Europe’s fears about China trade threat miss the point

Europe’s political and business leaderships appear to have concluded that China’s economic dominance represents an existential threat – not from intrinsic competitiveness but from subsidies, technology theft, state-owned enterprises and a pervasive industrial policy.

Cecilia Malmstrom, former European Commission member and a member of the European Parliament, wrote this week about “an ever more aggressive China”, which “seems to be entering a new phase of industrial policy with an increase of targeted subsidies, dumping and overproduction as strategies to increase exports”.

She called for Europe to develop “a coherent updated strategy” to deal with the threat. It is perhaps no coincidence that EU trade commissioner Maros Sefcovic met his Chinese counterpart Li Chenggang on the margins of an Organisation for Economic Cooperation and Development ministerial meeting in Paris on June 4. In addition, China’s Commerce Minister Wang Wentao will hold talks in Brussels at the end of this month as part of a “trade and investment consultation mechanism”.