Europe is really worried and is preparing to launch the "Anti-Coercion Act" to take tough retaliatory measures against China, mainly targeting to force the opponent to relax its control over rare earths! Macron and German Smo have both expressed their positions, and the head of the German central bank is also eager to act; it can be seen that China's round of trade retaliation has truly hit the opponent's vital point!

Analysis of the Dilemma of the European "Anti-Coercion Instrument Act" in Sino-European Trade Confrontation

Recently, European countries wanted to launch the "Anti-Coercion Instrument Act" to counter China's rare earth control policy. The feasibility of this move in Sino-European relations is questionable, and Europe is in a passive position in this potential trade confrontation.

Content and Purpose of the Anti-Coercion Act

The "Anti-Coercion Instrument Act" was proposed by the European Commission in August 2021 and passed by the European Parliament with an absolute majority on October 4, 2023. The act stipulates rules and procedures aimed at effectively protecting the interests of the EU and its member states when a third country through any form of action, omission or threat affects trade or investment, coercing the EU and its member states to pass or not to take specific acts. Its core is that if a member state believes it is being coerced by a third country, it can use any trade restrictions, such as imposing tariffs, freezing assets, stopping licenses, etc. The purpose of the act is to strengthen and supplement the EU's trade defense toolbox, enabling the EU to better protect itself on the global stage.

Feasibility of the Act in Sino-European Relations

Internal Contradictions

The EU is not a solid block, and there are differences in the core demands among Eastern Europe, Southern Europe, and Germany and France, with non-pure market economy factors such as geopolitical pressure involved. It is difficult for all parties to reach a common interest, and the long negotiation process leads to low decision-making efficiency and poor implementation. For example, in previous trade decisions, different countries found it difficult to quickly form a unified and effective action plan based on their own interests.

Economic Interdependence

Europe has developed high-end manufacturing and financial services, but it is highly dependent on China in terms of raw materials and components. Eighty percent of the materials in the new energy vehicle industry come from China, and positive and negative electrodes, separators, etc., all require Chinese supply. If Europe engages in trade confrontation with China, and China takes retaliatory measures, European car factories will face shutdown crises, and companies like Volkswagen, BMW, and Mercedes-Benz will suffer major losses.

European Strategic Leverage

Europe tries to use the "Anti-Coercion Instrument Act" to impose trade restrictions on China, hoping to force China to make concessions on its rare earth control policy through measures such as imposing tariffs and freezing assets, in order to obtain rare earths, batteries, semiconductors and other resources and technologies at low prices. For example, the Netherlands inspected Amphenol Semiconductor, and German officials, citing the act, said "stricter" actions against China, and France followed up by wanting to set new regulations for Chinese companies. Three countries seem to be putting all their chips on the table.

Reasons Why Europe Is in a Passive Position

Economic Difficulties

Europe itself has poor economic conditions, and the energy crisis has not completely passed. To help Ukraine, it has invested a lot of money and resources, making the entire economy weak. In this situation, engaging in trade confrontation with China would further impact its economy, making it even worse.

China's Resource Advantages

China has an absolute advantage in the rare earth sector, being the world's largest producer and exporter of rare earths, controlling the mining, processing, and supply of rare earths. Europe cannot find alternative sources of rare earths in the short term. If it loses China's rare earth supply, its high-tech industries and new energy industries will be severely affected.

China's Market Size

China has a vast consumer market and is an important trade partner for Europe. Many European companies have huge commercial interests in the Chinese market, such as the automotive and luxury goods industries. If trade confrontation escalates, European companies will lose the Chinese market, which will cause great losses to their economic development.

In summary, the feasibility of the European "Anti-Coercion Instrument Act" in Sino-European relations is extremely low. It is unrealistic for Europe to engage in trade confrontation with China through this act, and it may end up "hurting 1000 enemies while damaging 800 of its own."

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Original: www.toutiao.com/article/1847000761568282/

Statement: This article represents the views of the author.