Beijing – The United States’ tariffs against China are “economic madness” and will not be effective in convincing the Chinese government to speed up market reforms, the head of a European business group in China said Tuesday.
“We think that what the US is doing right now is economic madness,” said Mats Harborn, president of the European Union Chamber of Commerce in China.
Trade war hurts European companies
He spoke hours after US President Donald Trump announced 10-per-cent tariffs on an additional 200 billion dollars’ worth of Chinese imports. Earlier this year, the two countries imposed duties on 50-billion-dollars’ worth of goods each.
The escalating US-China trade war is hurting European companies and disrupting global supply chains, the chamber said.
Fifty-four per cent of respondents in a survey conducted by the chamber said they viewed the US tariffs negatively, while 43 per cent thought that way about Chinese tariffs.
The duties imposed by the world’s two largest economies against one another are slowing economic growth, decreasing jobs and delaying production upgrades, the study said.
Ten per cent of members are already shifting production out of the US, China or both countries. And seventeen per cent of respondents are holding off investment due to the trade tensions.
The study was conducted before Monday’s announcement in Washington.
“We can anticipate that the results will be magnified,” Harborn said.
EU: tariffs slow reforms
European businesses share the US’ concerns regarding China’s trade and investment practices, particularly on forced technology transfers, Harborn said, however, pressing on with tariffs will force Chinese policymakers into a corner and slow reforms.
“The US needs to recognize that either it trusts the efforts of the Chinese side, or we will be stuck in an eternal stalemate,” Harborn said, adding that, “the ball is in China’s court. China needs to continue to reduce the reform deficit.”
The EU Chamber’s recommendations to the Chinese government include improving market access for foreign firms; imposing fair and consistent regulations; and reducing support for the gargantuan state-owned enterprises.
The European Union’s approach to China’s market restrictions is not to “pressure China into substantial change,” but instead negotiate reforms that Beijing also sees as benefitting the Chinese economy, Harborn said.
China’s economy, which was expected to grow by 6.5 per cent this year, might be further slowed by the trade war, experts say. The stock market has dropped in recent weeks to the lowest level since 2014.