if your products are good enough that people want to buy them, that's grounds for banning them.
https://x.com/RnaudBertrand/status/2071423360123432987
This is a really important signal by China to Europe.
The social media account Yuyuantantian, operated by China’s state broadcaster CCTV and created in 2019 during China's first trade war with the US specifically to signal China's position, just wrote a long article (mp.weixin.qq.com/s/lO6LXYcY7U_z) on the brewing trade war between China and Europe.
Most notably they say the EU's current strategy of dealing with China "can only produce a paper tiger" (meaning it cannot hurt China) and that China is "not afraid" of a "freezing point" in trade and economic relations with the bloc - meaning presumably a complete halt of trade.
This sentence is eerily similar to what China told Trump when he unveiled the tariffs on China (and the whole world) in April 2025. At the time China's Ministry of Commerce said that "if the U.S. insists on its own way, China will fight to the end" (english.mofcom.gov.cn/News/PressConf).
The context is that the EU is currently working on a series of extremely hostile new legislation packages against China, such as the so-called "overcapacity instrument" on which I wrote a long post at the beginning of the month (see quoted post
).
This instrument is basically a legal tool that says that if China is competitive globally in a given sector in such a way that it exports a lot, that's proof of overcapacity, and legally it'd mean that the entire sector can be restricted from the EU market.
In essence, it's a law that says: if your products are good enough that people want to buy them, that's grounds for banning them. Which is pretty insane!
There's also a so-called "diversification instrument" being developed alongside it, which - according to Maroš Šefčovič, the EU's trade chief himself - is modelled on how the EU reduced its reliance on Russian energy after the Ukraine invasion (scmp.com/news/china/dip) and is developed with China in mind.
In their article, Yuyuantantian say that all of this is part of a "escalate first, de-escalate later" strategy - essentially bullying - that the EU borrowed from watching the US, but without any of the leverage to back it up.
As the article puts it: the actors who can pull off extreme pressure tactics can only do so if they have "absolute leading positions in key areas or irreplaceable international influence." The EU, it notes, has neither, hence them concluding that the EU "forcibly pursuing 'escalate first, de-escalate later' can only produce a paper tiger."
Another very consequential framing in the piece is that they characterize Europe as becoming - essentially - a rogue actor in the international system, that doesn't care about rules anymore. Which they say is suicidal for Europe in several ways.
First of all, as they write, the EU's international identity in the international system - its USP, if you will - rests entirely on being a "normative power," a rules-based institutional actor that you can do business with precisely because it won't move the goalposts on you. That's what made European standards worth complying with and European markets worth the entry cost.
As they explain, the EU had gone against China in the past but always within the rules of the WTO (with tools like anti-dumping and anti-subsidy), and always in a way that was somewhat justified and predictable, basically the cost of doing business.
However, the new approach is designed to be essentially unpredictable and arbitrary- and as such makes Europe less and less attractive and more and more risky.
They point out the irony of Europe on one hand saying it wants more investment and industrial cooperation to learn from China but at the same time "constantly raising the bar for attracting investment and maintaining industrial cooperation."
As they write: "the greater the uncertainty, the less likely long-term capital and supply chains will dare to enter, ultimately harming Europe's own sources of growth."
Secondly, the article exposes what is arguably the most self-destructive contradiction in the EU's entire approach: the EU's stated justification for all these new tools is its "unsustainable" trade deficit with China. But when China came to the negotiating table and said "fine, we'll buy more from you," the EU had nothing to offer - because what China wants to buy is high-tech products, and those are exactly what Europe restricts under its export controls policy (largely at the behest of the US).
In essence, Europe's approach is purely punitive, shutting every door simultaneously: you can't export to us (overcapacity), you can't invest here (unpredictable and arbitrary legal risk), and we won't sell you what you want to buy (export controls).
Now you understand why China is becoming frustrated to the point it's contemplating a "freezing point" in trade and economic relations with Europe. When the party on the other side of the table punishes you for exporting, blocks you from investing, and refuses to sell you what would fix the problem they're complaining about, there's not much left to talk about.
My personal opinion is that it is undeniable that Europe is suffering from grave economic problems, but it's mistaking symptoms for cause: it's doing the equivalent of wanting to punish the runner who overtook you instead of asking why you're getting overtaken.
The car industry is a really good case in point: Chinese EVs really are better than German cars at this stage, and it's NOT because of subsidies (quite the contrary in fact, see this: x.com/RnaudBertrand/). As such, how does punishing China for their competitiveness help the German car industry, specifically? What would help are rather initiatives to learn from the best: stuff like technology partnerships and welcoming Chinese factories on European soil.
The notion that if you ban China the problem goes away is exactly what the Ming dynasty - in 17th century China - did and that's what directly led to the century of humiliation because it became backwards technologically: it's what we call in French the "policy of the ostrich" ("la politique de l'autruche"), putting your head in the sand and hoping that makes things better.
