Last week, the European Parliament voted against the recognition of China as a market economy. It was a strong signal that revealed the growing concern about unbalanced trade relations with the Asian industrial superpower. Granting Market Economy Status (MES) would make it harder for Europe to address China’s dumping practices.
This paper confirms the need for vigilance towards China’s trade policy. China’s manufacturing sector, the paper posits, has become more and not less dependent on exports. Departing from a large set of policy documents, this paper goes on to demonstrate that China has no intention to rebalance its trade relations. The contrary is true: it is set to make another push to expand its market share in high-end industries.
But markets like the European Union must also look beyond China’s traditional dumping strategies. Besides low prices, the Chinese government looks at alternative ways to support its industries. The paper explains the importance of export credits, which reached a staggering total of US$ one trillion in 2015, export tax rebates, and, most importantly, geo-economics.
China’s export policy becomes increasingly sophisticated and thus begs for a more sophisticated response.
The paper can be downloaded here.
This study follows up on a previous paper about China’s increasingly unblanced economic relations with its neighbours. A new paper about the interests behind the One Belt, One Road and its impact on Europe follows around early September.
Professor Holslag works on a project basis with HCSS.
Experts
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