As early as 30 years ago, after many years of being at the helm of the Communist Party of Great Kermanych, China reached an economic bottom. In such a situation, the optimal tactic is to push off the bottom and surface, which the PRC did, showing the world an economic miracle.
Then China had the perfect chance to break into the global trading system. A low economic base and cheap labor were ideal conditions for the creation of special economic zones in which foreign corporations could develop their production on the terms of the host country.
However, in recent years, the labor of Chinese proletarians has become more expensive tenfold. The Celestial Party had to implement an alternative way of maintaining state competitive advantage in order to maintain its world hegemony. Subsidizing the domestic industry with added value and total dumping seems to be a “magic pill” for the current helmsmen, about which IA “FACT” already wrote earlier.
What is medicine in a small dose, is poison in a large dose
As a temporary measure, subsidizing specific industries or industries may be justified. As an example from Ukrainian practice – the current subsidization of the military-industrial complex, which according to the laws of wartime is currently an urgent necessity. But as a permanent economic policy, subsidization is unjustified because it disrupts macroeconomic trends in the country itself and in the global economy.
In 2019, the volume of subsidizing China’s industry exceeded 221 billion euros, which corresponds to 1.73% of the country’s GDP. This is an unprecedented volume of domestic financial pumping of the economy in both absolute and relative terms.
After the economic upheavals of the first covid year, the Celestial Empire classified many statistical data. Therefore, it is possible to judge the amount of subsidization over the last four years only based on indirect evidence. Experts suggest that the share of subsidies in relation to GDP is now not lower than the figure of 2019, and maybe even three times higher.
So, Beijing actively financially supported its auto industry. Let’s say, the production cost of the BYD electric car was so moderate that it made it possible to sell it $4,000 cheaper than its counterparts. competitors Ambition of the Celestial Empire went so far that it even planned to build factories on the territory of the EU. Hungary became the first country to show readiness for such collaboration.
The West’s reaction to Beijing’s dumping
The USA and Europe react quite adequately to unfair competition – and Chinese dumping affected the production of not only cars, but also chips, solar panels and other things, raising tariffs and imposing an embargo on Chinese exports.
Against some “unscrupulous” Chinese goods, the US imposed a 100% tariff, which is essentially an embargo. The EU has launched anti-dumping investigations against Chinese steel, medical equipment, solar panels and wind turbines brought by China to Europe. It is more than likely that a hefty duty will also be imposed on “made in China” wind turbines next year, as was previously the case with electric cars.
Chinese witch hunt
However, a stormy reaction has appeared in the EU only recently. Customs duty rates on Chinese products reach 17-36%. Beijing perceives such restrictions as a personal affront. The European Commission recently released a draft decision to update tariffs on electric vehicles, which drew swift criticism from China, which called it “unfair competition”. Beijing reiterated its determination to take measures to protect the “legitimate rights and interests” of its companies.
Yes, China announced on the initiation of an anti-subsidy investigation into the import of dairy products from the European Union. It comes shortly after the EU took another step in its investigation into Beijing’s subsidized electric cars.
A few hours later, the Ministry of Commerce of the People’s Republic of China issued a statement announcing the launch of an investigation into imports of dairy products produced before March 31, 2024. This investigation was in response to complaints from industry associations and covers different types of cheese, milk and cream from eight EU countries, including Austria, Belgium, Finland and Italy. The countries that “blamed” Beijing must respond to the investigation within 20 days, and the investigation itself will last a year.
However, dairy products have not become the only area where China is already looking for “signs of the devil”. Before that, they set similar restrictions on European alcohol, pork, and products of the chemical industry.
So, last year Europe exported 560,000 tons of pork to China with a total value of 3 billion euros. Spain was the absolute leader in the export of “non-kosher” products. Because of their overload, the PRC inspection authorities intended to inspect the compromised imported products selectively, rather than all, and prolong the investigation for at least a year.
Experts believe that these inspections are not caused by the objective need to put order in one’s imports, but by an attempt to manipulate the European authorities. Next, it is quite expected that this information war will move to social networks, where the Chinese will target European farmers, convincing them of the incompetence of the European bureaucracy, which does not allow its compatriots to earn, thus provoking social indignation and perhaps even strikes.
The prospect of such a development pushes the EU to the need to form its own secure information space, so as not to leave the Chinese cotton wools a chance to muddy the waters.
This year, the Ministry of Commerce of the People’s Republic of China launched an anti-dumping investigation into brandy, cognac and liquor imported from the European Union. The investigation will allegedly appeal to the rules of the World Trade Organization and is allegedly not related to China’s desire to take revenge on Europe for its anti-dumping measures against China.
But China has outdone itself in investigations into the supply of polyxethylene copolymer from the EU, Taiwan, Japan and the US. This is a plastic widely used in electronics and automobile production in China at an unfairly low – in the opinion of the Communist Party – price.
It is safe to say that there is neither political nor economic freedom in China. I wonder how massive China’s economic barriers against European goods will become? If the Chinese Communist Party approves high tariffs on European goods, it will thereby reduce domestic consumption, which will inevitably hit its domestic economy. Paraphrasing the phrase “one cannot live in society and be free from it”, one can say: one cannot trade in the global economic space and ignore its rules.
Tatyana Morarash
