EU and U.S. Unite Against China’s Market Distortion

Ursula von der Leyen calls for a tough stance on China
German Chancellor Scholz set to visit China from 14th to 16th
China refutes, “US pays subsidies through IRA”

Following U.S. Treasury Secretary Janet Yellen’s criticism of China’s overproduction, Ursula von der Leyen, President of the European Commission, has expressed a firm stance against China’s unfair trade practices.

According to CNBC on the 9th (local time), President von der Leyen stated, “European companies should have the same market access as Chinese companies,” and “At present, we will not exclude anything.” She added, “We want to see if we can find a solution in cooperation with China.”

These comments from President von der Leyen came after Secretary Yellen said, “China is deliberately flooding the international market with cheap green energy products,” and “We will not rule out any measures, including the possibility of imposing tariffs on China.” Secretary Yellen visited China from the 3rd to the 9th, urging China to curb overproduction.

Also, President von der Leyen has reportedly requested a tough stance from German Chancellor Olaf Scholz, who is scheduled to visit China this week. Chancellor Scholz will visit China for three days, starting on the 14th. She will meet with Chinese President Xi Jinping and Li Qiang, the Premier of the State Council, and visit local green businesses in China.

The U.S. and its Western allies have pointed out that China’s massive subsidies and overproduction distort the global market. In response to this, Wang Wentao, Minister of Commerce of China, refuted, “The rise of China’s green technology industry, such as electric cars, solar panels, and lithium-ion batteries, is the result of continuous innovation,” and “The U.S. is also providing subsidies to its domestic manufacturing industry through policies like the Inflation Reduction Act (IRA).”

With the escalation of diplomatic tensions, it is noteworthy whether Europe will follow the U.S.’s lead. So far, the EU has been reluctant to impose trade restrictions, conscious of its relationship with China, the world’s second-largest economy. Germany has hesitated to impose tariffs on Chinese electric cars for fear of retaliation against its domestic auto industry.