Chinese media warns of more action in EU trade row

BEIJING (AFP) - Chinese state media on Thursday welcomed Beijing's probe into wines from the European Union, warning of further action as the trade dispute intensified.

Fears of an EU-China trade war mounted after the Ministry of Commerce on Wednesday said it would investigate the alleged dumping of European wines "in a strict way". The announcement came hours after Brussels imposed an 11.8-per cent tariff on Chinese solar panels despite German-led opposition. The tax will rise to 47.6 per cent in two months' time if there is no resolution of the dispute.

The wine probe "signals the country will safeguard its major economic interests - and it has ample cards in hand to do so", the English-language China Daily said in an editorial.

China is the EU's second-largest trading partner with US$546 billion (S$683 billion) in two-way business last year, according to Beijing's figures, with the bloc's exports to China totalling US$212 billion.

"The probe into wine imports could be followed by more moves if the EU continues to ignore China's interests," the China Daily said, urging the Chinese government to show "more teeth".

The government-run paper also pointed out the euro zone's "lingering debt crisis", saying that EU protectionism "will only incur tit-for-tat retaliations and worsen its economic prospects".

The value of China's wine imports from the EU was far lower than its photovoltaic exports to the bloc, it said, describing the investigation as "a timely warning".

China bought 257 million litres of wine worth US$1.04 billion from the EU last year, 65.2 per cent of its total wine imports, according to Chinese official data.

The figures also show China's solar panel exports to the block were worth more than US$20 billion during the period.

But the targeting of wine is highly pointed as the countries that support the solar cell tariffs, such as France and Italy, will be hardest hit, said the Global Times.

"China has many cards to play, including significant European bonds and investment in EU countries," it said in an editorial.

"It is the situation on the battlefield which determines how negotiations proceed in warfare," it added. "Trade wars are similar."

The headline on the Chinese-language version of the editorial referred to the wine investigation as "not China's only bullet".

EU Trade Commissioner Karel De Gucht has said Chinese solar panels were being sold at up to 88 per cent below cost in the European market and the "dumping" was harming European industry.