Warning to EU exposes bias against China

US institute report is based on false assumptions, failing to take account of trade realities

Politicians in the United States are in the habit of pressuring their European counterparts to follow their line in setting foreign agenda. Some US scholars do the same, especially when the European Union prepares to make important decisions related to China. Among them is Robert Scott, director of trade and manufacturing policy research at the Economic Policy Institute in Washington. He has warned the EU that granting market economy status to China (in December 2016, as scheduled) would increase imports from China by 25 to 50 percent, putting between 1,745,400 and 3,490,900 EU jobs at risk.

To gain maximum attention, Scott and his colleagues issued the report shortly before President Xi Jinping visited the US, and at a time when exchanges between Beijing, on one hand, and Brussels, Paris and London, on the other, have significantly increased.

On Sept 28, Chinese and EU officials signed a memorandum on how to connect the EU's Investment Scheme and China's Belt and Road Initiative, which is a landmark development, because it means the EU has officially endorsed China's global proposal with concrete steps. 

In addition, senior financial officials of France and Britain held talks with Beijing a few days ago, and Europeans are looking forward to Xi's state visit to the United Kingdom in October for further good news.

Moreover, the EU trade chief Cecilia Malmstrom will hold talks with her Chinese counterpart in early October. With one year left before the deadline is reached, China is arguing that it should be automatically given market economy status in line with the World Trade Organization's accession terms when it joined that body in 2001.

It is unclear whether the market economy status issue will be on the agenda of Malmstrom and Chinese officials. But trade officials from both sides will focus on the ongoing bilateral investment talks to finalize the range of negotiation and prepare a draft by the end of this year. 

With such dynamic and open exchanges between China and the EU, it is improper to encourage closed-door talks and take protectionist measures. It is easy for scholars like Scott to make false assumptions if they base their research only on model and scenario analysis, and pay no attention to what is happening with China-EU trade. Such scholars should know that many Chinese companies have already moved their assembly lines outside China to avoid the EU's anti-dumping tariffs. They should also know that Chinese exports to the EU could contain the contribution of Europeans in China, who, as outward investors, form part of global industrial chain.

China is implementing another round of market-oriented reform, which Scott has ignored, deliberately or otherwise, and thus presented an incomplete picture.

His reasoning is simple: since granting market-economy status to China could create job risks for Europeans, the EU should not make such a decision. In the process, he has failed to objectively judge whether China is a market economy, which many advanced economies have accepted.

The report, in other words, is one-sided, for it only touches on risks. Scott knows the basic rule of global politics full well: If there is no give there can be no talk. If the EU decides to not impose anti-dumping tariffs on Chinese exports, Beijing will do the same with European exports.

In particular, Scott should know that to succeed in its economic restructuring, China needs huge imports from not only Europe, but also his country, the US.

For a better risk analysis, it would be better for him to listen to the voice of European consumers, who welcome cheaper imports. And in some ways, lower commodity prices can bolster competition and sharpen EU industries' competitive edge.

The author is China Daily chief correspondent in Brussels. Contact the writer at fujing@chinadaily.com.cn