EU, Chinese Leaders To Discuss Trade Issues

By Naomi Martig
Hong Kong

EU, Chinese Leaders to Discuss Controversial Trade Issues

Leaders of China and the European Union are to open a summit Wednesday in Beijing. The EU's growing trade deficit with China and the safety of Chinese imports are issues that are likely to dominate the talks.

EU leaders gathering in Beijing are expected to bring up a variety of trade issues with China, many of which have created an increasingly complicated relationship between them.

The safety of Chinese products is likely to be at the top of the agenda. In recent months, China has scrambled to clamp down on poor quality goods to try to build confidence in the "made in China" label. A string of safety scandals involving seafood, car tires, toothpaste and children's toys have led to bans and recalls overseas.

Earlier this year, a leading London toy store pulled two Chinese-made products from its shelves after paint on one type of toy was shown to contain high amounts of lead, which could cause brain damage or even death. The U.S. toy company Mattel has also recalled more than 18 million Chinese-made toys because of unsafe levels of lead.

On Monday in Beijing, European Union trade commissioner Peter Mandelson said that ensuring consumer trust and confidence in Chinese products must be China's priority if it wants to maintain the export growth rates of recent years.

"During the summer, some Chinese officials pointed out that less than one percent of China's exports to Europe had alleged health risks," he said. "But Europe imports half a billion euros worth of goods every day from China. So, even one percent is not acceptable."

His comments drew an icy response from China's top trade official, Vice Premier Wu Yi. She insists China's government has taken unprecedented steps to ensure product quality and food safety.

EU policy makers are also expected to press Chinese officials to increase market access for European goods, and to reform its currency exchange rate.

Last year, the EU's trade deficit with China was about $170 billion. This year, it is expected to approach $230 billion, a record level. EU officials blame the widening gap on what they call China's artificially low currency exchange rates, which they say give the country an unfair trading advantage.

Christer Ljungwall is an EU and China trade expert at Peking University. He says he does not expect the currency dispute to be resolved anytime soon.

"Any major jump in exchange rate policy would be, first of all, very unpredictable, and it would be very difficult to foresee the actual results of that," he said. "And from the Chinese perspective, again, it is not likely to happen."

China is reluctant to allow a rapid fluctuation of its currency, fearing it could cause unemployment and market instability.

After the US, China is the European Union's second-biggest trade partner, and its largest source of imports.

ENDS

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