The European Union is preparing to take aim at Chinese steelmakers this month – over Beijing’s state subsidies – as part of the bloc’s ongoing crusade to retain its industrial edge.
The EU move, reported by the Financial Times, is likely to be announced at a summit with the US, which has been targeting China in an effort to shield its industries from cheap competition.
Washington had asked Brussels to move against Chinese steel producers in return for avoiding the re-imposition of Trump-era tariffs on EU steel, the FT report said.
US President Joe Biden will host European Commission President Ursula von der Leyen and European Council President Charles Michel on October 20, just before a deadline to resolve a bilateral dispute over steel tariffs.
Both the US and EU have been ramping up efforts to ‘de-risk’ from China, in the aftermath of the Covid-19 pandemic, which saw Beijing impose extreme shutdowns that threw global supply chains in disarray.
The EU has repeatedly said that de-risking does not mean decoupling from China, but that it has learned a tough lesson from relying on Russia for natural gas and then being cut off after Russia’s 2022 invasion of Ukraine.
Last week, EU leaders met to map out economic security strategies aimed at reducing China dependencies and boosting the bloc’s competitiveness.
The bloc was particularly focused on cutting dependencies for strategic products, particularly those required for its green transition. These include critical minerals such as lithium — used in electric vehicle (EV) batteries — and rare earths found in wind turbine magnets.
Steel is a crucial metal for the EV industry as well, given its strength, durability and relatively lower impact on environment during mining.
In September, Brussels also launched an investigation into Chinese state subsidies for electric vehicles, with an aim to assess the need for punitive tariffs to protect EU producers.
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Chinese EVs imported into the EU have been a cause of immense concern for European carmakers, who have been forced to slash costs to tackle the ‘invasion’ of cheaper cars.
Beijing also urged Brussels to safeguard the stability of the global supply chain and a strategic partnership between the two, while “prudently” applying trade remedies.
Meanwhile, last week, the FT reported that the EU was also considering an investigation into Chinese subsidies for wind turbines, the cheap imports of which were driving local firms to ‘near-collapse’.
- Reuters, with inputs from Vishakha Saxena