China slams EU over its report, says calling it a 'distorted state-run econo

Beijing: The European Commission accused China of being a “distorted state-run economy”. China has expressed its displeasure on the Commission’s accusation and has criticised EU’s stand in this regard to be hypocritical and baseless. It is believed that the series of accusations between China and Europe would further strain the trade relations between both countries.

The European Commission published its first “Country Report” on the China this Wednesday. The 435-page report targets China by reporting on cheap imports and new rules on “anti-dumping”. The Commission accused the Chinese government of distorting and corrupting the Chinese economy using pressure tactics.

By mentioning the rules applicable to the ‘World Trade Organization’ member countries on the issue of “dumping”, a warning to consider countries independently was issued to those that have been trying to manipulate the market knowingly. This warning was specifically issued to Chinese companies wherein a few of these companies from certain sectors would soon be levied fines in this regard. The Commission in their report has reprimanded China by stating that China’s Communist Party describes its nation’s economy as a ‘Socialist Market Economy’ but the reality was far from it. The report states that China’s ruling Communist Party first forms the economic agenda upon which all other related components are fixed and controlled. It mentions that the banks were instruments to maintain a constant rigid and corrupted financial system and the local companies were being assigned preferences through banks for their boom.

The Chinese economy was further accused in the report stating that the Chinese businesses were being given land at minimal or no cost, cheap energy, preferential access to capital, low interest rates for their companies, cost of raw materials were being regulated and limited rights were given to workers. The Commission report provides separate sections on the state’s intervention in sectors like steel, aluminium, chemicals and ceramic.

The Commission openly accused the state’s intervention to be responsible for problems of overcapacity. It also criticised that though the Chinese government had committed on curtailing overcapacity, the actual industrial policy aims at giving priority to local business. The Commission report mentions “state interference” and “distorted economy” over 90 times.

The EU report has received acute reactions from China. The Chinese Foreign Ministry Spokesperson Hua Chunying attacked the Commission with sharp words by saying that the Commission report had made ‘thoughtless remarks’ about the Chinese economy and warned of unfair action being taken against it. She said that such actions may be detrimental to mutual co-operation and affect their relations. Also, the report was symbolic of hypocrisy and baselessness, said Chunying.

Only in the previous month, a new bill was passed to stop cheap imports of Chinese products. Previously, the US had openly opposed China to be recognised with the status of ‘Market Economy’ (Market based Economy) by World Trade Organisation.