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Jürgen Matthes IW-Analyse No. 138 10. September 2020 European trade policy and China: Steps towards a new balance and fair competition

For the European Union, China is both an important trading partner and, with its very different political system and industrial policy, a new competitor. From a European perspective, the main cause for concern is how China’s state capitalism has created distortions in economic competition which are increasingly affecting world markets.

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Steps towards a new balance and fair competition
Jürgen Matthes IW-Analyse No. 138 10. September 2020

European trade policy and China: Steps towards a new balance and fair competition

IW-Analyse

German Economic Institute (IW) German Economic Institute (IW)

For the European Union, China is both an important trading partner and, with its very different political system and industrial policy, a new competitor. From a European perspective, the main cause for concern is how China’s state capitalism has created distortions in economic competition which are increasingly affecting world markets.

Unfortunately, the world’s current multilateral trade regime has inadequate mechanisms for dealing with industrial subsidies and state-owned enterprises. Various constructive attempts by the EU and the USA to reform the rules of the World Trade Organization (WTO) have continued to meet with Chinese resistance. Nor, despite massive pressure, especially from the USA, has China so far made any substantial concessions on industrial subsidies in bilateral negotiations. The EU should therefore act unilaterally, making greater use of existing trade defence instruments within the WTO framework, as the USA has long been doing, and expanding its own tool box. These measures will serve the dual purpose of preparing for a further increase in Chinese competitive distortions on the world market and of exerting more pressure on China to agree to new trade rules on industrial subsidies. After all, if the Chinese government continues to reject reform of the respective WTO rules, the multilateral trading system risks permanent damage.

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Steps towards a new balance and fair competition
Jürgen Matthes IW-Analyse No. 138 10. September 2020

Jürgen Matthes: Die europäische Handelspolitik und China – Schritte zu einer neuen Balance mit fairem Wettbewerb

IW-Analyse

German Economic Institute (IW) German Economic Institute (IW)

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Institutional consequences of EU Enlargement
Berthold Busch / Julian Sommer / Samina Sultan IW-Report No. 15 12. March 2024

Institutional consequences of EU Enlargement

At the latest since the Russian war of aggression in Ukraine and the decision to open accession talks with the country, the topic of enlargement has once again become much more important for the European Union (EU).

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Berthold Busch / Samina Sultan IW-Report No. 63 11. December 2023

Fiscal aspects of an EU-enlargement

Following the European Commission's recommendation to open accession negotiations with Ukraine, the European Council will decide on this at its summit in December. This is a historic step that is of great geostrategic importance, particularly in light of the ...

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