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An article by H.E. Mr. Wu Hailong, Ambassador of the People's Republic of China to the EU,on Financial Times
The EU should end its fruitless trade dispute with China

Trade is central to the relationship between China and the EU. The $546bn in bilateral trade between two of the world's biggest economies underpins a broader strategic partnership in which growing business ties have delivered great benefits to both sides.

In the past year, however, China-EU trade has been on a downward trajectory, declining 3.7 per cent in 2012 and a further 1.9 per cent in the first quarter of this year. This is very worrying. The main cause is the sluggish European economy, where demand is weak and competitiveness is declining. But the EU's protectionist measures against China have also had a harmful impact on trade.

This month, the European Commission informed member states of a proposal to impose provisional anti-dumping duties averaging 47 per cent on photovoltaic products – core components of solar panels – imported from China. A week later, on May 15, the commission said that it was prepared to launch an anti-dumping and anti-subsidy investigation into imports of mobile telecommunications equipment from China.

Additionally, the commission has rejected claims that Chinese exporters should enjoy market-economy treatment. When mounting arguments for its dumping accusations, it has chosen to compare the prices Chinese companies charge for their photovoltaic products in Europe with those they charge in India, where they are much higher than in China.

The commission's actions have tarnished its image as an advocate of free trade, fuelled the rise of protectionism and run counter to the commitment by the leaders of the Group of 20 leading industrialised nations not to introduce protectionist measures.

The EU's repeated attempts to stir up trade frictions with China are astonishing and confusing. Europe has not overcome its debt crisis and much of the continent is still mired in recession. In this context, it is counterproductive for the EU to take any protectionist measures against China, as these will not help resolve the difficulties facing Europe's industries or stem the decline in competitiveness of their products. In fact, the EU may end up only harming itself since these measures could cause its economy to lose steam and undermine the confidence of Chinese companies in their business relations in Europe.

Pascal Lamy, director-general of the World Trade Organisation, recently noted that about 40 per cent of what countries export is made up of imported inputs. So protectionism does not protect. A large proportion of imports and exports between China and the EU belong to the same value chain. Restricting Chinese exports to Europe will hurt both EU consumers and industries.

In fact, many European entrepreneurs and experts have spoken out against the EU's moves to stir up trade frictions. Recently, more than 1,500 companies that import and install photovoltaic products wrote to Karel De Gucht, EU trade commissioner, opposing the protection of a small number of producers at the expense of the rest. Some European studies have warned that restricting Chinese photovoltaic products will lead to job losses running into the tens of thousands and could even trigger a trade war.

Recently, some senior officials from EU member states expressed support for a political resolution to the photovoltaic case. They believe the EU could find a long-term solution to some of its economic problems by supporting the expansion of this sector, making its products more competitive for consumers and increasing market demand for photovoltaic goods. I think their proposals are sensible and reasonable.

The EU economy is still in the doldrums, facing considerable downward pressures and many uncertainties. Creating an open trade environment and sending a positive signal would be much more beneficial in boosting the confidence for co-operation and facilitating the EU's economic recovery.

As important partners, China and the EU share a responsibility to promote the growth of two-way trade. China does not want to see any damage to bilateral trade ties, and hopes the EU will take a sensible approach and honour its commitment to settle disputes through dialogue and consultation – to the ultimate benefit of both sides.

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