action complies with internationally recognised rules. Is this second aspect being respected? European producers have doubts about it. The approach advocated at the end of last month by the organisation representing European enterprise (BusinessEurope) to the president of the European Commission, involved an unmistakable accusation made against certain Chinese practices. Following standard praise regarding China's role in the world and Euro-Chinese cooperation, the letter signed by Jürgen Thumann makes a robust denunciation of China's position on: market access (legal uncertainties, artificial barriers); foreign investment; counterfeiting; intellectual property; preference for national products; and abusive restrictions on the export of raw materials. Let's not forget exchange rates, which are artificially low.
Perhaps there are some exaggerations on this list of objections; BusinessEurope is obviously defending its members' interests. There is no doubt, however, that in many areas, Chinese practices are incompatible with international rules. The European Commission has on many occasions taken a position on this issue. In her former role as the European commissioner for trade, Catherine Ashton, now the EU high representative, sometimes had to begin proceedings at the WTO in this connection. For example, she requested that a panel give its opinion on Chinese restrictions applying to exports of several raw materials (magnesium, silicon, zinc, etc) but WTO procedures are so long … The response from the Chinese authorities in general consists of expressions of good faith, claims that it is seeking to protect the environment or denunciations of European restrictions on, for example, anti-dumping laws on screws and bolts (EUROPE 9996). The EU perhaps could orientate itself more towards ensuring reciprocity in activities, namely responding to restrictions by introducing similar measures, even if such an approach does not comply with WTO principles. It is true that the interests of European operators are sometimes contradictory, as we have just observed with regard to anti-dumping duties in the footwear sector …
Counterfeiting, relocations, currency. The dossier on counterfeiting is even more complex because the daily control of hundreds of thousands of containers is impossible and the destruction of counterfeit products raises a number of questions. European trade is affected in all of these areas. In certain cases, such as pharmaceutical and food products, there should be zero tolerance. We are not talking about trade rules in this connection, but rather legislation for criminal proceedings. Overall, the Commission's services have described on a number of occasions the scale of the abuses committed, and investigations by journalists have demonstrated the seriousness of the dangers created. The Chinese authorities have become more cooperative and some results have been obtained, even in the area of intellectual property, but the bulk of the work in this area remains to be accomplished.
At the same time, we have observed a significant slowdown in company relocations. Some major Western firms, for example IKEA from Sweden and the US company Mattel, are gradually reducing their production in China, while others are putting an end to it. Even in the textile sector, there have been some turnabouts after some relocation experiences did not prove fruitful due to poor quality or non-respect of intellectual property rights (copies of a European product put on sale as a Chinese brand). In general, the affirmation that Europe will need China more than China will need Europe is put into some doubt. European exports to China only represent 0 .7% of the EU's GDP, whereas Chinese exports to Europe account for 7% of China's GDP.
Monetary matters. Even if one were to ignore the Chinese currency exchange-rate (discussed yesterday), it is the enormous volume of dollars that China possesses which allows it to buy up what it wants in the whole world: shares in Western countries, oil and raw materials guaranteed for decades, immense tracts of agricultural land in poor countries. The mountain of dollars could become a liability if the dollar (whose value has fallen on the markets), collapses. This is why China is taking a cautious approach and cannot devalue its reserves. Everyone is calling for a strong dollar but this presupposes that the US balance of payments is better balanced and therefore that the US reduces its imports, which no one wants to hear. How can we get out of this situation? There is no easy answer.
(F.R./transl.fl)