China could fend off EU tariff moves with more direct investment: analyst

Chinese researcher expects more restrictions to follow as Brussels tries to reduce reliance on China’s critical raw materials

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A Chinese researcher said recent moves by the European Union make clear that the EU is aiming to reduce its reliance on critical minerals from China. Photo: Reuters

Published: 6:30pm, 21 Oct 2024

China may face more tariff moves by the European Union while the bloc attempts to reduce its reliance on the country’s critical raw materials, a Chinese analyst has warned.

Zhang Pengfei, a research fellow at the Shanghai Academy of Social Sciences, acknowledged that it would still be “very difficult” for the two economies to decouple in the short term.

In an article published by the state-backed digital outlet The Paper on Thursday, Zhang recommended more direct investment from Chinese companies in the European Union to cope with the expected trade barriers to come.

“It is clear that the EU cannot simply follow the US practice of systematically excluding Chinese technology,” he wrote, noting that such a course would not only impede the EU’s digital and energy transitions, but also lead to higher costs for its economy.

Nevertheless, Brussels is unlikely to take a “laissez-faire approach” to its economic and trade ties with Beijing, since doing so would affect jobs, productivity and the bloc’s economic security, he said.

To back his argument, Zhang cited last month’s 400-page report on the future of European competitiveness led by the former Italian prime minister Mario Draghi, who also served as European Central Bank chief.