Within China, there was always a sense of security regarding the European Union. I mean Europe would issue a statement about Hong Kong or Xinjiang, but would usually stop short of concrete actions like sanctions or tariffs. So, it didn’t really matter for the CCP. As long as he could use unfair subsidies and cheap labour for mass production, powering exports to Europe— the statements made by the EU made little sense.
But now the EU has imposed tough tariffs on Chinese steel wind towers and aluminium foils. And all this would not have happened, had a bellicose Xi Jinping not made extravagant threats to the European Union.
Xi Jinping’s threats
When you consolidate too much power, you feel that there is no one bigger than you and you get delusional. This is what happened with Hitler in the Second World War. The man kept pushing his troops deeper and deeper, only to realise that Germany didn’t have a war economy big enough to sustain such military campaigns.
Xi Jinping too bites more than he can chew. So, when Lithuania got close to Taiwan, Xi started a trade war and told the world— cut ties with Lithuania or we will cut ties with you. Xi fooled himself about his own economic might. He thinks that the entire world wants to trade with China, and that the Chinese economy can be leveraged in foreign policy. But the truth is that the world wants to get rid of China and this is what the EU is now making him realise.
European tariffs on Chinese aluminium
Xi thought he would isolate Lithuania. But the EU decided to put all its weight behind its member country and took on China instead.
And the EU is not only talking about Xinjiang or getting close to Taiwan, but is also fighting China’s economic coercion.
On Wednesday, the EU official journal announced that that the EU will impose extra tariffs on aluminium foil coming from China. The European Commission found that the Chinese aluminium foil benefitted through excessive and unfair subsidies. The tariffs on thin-grade aluminium foil range between 8.6 and 18.2 percent, over and above existing anti-dumping duties between 6 and 28.5 percent.
China is the biggest aluminium producer in the world. And the aluminium foil market in Europe was one of the Chinese aluminium industry’s biggest markets. China’s share in the EU aluminium foil market grew from 18 per cent in 2017 to 24 per cent in 2019.
Europe imposes strict tariffs on Chinese steel wind towers
A day later, the EU official journal said that the EU will impose tariffs on steel wind tower imports coming from China. The EU has set duties ranging from 7.2 to 19.2 percent and the anti-dumping duties will apply for five years. The imports of Chinese wind towers have been going up rapidly. It was found that 80 percent of all steel powers imported from China into the EU, increased their share of the EU market to 34 percent from July 2019 as against 25 percent in 2017.
The European Commission also found that the Chinese steel wind towers sold at a discount and given the level of price-competitiveness in the EU market, China was planning to monopolise it.
EU cutting dependence on Chinese steel and aluminium
European Union is now cutting dependence on Chinese steel and aluminium. And why not? The US and the EU have already ended their steel and aluminium fight. The Biden administration will allow duty-free access to steel and aluminium exports to the United States. And together the US and the EU will fight China’s ‘dirty’ steel.
Meanwhile, European companies know that China’s steel and aluminium production has gone down due to a prolonged power crisis. So, the European Union can produce, use and export the two important metals with wide application in different industries.
The European Union always needed to get rid of China’s steel and aluminium. But it had no visible plans to achieve that. And yet it was Xi Jinping’s threats that backfired and instigated the EU to fast-track curbs on Chinese metals.