Bob Savic

Opinion | EU has reason to keep things sweet with China despite protectionist rules

Although new EU measures covering environmental, human rights and anti-subsidy concerns threaten Chinese business interests, EU and Chinese leaders, braced for Trump 2.0, have reason to keep tensions from boiling over

Reading Time:4 minutes

Why you can trust SCMP

Bob Savic

Published: 8:30pm, 26 Mar 2024

While US lawmakers hit global headlines for pushing a bill aimed at forcing China’s ByteDance to divest of its TikTok operations in the US, the European Union has passed relatively low-key rules targeting China’s commercial interests. The EU’s measures, however, could have a more far-reaching impact on Chinese industries.

Arguably the most controversial is the EU’s new directive governing the oversight of international business supply chains. This will require large EU-based companies to monitor human rights and environmental policies in the countries they operate in, in connection with local suppliers and other business partners.

The measure prospectively targets all developing countries that have different regulatory standards in these areas, and many Chinese businesses are expected to fall under its focus.

According to a survey by the Chinese Chamber of Commerce to the EU, China’s enterprises are especially concerned over the law’s due diligence requirements, with compliance expected to impose high costs.

In particular, high compliance burdens are anticipated for Chinese solar and textile producers in accessing the EU market. Industry officials have been lobbying the EU for action as these Chinese companies have effectively elbowed out their EU competitors in the single market over the last decade.

In tandem with the new supply chain law, the EU has also agreed provisionally on new rules to prohibit products made from “forced labour”. This move is seen as aiming to more specifically target China’s alleged labour practices in its western region of Xinjiang.