[ NL] Urgent advice: 'EU must tackle China harder, even if it hurts economically'
Dringend advies: EU moet China harder aanpakken, ook als dat economisch pijn doet
Dat zegt de Wetenschappelijke Raad voor het Regeringsbeleid in een nieuw rapport. Niets doen is op de langere termijn risicovoller, zegt het adviesorgaan.
[ The Netherlands] "Europe must take much stricter action against China to stay afloat economically. That is one of the most important advice in a new report from the Scientific Council for Government Policy (WRR).
Europe should not be afraid that China will strike back and damage the European economy. Doing nothing is more risky in the longer term, says WRR scientist Haroon Sheikh. “And the alternative is for our industry to disappear.”
Note; Translation via Vivaldi of NOS article in Dutch. See comments for the rest of the translation of 'Dringend advies: 'EU moet China harder aanpakken, ook als dat economisch pijn doet"
…Continued part I.
Europe should not be afraid that China will strike back and damage the European economy. Doing nothing is more risky in the longer term, says WRR scientist Haroon Sheikh. “And the alternative is for our industry to disappear.”
( The WRR is an independent body that advises the Dutch government on major long-term social issues. In the report Strategic action: policy for a geopolitical economy the WRR makes recommendations on how Europe can reduce that economic dependence on China and the US ).
The observation that Europe must stand more economically on its own two feet is not new. Two years ago it was much discussed Draghi Report out. In it, Mario Draghi, former CEO of the European Central Bank, wrote that investments in innovation are crucial to compete with China and the US.
Last December, former ASML CEO also advised Peter Wennink the Dutch cabinet to take measures so that companies can innovate more easily.
Trump blocks digital services
The WRR also mentions the innovation gap in the report. That lag is especially visible in the relationship between the EU and the US, says researcher Sheikh. “We see that the US can use that dependency as a weapon against Europe. Look at the Chief Prosecutor of the International Criminal Court who is closed from Microsoft Services. And Trump has threatened the most advanced AI models no longer available to Europeans. That’s why we need to get our own innovation systems in better order.”
But focusing on innovation alone is not enough, according to the WRR. Trade policy must also be overhauled, especially with regard to China. The WRR writes that Chinese products are often more than 30 percent cheaper than European products. “That’s not a coincidence, it’s a conscious strategy by the Chinese government.”
Continued part II
Unfair competition
The Chinese government pumps billions into its own industry and keeps China’s currency, the yuan, artificially low-rated. This allows Chinese companies to dump their products on the European market for very low prices. “Unfair competition”, says Europe. Last month, the heads of state of the 27 EU countries met to discuss how to intervene harder. There is no concrete plan yet.
In October, European Commissioner Maros Sefcovic will go from Trade to China to talk about restoring the balance. If this visit comes to nothing, the European Union should not shy away from strong measures, writes the WRR. “Europe, for example, similar to what Trump does, can introduce tariffs on Chinese products,” Sheikh says. “Or develop a system whereby Chinese producers must prove that their products were produced without unfair state support.”
The researcher acknowledges that these opinions go against the Dutch tradition of free trade, based on the rules of the World Trade Organization. “But if other big players don’t follow those rules, you also have to adjust your own strategy.”
Trade war?
Won’t China hit back much harder and will Europe be able to cope with that? “The point is right that if we don’t intervene now, it’s too late. Now China is still dependent on us in some areas. And Europe is still a very important sales market. If we continue to postpone measures, more and more sectors in Europe will disappear. Yes, these types of measures will hurt at first, but we argue that doing nothing is ultimately more painful. Moreover, China itself also has an interest in ensuring that a trade war does not escalate.”
The WRR issues this advice to the Dutch government, not to the European Commission. In The Hague, Sheikh sees “no enormous resistance”. “The realization is starting to drop that it can go very fast.”
But the Netherlands will only want to take such measures if it is organized at European level, Sheikh thinks. “This will call for more European cooperation, but I see movement there too. And European countries must remember that they have great negotiating power.”
[Opinion] by China correspondent Laura van Megen
“Understanding is sorely needed. Europe is a plaything in one race to the bottom between China and the US. Europe has to press heavy buttons, because doing nothing is more expensive. China is a bigger problem for our industry than America.
The recommendations such as general import duties for products from China would be bad news for China. But in the short term this is going to hurt us a lot: raw materials, rare earth metals, steel, semi-products and computer chips from China can be put on the export control list and European companies can be cut off from the Chinese market.”
EU leaders want to tackle China harder, but do they dare? Brussels wants to save industry with ‘made in Europe’ Will we soon be less dependent on American tech? If it were up to the EU, yes
What about the USA?
The US would like to be as compitive as China with its strategic subsidies but is a actually a lame duck trying to protect its uncompetitive companies with tarifs. The exact contrary of what China is doing.
Both sides are bleeding their work force dry, one for profit (US) and one for global indluence (China).