China, EU should set example in resolving trade disputes

17  January 2013

BEIJING — Chinese and European Union leaders met in Brussels Thursday for a summit, and the world was watching to see whether they could make progress on tackling “issues of common concern,” including thorny trade frictions.

Disputes have loomed even though the trade volume between the world’s second-largest economy and the biggest trade bloc hit $567.2 billion in 2011, four times the volume seen 10 years prior.

In the latest spat, which emerged earlier this month, the European Commission launched an anti-dumping investigation into imports of solar panels and key components from China, claiming that the products were exported from China below cost, threatening the products’ EU counterparts.

However, Chinese manufacturers said the competitiveness of their products is not an ill-intended maneuver used to break into the European market, but rather the outcome of technological advances, intensive production, decreases in the prices of raw materials and hard work on the part of Chinese workers, as well as the low pay they receive.

As two major trade partners, China and the EU should set an example for the rest of the world in settling trade disputes without harming trade ties. Both goodwill and concrete actions are needed in this regard.

Upon arriving in Brussels on Wednesday for the 15th China-EU summit, Chinese Premier Wen Jiabao said, in a written statement, that he would exchange ideas with EU leaders on China-EU relations and issues of common concern, make plans for strengthening relations and enhance pragmatic cooperation.

Since China and the EU established a comprehensive strategic partnership in 2003, their relationship has made remarkable progress and become among the most influential bilateral relations in the world, Wen noted.

He said the China-EU relationship is facing unprecedented development opportunities as the international situation undergoes profound changes.

A fact that cannot be overlooked in the solar panel row is that the bullish market for primary solar products in the last couple of years has come to an end due to the fall in international crude oil prices.

At this moment, attacking the products of the other side can only weaken the overall competitiveness of the solar industries in China and Europe that have become more and more interlocked.

Last year, China bought polysilicon and other raw materials for solar panel production worth $1.12 billion and equipment totaling $1.71 billion from Germany and Switzerland.

Aside from industry analyses, strategically speaking, it is not wise for the EU to venture into undermining trade ties with China.

The prolonged European debt crisis has left the bloc increasingly dependent on trade and investment ties with China, a major buyer of the euro zone government debts and the world’s largest holder of foreign exchange reserves.

Although experts say China does not link its purchase of EU government bonds with trade disputes, the latter issue could potentially harm bilateral relations, which would, in turn, affect the Chinese government’s level of participation in battling the euro crisis.

The more difficult the situation is, the more a resolute attitude against protectionism is needed, and now is the time for China and the EU to set an example for the world in settling trade disputes.