june-06-03In late May, Chinese Premier Li Keqiang claimed that the East Asian trade giant had discussed helping EU nations through the euro zone crisis. Given the recent change in policy from European regulators on China’s solar panel exports, the Premier may be soon revising his words.

The European Union’s trade disputes with China, which involve new tariffs on the importation of Chinese solar panels to Europe and European wine to China, are an awfully worrying development. Economists claim that the dispute could lead to a serious ‘trade war’ emerging between the two economies.

China has been accused of deliberately under-pricing its solar panels to put pressure on European manufacturers. The EU has responded to the pricing issue by imposing an additional 11 percent tariff on Chinese solar panels. China has responded with its own tariff – this one, however, is targeted at the importation of European wine.

The dispute has divided member states of the EU, with China’s tariffs targeted at the continent’s major wine producers: Italy and France. While neither of these countries are actively involved in the production of solar panels – a sector that’s largely based in Germany – both have supported the use of tariffs against Chinese imports.

The dispute, economists claim, could have negative consequences for the UK as the European Union and China continue to threaten new tariffs. The UK is one of China’s largest investment targets, with Chinese investment ranking second after Germany in the last twelve months. Could it also be the country’s next tariff target?

The UK has largely supported Beijing in the dispute, claiming that the actions of the European Union were worrying and that Chinese relations were a top priority. With EU members fuming about a potential trade war, Britain may need to further assert its commitment to balanced trade with China in order to avoid becoming a target.

Print Friendly, PDF & Email

About The Author