October 16, 2008

EU urges China to address yawning trade gap

It is reported that European Union has urged China to address increasing gap in bilateral trade imbalance.

Mr Heinz Zourek Director General for Enterprise and Industry of European Commission said "We are aware that the European Union has become the most important export market for China. However, our exports going to China are smaller in size than our exports going to Switzerland.” In 2006, EU total exports to China were EUR 63.4 billion while those to Switzerland stood at EUR 86.8 billion.

Mr Zourek said “The trade deficit with China has continued to widen, rising by 25% so far this year compared with 2006, a fact the European Union is following with great attention.”

Mr Zourek said that European steel producers complain that they are being hurt by Chinese exports sold below cost. EU's steel imports from China in the first nine months of 2007 are up by 137 % YoY.

He said National Development and Reform Commission hopes to cut steel production capacity by 20% to 400 million tonnes and wants to enhance productivity by closing down outdated facilities. He said that a Chinese delegation is due to attend an EU seminar in Poland this year on restructuring an obsolete steel industry. He concluded that "China considers that they have reached a peak of capacity of production of steel and will do whatever they can to avoid that additional capacity will be created.”