EU and China should join hands to lead new era of green trade

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Why the EU, US are concerned about China’s overcapacity

Second, the EU maintains a global leadership position in many traditional manufacturing sectors and emerging industries, making it one of the few economies with technological innovation capabilities that can rival those of the US.

Third, after more than 30 years of integration, the EU’s single market has become increasingly competitive and attractive, further enhancing its significance in the global trade system.

Both the US’ Inflation Reduction Act and the EU’s Net-Zero Industry Act implement fiscal and credit policies favouring green industries. However, such policy tools for promoting green development sometimes may not be aligned with existing international trade rules.

In the absence of updated rules and international agreements, trade conflicts are inevitable, fuelling protectionism, high inflation and hindering the global green transition process. Therefore, reforming international trade rules to better suit green development is in the interest of all parties involved.

Amid current trade tensions, China and the EU are in a unique position to lead the way in negotiating new international trade rules that would promote the green transformation of both economies, setting an example for future WTO reforms in this area. The two sides need to establish a coordination mechanism for green industry policies, ensure bilateral transparency and openness and jointly commit to a win-win green future.

Ju Qiu, PhD, is a researcher at the CEIBS Lujiazui International Institute of Finance. The views in this article are the author’s own