The concept of international trade is that it should be set against the backdrop of a level playing field where the legitimate influences of a nation state on a given market are agreed and carefully regulated. Meanwhile, in the real world…
China has come under much criticism, most notably from US lawmakers, for artificially keeping its exchange rate against competing currencies low. This means that the cost of Chinese goods is more attractive than market forces would dictate – it’s a charge China always denies. China has also regularly been accused of subsidising its exports and “dumping” them in importing economies.
The most recent spat between China and her major trading partners focuses on the solar panel industry and telecommunications. The focus of this dispute is in Europe and it has split the EU as to the best way of handling it.
At the weekend, the German Chancellor, Angela Merkel, was reported as saying that she wished to see intensive negotiations between the EU and Chinese authorities aimed at averting a trade war over the pricing of telecommunications equipment and solar panels. A levy of 47% on solar panels has been proposed by EU Trade Commissioner, Karel de Gucht, which is due to be decided upon in June. The tariffs could come into force as soon as 6th June and would remain in force for an initial period of six months. Ms Merkel’s view is that the imposition of tariffs will be counterproductive. The solar panel business with China is estimated to be worth €21 billion and the dispute is the largest of its kind ever taken on by the Commission. Germany’s position is backed by the UK and at least twelve other EU states.
The Commission issued a statement which accused China of lobbying against the tariffs behind the scences: "Commissioner De Gucht ... made it very clear to the Vice-Minister that he was aware of the pressure being exerted by China on a number of EU member states, which explains why they are positioning themselves as they are in their advisory positions towards the European Commission." The vice-minister in question was the vice-minister of commerce, Mr Zhong Shan whom Mr De Gucht met for informal talks on Monday.