The Ministry of Commerce of China File photo: VCG

If a trade surplus alone is enough to warrant the label of "overcapacity," then aren't the automobiles, pharmaceuticals, wine, and cosmetics exported by the EU also suffering from "overcapacity"? China's Ministry of Commerce spokesperson He Yadong asked rhetorically during a press conference on Thursday.

He made the remarks when asked to comment on recent media reports claiming that the European Commission is rushing to formulate a new trade instrument to address so-called China's "overcapacity" issue.

The spokesperson said that regarding the so-called "overcapacity" issue, the Chinese side has previously elaborated its position on multiple occasions. "In the broader context of globalization, we should respect economic laws and market principles, and view the issue objectively, comprehensively, and from a long-term perspective," He said.

Noting that relevant countries are investigating the EU's own "overcapacity" issues, the spokesperson said that under such circumstances, the EU has even less reason to apply double standards. 

If the EU fabricates a new trade tool targeting China under the pretext of "overcapacity," it is essentially an attempt to cover up its own industrial difficulties and to smear and suppress external competition. This move will not only damage China-EU economic and trade relations, but also disrupt the stability of global production and supply chains, and it will ultimately backfire on the EU's own industrial development. The EU shall bear full responsibility for this, the spokesperson noted.

The Chinese side has consistently advocated that China and the EU should resolve differences through cooperation and consultation. China will not initiate trouble, but if China's national interests and the legitimate rights and interests of its enterprises are harmed, it will not sit idly by, He said, urging the EU to face reality, return to the correct track of dialogue and consultation, and take actions that genuinely benefit the development of China-EU economic and trade relations.

"If the EU insists on pushing forward the so-called new tool and adopts discriminatory restrictive measures against Chinese enterprises or products, China will firmly take countermeasures," the spokesperson noted.

Recently, the EU has taken a series of trade protection measures targeting China, including cross-border investigative practices targeting Chinese entities in its probe into Nuctech, the Industrial Acceleration Act as well as the proposed revision of the Cybersecurity Act.

Jian Junbo, director of the Center for China-Europe Relations at Fudan University's Institute of International Studies, told the Global Times on Thursday that with the continuous development of the economies and industrial structures of both sides, it is normal for China and the EU to have competition in certain fields, but protectionism does not enhance competitiveness, and will harm others without benefiting itself.

For instance, the EU's proposed revision of the Cybersecurity Act could carry a price tag of nearly 367.8 billion pounds ($431.5 billion), if it forces the replacement of Chinese suppliers across 18 critical sectors, according to a report the China Chamber of Commerce to the EU sent to the Global Times.

Jian said that the Chinese side has consistently emphasized resolving differences through dialogue and exchanges while strengthening cooperation. However, if the EU insists on taking unilateral actions against China, China will definitely resolutely safeguard its own legitimate rights and interests, he said.

An insider told the Global Times in April that China has a full policy tool kit to counter EU protectionist measures and stands ready to use it when necessary. For instance, China could also launch investigations into the impact of foreign subsidies in response to the EU's Foreign Subsidies Regulation, the insider said.

"China is neither unfamiliar with nor intimidated by trade wars. If the EU chooses to provoke a trade war, China will respond promptly and resolutely. However, any escalation - let alone a full-scale trade war - would harm both sides, disrupt global industrial and supply chains, and weigh on global growth," the insider noted.