Economic experts and federal ministries are calling for tougher action against China's competitive advantages

Both economic experts and federal ministries are calling for a tougher approach to China's competitive advantages. A trade dispute should be avoided, but new tariffs are already being discussed. It is not the only idea against the dominance of the People's Republic.

Economic experts from Germany and France have called for “targeted” EU action against China’s dominance in numerous industrial sectors. The EU needs a strategy that “smartly counters China’s economic dominance,” said the Franco-German Council of Economic Experts (FGCEE). They advocate a mix of individual tariffs, higher requirements for government funding and finding other trading partners.

The experts recommend linking funding for electric cars and renewable energies to so-called diversification criteria. So not all funding should go to manufacturers from a single country. A few years ago, for example, almost all funding for solar systems went to China without such criteria.

According to experts, tariffs can also be used. But it is important to choose the right products. The EU is already imposing punitive tariffs on electric cars from China, but since then Chinese manufacturers have been exporting more plug-in hybrids to Europe - so the experts believe the tariff was not broad enough.

The SPD-led federal ministries are also urging the government to take tougher action against China. This emerges from a paper preparing the upcoming coalition committee. "China's economic and trade policies are based on a web of government subsidies, administratively controlled excess capacity and economic coercion," it says. Chinese companies would therefore have competitive advantages that would not be possible using purely market-based means. Germany must counter these distortions more robustly.

SPD targets car companies

In their paper, the ministries argue that China is systematically violating the existing rules of world trade. That is why Germany should, for example, lobby the EU for an anti-subsidy investigation against Chinese car companies that produce plug-in hybrids. It is examined whether foreign manufacturers have unlawful competitive advantages through state support. If necessary, there may then be countervailing duties. In addition, stricter measures should be taken against product piracy and greater attention should be paid to the violation of labor and environmental standards, through which China achieves low export prices.

The European economy is suffering from massive competition from China: Chinese suppliers are cheaper, for example when it comes to steel for wind turbines and power transformers, as well as semiconductors and batteries. European companies also need raw materials such as lithium and rare earths from China. The EU therefore imports significantly more goods from China than the other way around. Brussels accuses Beijing of deliberately reinforcing this imbalance with state sanctions.

Both sides have been negotiating for weeks to avoid a trade dispute. This week, EU Trade Commissioner Maros Sefcovic is traveling to Beijing to negotiate initial results with Chinese Trade Minister Wang Wentao. Regardless of the negotiations, European heads of state and government want to discuss possible action against China next week.