THE CHINESE DUMPING REALITY

China’s dumping undermines free and fair trade. A company is ‘dumping’ if it is exporting a product to the EU at prices lower than the normal value of the product (the domestic prices of the product or the cost of production) on its own domestic market. The purpose of dumping is usually to increase market share in a foreign market or to drive out competition. Chinese enterprises dump more products into Europe’s open market than any other country in the world. Indeed, 75% of all the EU's anti-dumping measures in force involve China. The European Commission has found China guilty of dumping 54 important products on the EU market at predatory prices. Furthermore, the EU is currently experiencing a rise in anti-circumvention proceedings where Chinese producers try to avoid anti-dumping measures illegally by exporting to Europe, via third countries such as Taiwan and Malaysia.  The enormous EU-China trade deficit grows every year. China has dramatically increased exports to Europe by an average of 11% per year over the past fifteen years, rising from €75 billion in value in 2000 to €360 billion in 2015. Europe’s trade relationship with China is not balanced and is made worse by dumping. The trade deficit between the EU and China reached an all-time record high of €180 billion in 2015.

Dumping from China is wiping out European jobs. European industry has already lost millions of manufacturing jobs to China. For instance, when China joined the WTO in 2001, millions of EU workers were employed in the textile sector. Now, China has an estimated 65 percent of the world's total textile production and European production has been decimated. Overall, China now makes and sells more manufactured goods than any other country, particularly steel. Driven by massive excess capacity more than twice the size of total EU steel demand, China has been dumping unprecedented volumes of steel into Europe. The EU steel sector has lost at least 85,000 jobs since 2008, over 20% of its workforce. Import volumes of steel from China into the EU have doubled in the past two years, with prices collapsing by about 40%. Steel is the backbone of many of Europe’s manufacturing and construction industries, providing direct and indirect employment to millions more European citizens.

The list of vulnerable industries include steel , ceramics , glass , aluminium,  bicycles and parts , solar panels and many others besides. These industries are at high risk due to the potential for large import surges in sectors where China has, or is developing, substantial excess production capacity. The country has demonstrated past willingness to engage in subsidies and the massive dumping of excess domestic production at prices below cost.

China’s environmental and social dumping is wiping out jobs. China’s export-led growth strategy leads to environmental and social dumping.

The Chinese central government and political authorities maintain extensive controls over the economy through detailed five-year plans and 22 national industrial-sector plans, faithfully implemented by provincial and local governments. China’s ‘State Capitalism’ system facilitates collusion between elites in the Communist Party and the corporate sector. Furthermore, the State has substantial influence over company decision-making through intervention in the pricing of specific goods, raw materials and energy prices. In supporting its export-led growth strategy with widespread subsidies and state, provincial and local capacity-expansion plans, China promotes massive excess production capacity in a wide range of industries. There is state control of trade union organisations and a lack of free collective bargaining. Currency manipulation by China also acts as an implicit subsidy to China’s exports to the EU and other countries, and as an effective tax on EU exports to China, and to all other countries where EU products compete with those from China. Currency manipulation adds a wedge between costs and prices in China and those in other countries. A lower yuan makes the cost of exporting goods for Chinese companies cheaper, giving the slowing factory sector a boost.

Current anti-dumping measures safeguard tens of thousands of direct and indirect jobs in Europe, with thousands more in sectors or product types still undefended. Without the anti-dumping instruments currently available, up to 3.5 million jobs would be at risk from China’s unfair trading practices. Without effective anti-dumping measures the EU is only left with the anti-subsidy instrument, which has never been effective in the face of the distortions of the Chinese economy: it only allows action against specific subsidies and not against the subsidies which are generally available in China. To make things worse, in addition to the opaqueness of Chinese subsidy regimes, the Chinese government has never complied with the WTO obligation to report subsidies, nor has it ever cooperated with the European Commission in anti-subsidy investigations. Accordingly, the average subsidy rate found in Chinese cases is negligible, and entirely inadequate in redressing injuries to EU industry and easily absorbable by Chinese producers.

Chinese officials are trying to solve their domestic economic problems including a massive property bubble, a collapsing stock market, and a slowing  domestic economy through more dumping and market manipulation. The country is, in effect, exporting its overcapacity and domestic economic problems abroad.