The EU will ‘pull its punches’ on China despite growing trade war talk: analysts
Quick Look
Capital Economics reports that the European Union is unlikely to engage in a full-scale trade war with China, citing internal bloc divisions, fears of economic retaliation, and a desire to preserve the existing global trading system.
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Why It Matters
The European Union faces internal disagreements regarding its economic strategy toward China. The bloc seeks to balance trade interests with the preservation of the rules-based global trading system.
The European Union is likely to avoid a full-blown trade confrontation with China due to internal divisions in the bloc and fear of retaliation, according to a prominent research firm.
But the bloc would “continue to pull its punches” in any confrontation with Beijing due to a lack of consensus among and within Europe’s member states, the London-based Capital Economics said at an event in Hong Kong on Wednesday.
The EU also had “concerns over retaliation” if it stepped up trade tensions with China, the research firm said, and held “lingering hopes to save the rules-based global trading system” that had helped Europe in the past.
Open Questions
- What specific trade measures are currently under consideration by the EU?
- How will China respond to potential EU trade restrictions?
