Europe needs to double down on trade protections to protect itself against China more vigorously and faster than it is currently doing, according to the Dutch scientific council.
The Scientific Council for Government Policy (WRR), which advises the Dutch government on long-term policy questions, will present its findings to the Dutch ministers of foreign and economic affairs on Thursday (27 August), but the brief covers Europe as a whole.
“There is a worldwide geopoliticisation of economic relations taking place,” writes chair Corien Prins in an accompanying letter to Dutch prime minister Rob Jetten, who hails from the pro-EU liberal centrist D66 party.
Albeit still in its infancy, Prins acknowledges EU industrial and innovation policy initiatives as a necessary step to catch up with China, and to a lesser degree the US.
But she also says that just focusing on domestic competitiveness and innovation is not enough, and that trade defences are needed.
“If we do not find a solution for the distorted trade, we risk spending a lot of money while losing European gains in areas such as privacy, working conditions and climate,” she wrote.
China subsidies
The core of the matter is cheap Chinese products.
Prices of Chinese goods are 30 percent below that of European products, which the report’s authors say is the result of “an economic strategy by the Chinese government that leans heavily on exports.”
One reason for Chinese goods flooding the world market is consistently weak domestic demand.