China has been involved in several trade controversies in the last couple of years, with the biggest one was probably being the trade war with the US. Both countries have imposed significant tariffs on each country’s imports. However, this has not been the only controversy regarding China. There have been other allegations of forced labor, dumping of products, and poor quality of materials.
Thus, in December 2020, the European Union (EU) announced that it will open two major investigations against products being exported by Chinese firms. The first investigation will look into Chinese screws, which are being sold in large quantities at extremely low prices. On the other hand, the second investigation will focus on Chinese optical cables to determine if they could be benefitting from unfair subsidies. This blog reviews the key aspects of the investigation and analyzes whether Chinese policies are becoming unreliable and even perhaps illegal.
EU Opens New Investigation
In recent years, the EU had already started viewing China as a significant rival. Currently, there are around 23 investigations related to Chinese products that are being undertaken by the union. Most of these investigations are related to anti-dumping laws or excessive subsidies being provided by the Chinese government.
The latest investigation has been announced after the European Industrial Fasteners Institute (EIFI) filed a complaint against the low prices being offered by Chinese manufacturers. The institute believes that these low prices are harming the prospects of local producers within the EU. Moreover, Chinese producers of optical cables are also under scrutiny, as they have been benefiting from subsidies provided by the government. Both these investigations are likely to be completed within the next 12 to 13 months. It will be interesting to see whether the Chinese exporters will be penalized and if the Chinese government will also receive sanctions as part of the punishment.
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