Warning to EU exposes bias of U.S. scholar against China

2015-09-29 10:33China Daily Editor: Wang Fan

American politicians are in the habit of pressuring their European counterparts to follow their line in setting foreign agenda. Some American scholars do the same, especially when the European Union prepares to make important decisions related to China. Among them is Robert Scott, director of trade and manufacturing policy research at the Economic Policy Institute in Washington. He has warned the EU that granting market economy status to China (in December 2016, as scheduled) would increase imports from China by 25 to 50 percent, putting at least 1,745,400 to 3,490,900 EU jobs at risk.

To gain maximum attention, Scott and his colleagues released the report shortly before President Xi Jinping paid a state visit to the United States, and a time when exchanges between Beijing, on one hand, and Brussels, Paris and London, on the other, have significantly increased.

Top officials from Beijing and Brussels on Monday inked a memorandum on how to connect the EU's Investment Scheme and China's Belt and Road initiative, which is a landmark development, because it means Brussels has officially endorsed China's global proposal with concrete steps.

In addition, senior financial officials from Paris and London held pragmatic dialogues with Beijing a few days ago, and Europeans are looking forward to Xi's state visit to the United Kingdom in October for further good news.

Moreover, Brussels trade chief Cecilia Malmstrom will hold talks with her Chinese counterpart in early October. With one year left for the deadline expires, China is arguing that it should be automatically given market economy status in line with the World Trade Organization's accession terms when it joined the trade body in 2001.

It is not yet clear whether the market economy status issue will be on the agenda of Malmstrom and Chinese officials. But trade officials from both sides will focus on the ongoing bilateral investment talks to finalize the range of negotiation and prepare a draft by the end of this year.

With such dynamic and open exchanges between China and the EU, it is improper to encourage closed-door talks and take protectionist measures. It is easy for scholars like Scott to make wrong assumptions if they base their research only on model and scenario analysis, and pay no attention to the live trade and actual China-EU trade landscape. Such scholars should know that many Chinese companies have already moved their assembly lines outside China to avoid the EU's anti-dumping tariffs. They should also know that Chinese exports to the EU could contain the contribution of Europeans in China, who, as outward investors, form part of global industrial chain.

China is implementing another round of market-oriented reform, which Scott has ignored, deliberately or otherwise, and thus presented an incomplete picture.

His reasoning is simple: since granting market economy status to China could create job risks for Europeans, Brussels should not make such a decision. In the process, he has failed to objectively judge whether China is a market economy, which many advanced economies have accepted.

The report, in other words, is one-sided, for it only touches on risks. Scott knows the basic rule of global politics full well: there can be no taking without giving. If the EU decides to not impose anti-dumping tariffs on Chinese exports, Beijing will do the same with European exports.

In particular, Scott should know that to succeed in its economic restructuring, China needs huge imports from not only Europe, but also his country, the U.S..

For a better risk analysis, he had better listen to the voice of European consumers, who would welcome cheaper imports. And in some ways, lower commodity prices can bolster competition and sharpen EU industries' competitive edge.

The author, Fu Jing, is China Daily chief correspondent in Brussels.


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