EU’s von der Leyen echoes Yellen’s calls for tough stance on Chinese overcapacity

The chief of the European Commission, Ursula von der Leyen, stated on Tuesday that Europe must adopt a firm approach towards China regarding its perceived unfair trade practices, echoing similar sentiments expressed by the U.S. Treasury Secretary Janet Yellen the day before.

Prior to German Chancellor Olaf Scholz’s scheduled trip to Beijing later in the week, von der Leyen emphasized that European companies should enjoy equal market access in China as Chinese firms have in Europe, as reported by Reuters.

Furthermore, she urged the German leader to adopt a stringent stance with Chinese authorities regarding overcapacity and unfair competitive practices.

This statement follows Yellen’s remarks on Monday to CNBC, where she indicated that the United States would consider all options, including potential tariffs, against China amidst concerns that Beijing is deliberately flooding global markets with inexpensive green energy products.

“I wouldn’t rule out anything at this point. We need to keep everything on the table. We want to work with the Chinese to see if we can find a solution,” she stated in an interview with CNBC’s Sara Eisen.

Concerns over Chinese overcapacity Chinese overcapacity has emerged as a significant point of diplomatic tension, with the U.S. and its allies contending that excess production and subsidized goods from China are undermining domestic businesses.

China, however, refutes these claims, with China’s Minister of Commerce Wang Wentao stating on Sunday that the growth of China’s green technology industry, encompassing electric vehicles, solar panels, and lithium-ion batteries, is the result of “constant innovations,” according to the ministry.

China also argues that the U.S., through initiatives such as the Inflation Reduction Act, is subsidizing its own manufacturing industry.

Yellen mentioned on Monday that if an understanding could not be reached, other countries might consider imposing trade restrictions on China.

The European Union has thus far refrained from implementing such measures, given its significant trade relations with the world’s second-largest economy.

Particularly, Berlin has been hesitant to impose tariffs on Beijing’s electric vehicle (EV) industry due to concerns about potential retaliation against its substantial automotive industry, which serves as a crucial avenue for German exports to China.

According to Reuters, a spokesperson stated on Monday that Scholz, ahead of his three-day trip to China, expressed skepticism about the necessity for such tariffs. This stance persists despite a broader ongoing EU investigation into the “dumping” of subsidized Chinese EVs into Europe.

Scholz is scheduled to arrive in China on Sunday for a visit that will include meetings with Chinese President Xi Jinping and Premier Li Qiang. He will be accompanied by three ministers and several business executives from the European Union, as reported by various media outlets.

This visit marks Scholz’s second trip to China since assuming office as chancellor and his first since November 2022.