Trade friction between the European Union and China is the hot issue at this Saturday’s bilateral summit in Helsinki. The leaders will discuss cooperation on energy and climate issues. After Finland, Chinese Premier Wen Jiabao will go on to visit Britain and Germany.
The EU is China’s biggest single trade partner. The EU said last year’s trade deficit with China reached 106 billion euros. Beijing has said that easing the trade imbalance will take time. European manufacturers have pressed complaints that China’s cut-price exports are endangering domestic industries such as shoe and garment-making.
Friction is also being generated by the relative weakness of the Chinese currency to the euro, which favours Chinese exports and handicaps European imports into China. The director of the European Institute for Asian Studies, Willem van der Geest, gives his insight into Beijing’s perception of EU grievances:
“Chinese are saying well we are as much a market eocnomy as European economies because governments are very important in European economies as well. But we say ‘hold on!’ There is this issue of accountability, transparency, how the stock markets operate, to what extent is there insider trading… What does it really mean to find a balance sheet of a Chinese company? These questions need to be clarified before we can grant market economy status.” An EU study published this week said foreign companies trying to do business in China face numerous obstacles.
Notably: a lack of transparency of official rules, favouritism towards local competitors and a lack of protection for intellectual property – against product piracy. Europe especially wants the market in services opened up.