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EU's Von der Leyen echoes Yellen's calls for tough stance on Chinese overcapacity

by SuperiorInvest

President of the European Commission Ursula von der Leyen speaks during a press conference.

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European Commission chief Ursula von der Leyen said on Tuesday that Europe must talk tough to China over its perceived unfair trade practices, echoing calls from US Treasury Secretary Janet Yellen the previous day.

Speaking ahead of German Chancellor Olaf Scholz's trip to Beijing later this week, von der Leyen said European companies should have the same market access in China as Chinese companies in Europe, according to comments cited by Reuters.

He also urged the German leader to take a tough stance with Chinese authorities over overcapacity and unfair competitive practices.

It comes after Yellen told CNBC on Monday that she would not rule out any US measures, including possible tariffs, against China amid concerns that Beijing is intentionally flooding international markets with cheap green energy products.

“I wouldn't rule anything out at this point. We need to keep everything on the table. We want to work with the Chinese to see if we can find a solution,” he said in an interview with CNBC's Sara Eisen.

China overcapacity concerns

Chinese overcapacity has become a major point of diplomatic tension, with the United States and its allies questioning whether China's overproduction and subsidized goods are undermining domestic businesses.

China, for its part, denies the claims, with Chinese Minister of Commerce Wang Wentao saying on Sunday that the rise of China's green technology industry, which includes electric vehicles, solar panels and lithium-ion batteries, It is the result of “constant innovations”. according to his ministry.

He also questions whether the United States – through initiatives such as the Inflation Reduction Act – is subsidizing its own manufacturing industry.

Yellen said on Monday that other countries could explore the possibility of imposing trade restrictions on China if a deal could not be reached.

Read more CNBC political coverage

The European Union has so far resisted implementing such measures, given its strong trade ties with the world's second-largest economy.

Berlin, in particular, has been reluctant to impose tariffs on Beijing's electric vehicle industry for fear of retaliation against its own sizable auto industry, a key avenue for German exports to China.

Speaking on Monday before his three-day trip to China, Scholz said he was skeptical about the need for such tariffs, a spokesman said, according to Reuters. This is despite a broader ongoing EU investigation into the “dumping” of subsidized Chinese electric vehicles in Europe.

Scholz is scheduled to arrive in China on Sunday for a visit that will include a meeting with Chinese President Xi Jinping and Premier Li Qiang. He will be joined by three ministers and several executives from the business community, according to media reports.

The visit is Scholz's second since taking office as chancellor and the first since November 2022.

Correction: China's Commerce Minister Wang Wentao spoke on Sunday. An earlier version incorrectly indicated the day.

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