And timing-wise it couldn't possibly be worse: having cut itself off from Russian energy, caved to American tariffs, and destabilized its own industrial base - the logical next step was apparently to pick a trade war with your largest trading partner and the last remaining great power with genuine goodwill towards you.
Because that's the real tragedy of the China-Europe relationship: there is a genuine and frankly almost touching desire for engagement and cooperation from the Chinese side and Europe is doing everything in its power to squander it.
).
This instrument is basically a legal tool that says that if China is competitive globally in a given sector in such a way that it exports a lot, that's proof of overcapacity, and legally it'd mean that the entire sector can be restricted from the EU market.
In essence, it's a law that says: if your products are good enough that people want to buy them, that's grounds for banning them. Which is pretty insane!
There's also a so-called "diversification instrument" being developed alongside it, which - according to Maroš Šefčovič, the EU's trade chief himself - is modelled on how the EU reduced its reliance on Russian energy after the Ukraine invasion (scmp.com/news/china/dip) and is developed with China in mind.
In their article, Yuyuantantian say that all of this is part of a "escalate first, de-escalate later" strategy - essentially bullying - that the EU borrowed from watching the US, but without any of the leverage to back it up.
As the article puts it: the actors who can pull off extreme pressure tactics can only do so if they have "absolute leading positions in key areas or irreplaceable international influence." The EU, it notes, has neither, hence them concluding that the EU "forcibly pursuing 'escalate first, de-escalate later' can only produce a paper tiger."
Another very consequential framing in the piece is that they characterize Europe as becoming - essentially - a rogue actor in the international system, that doesn't care about rules anymore. Which they say is suicidal for Europe in several ways.
First of all, as they write, the EU's international identity in the international system - its USP, if you will - rests entirely on being a "normative power," a rules-based institutional actor that you can do business with precisely because it won't move the goalposts on you. That's what made European standards worth complying with and European markets worth the entry cost.
As they explain, the EU had gone against China in the past but always within the rules of the WTO (with tools like anti-dumping and anti-subsidy), and always in a way that was somewhat justified and predictable, basically the cost of doing business.
However, the new approach is designed to be essentially unpredictable and arbitrary- and as such makes Europe less and less attractive and more and more risky.
They point out the irony of Europe on one hand saying it wants more investment and industrial cooperation to learn from China but at the same time "constantly raising the bar for attracting investment and maintaining industrial cooperation."
As they write: "the greater the uncertainty, the less likely long-term capital and supply chains will dare to enter, ultimately harming Europe's own sources of growth."
Secondly, the article exposes what is arguably the most self-destructive contradiction in the EU's entire approach: the EU's stated justification for all these new tools is its "unsustainable" trade deficit with China. But when China came to the negotiating table and said "fine, we'll buy more from you," the EU had nothing to offer - because what China wants to buy is high-tech products, and those are exactly what Europe restricts under its export controls policy (largely at the behest of the US).
In essence, Europe's approach is purely punitive, shutting every door simultaneously: you can't export to us (overcapacity), you can't invest here (unpredictable and arbitrary legal risk), and we won't sell you what you want to buy (export controls).
Now you understand why China is becoming frustrated to the point it's contemplating a "freezing point" in trade and economic relations with Europe. When the party on the other side of the table punishes you for exporting, blocks you from investing, and refuses to sell you what would fix the problem they're complaining about, there's not much left to talk about.
My personal opinion is that it is undeniable that Europe is suffering from grave economic problems, but it's mistaking symptoms for cause: it's doing the equivalent of wanting to punish the runner who overtook you instead of asking why you're getting overtaken.
The car industry is a really good case in point: Chinese EVs really are better than German cars at this stage, and it's NOT because of subsidies (quite the contrary in fact, see this: x.com/RnaudBertrand/). As such, how does punishing China for their competitiveness help the German car industry, specifically? What would help are rather initiatives to learn from the best: stuff like technology partnerships and welcoming Chinese factories on European soil.
The notion that if you ban China the problem goes away is exactly what the Ming dynasty - in 17th century China - did and that's what directly led to the century of humiliation because it became backwards technologically: it's what we call in French the "policy of the ostrich" ("la politique de l'autruche"), putting your head in the sand and hoping that makes things better.
And timing-wise it couldn't possibly be worse: having cut itself off from Russian energy, caved to American tariffs, and destabilized its own industrial base - the logical next step was apparently to pick a trade war with your largest trading partner and the last remaining great power with genuine goodwill towards you.
Because that's the real tragedy of the China-Europe relationship: there is a genuine and frankly almost touching desire for engagement and cooperation from the Chinese side and Europe is doing everything in its power to squander it.
posted by Satish Sharma at
11:15
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