EU Updates its Report on China’s Distortions in Economy

Workers wait for transport outside a construction site in Beijing, Tuesday, April 9, 2024. (AP Photo/Ng Han Guan)
Workers wait for transport outside a construction site in Beijing, Tuesday, April 9, 2024. (AP Photo/Ng Han Guan)
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EU Updates its Report on China’s Distortions in Economy

Workers wait for transport outside a construction site in Beijing, Tuesday, April 9, 2024. (AP Photo/Ng Han Guan)
Workers wait for transport outside a construction site in Beijing, Tuesday, April 9, 2024. (AP Photo/Ng Han Guan)

The European Commission has updated its report on state-led distortions in the Chinese economy, adding new sectors and potentially opening the door to anti-dumping complaints from EU chip and clean-tech producers.
The update, published on Wednesday and stretching to 712 pages, adds details of what the EU executive considers to be distortions in sectors of telecom equipment, semiconductors, the rail industry, renewable energy and electric vehicles.
It retains the steel, aluminum, chemicals and ceramics sectors of the initial report in 2017. There is no similar EU report for any other country.
The report is a tool for EU industries to use when filing complaints about dumping practices. If Chinese prices and costs are found to be distorted, they can be replaced with those from another country to calculate normally higher dumping tariffs.
“This could be taken as an invitation to sectors that have not yet brought anti-dumping complaints to explore their use,” said Laurent Ruessmann, partner at trade law firm Ruessmann Beck & Co.
The Commission has typically launched about 10 anti-dumping investigations per year, many concerning steel products.
It is now looking to shield EU firms from cheap clean-tech products, with a review of subsidies received by Chinese wind turbine suppliers and an anti-subsidy investigation into imports of Chinese electric vehicles.
The report, however, will not play a part in these investigations as it only concerns dumping.
The report covers the role of the Chinese state in planning to meet economic objectives, the importance of state-owned enterprises, preferential access to land, labor, raw materials and energy and state support for specific sectors.
In most sectors, including electric vehicles, it refers to Chinese overcapacity.
China's parliament, the National People's Congress, said in March the government would take steps to curb overcapacity. Beijing argues the recent US and EU focus on risks from China's excess capacity is misguided. Its state media has denounced these concerns as part of an effort to limit China's rise.
On Wednesday, China said it was concerned by what it called discriminatory measures by the EU against its firms after the bloc said it would investigate subsidies received by Chinese suppliers of wind turbines destined for its countries.
“The outside world is worried about the rising tendency of protectionism in the EU,” foreign ministry spokesperson Mao Ning said at a regular press briefing on Wednesday.
“China is highly concerned about the discriminatory measures taken by the European Union against Chinese companies and even industries,” Mao said, adding that the bloc should abide by World Trade Organization rules and market principles.
Meanwhile the EU's anti-trust commissioner Margrethe Vestager has said the European Commission will look into conditions for the development of wind parks in Spain, Greece, France, Romania and Bulgaria.
“Today, we are launching a new inquiry into Chinese suppliers of wind turbines,” Vestager said in a speech at Princeton University, in the US state of New Jersey.
“We are investigating the conditions for the development of wind parks in Spain, Greece, France, Romania and Bulgaria,” she added.
For her part, a European Commission spokeswoman told the German News Agency that the EU investigations relate to suspicions that some wind turbine makers may benefit from an unfair competitive advantage as a result of foreign support.
In her speech to the Institute for Advanced Study in Princeton, Vestager said: “China is for us simultaneously a partner in fighting climate change, an economic competitor, a systemic rival. And the last two dimensions are increasingly converging.”
Vestager said China's “playbook” of subsidizing domestic solar panel suppliers and exporting excess capacity at low prices had resulted in fewer than 3% of solar panels installed in the EU being produced in Europe.
Research service BloombergNEF said prices for Chinese turbines are around 20% below rival US and European products.
The EU imported some $1.42 billion in turbines and components from China last year, customs data showed.
In a related development, a survey released by the German Chamber of Commerce in China has found that nearly two-thirds of German firms feel they encounter unfair competition from local firms in China and are outgunned in terms of access to local officials, information and licenses.
The survey came a few days ahead of Chancellor Olaf Scholz’ visit to China for talks with Chinese President Xi and other senior officials.
It showed that 150 companies surveyed from February 22 to March 6 said they face “unfair competition” operating in China, Germany’s largest trading partner.
Over 52% of those surveyed said their primary competitors were private Chinese companies.
Wednesday's survey also showed that 95% of German firms felt that increased competition from Chinese companies was affecting their business, including 70% who felt it was eating into their market share.
Scholz’s trip will be his second to China as chancellor, following his first visit in November 2022.



Gold Subdued as US Dollar, Yields Firm; Traders Await Inflation Data

A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024.  REUTERS/Alexander Manzyuk
A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk
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Gold Subdued as US Dollar, Yields Firm; Traders Await Inflation Data

A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024.  REUTERS/Alexander Manzyuk
A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk

Gold prices edged lower on Wednesday as the US dollar and Treasury yields held firm ahead of key inflation data, which could offer more clarity on the Federal Reserve's interest rate trajectory.
Spot gold eased 0.2% to $2,354.76 per ounce by 0711 GMT. Prices had hit an all-time high of $2,449.89 on May 20, said Reuters.
US gold futures fell 0.1% to $2,355.10.
The dollar held steady against its rivals, making gold less attractive for other currency holders, while benchmark US 10-year bond yields rose to multi-week peaks.
"Investors will try to book profit and prices are trading near $2,350. So, prices have not corrected but it's a kind of a healthy consolidation after a very sharp rally last Monday," said ANZ commodity strategist Soni Kumari.
"Investors will try to position themselves in gold because overall long-term fundamentals are looking pretty strong for gold at the moment."
The US core personal consumption expenditures (PCE) data, the Fed's preferred measure for inflation, is due on Friday.
"A softer US core PCE release would make the job easier for gold to reclaim the $2,400 level, given the possible rate-cut timing implications," said Tim Waterer, chief market analyst at KCM Trade in a note.
Traders currently pricing in about a 59% chance of a rate cut by November, according to the CME FedWatch Tool.
While gold is used as a hedge against inflation, rate hikes raise the opportunity cost of holding non-yielding bullion.
Spot silver rose 0.3% to $32.19, platinum was down 0.4% to $1,058.95 and palladium was unchanged at $973.02.
Meanwhile, BHP Group said it needed more time to engage with Anglo American, a week after the London-listed miner rejected BHP's 38.6 billion pounds ($49.20 billion) offer ahead of a final bid deadline later in the day.
The International Monetary Fund upgraded China's GDP growth forecasts for 2024 and 2025 after a "strong" first quarter. China is a key consumer of bullion and other industrial metals.