Despite the tit-for-tat skirmishes between China and its major trade partners the United States and the European Union, analysts say full-scale trade wars are unlikely as no one will benefit, especially considering the world's fragile economic situation.

On Aug 20, China's Ministry of Commerce ruled that some policies the US had adopted to support its renewable energy industry contravene World Trade Organization anti-subsidy rules, and it called on the US to rectify those policies.

On the same day, the China Alcoholic Drinks Association asked the ministry to launch an investigation into wine imports from the EU, accusing them of dumping.

These actions are considered China's responses to the US' and the EU's probes into China's renewable energy goods, and had led some to believe that a large-scale trade war between China and its two largest trading partners is in the offing. However, experts believe everyone would lose in that situation.

Feng Zhongping, director of the Institute of European Studies at China Institutes of Contemporary International Relations, says the intensifying trade disputes are largely related to the worsening global economy.

"China is fighting back against the trade protectionism adopted by other countries. The EU and the US have been more aggressive in launching probes into Chinese goods in recent years, because of the current economic circumstances. Both regions have the economic crisis to deal with, and they are trying to protect their own markets and local companies, which is a natural reaction," he says.

Feng says the trade frictions will continue to be intensified, but a trade war is not likely to happen because it will cost too much.

"Negotiation and then compromise on both sides is the most desired solution, and I believe all parts will finally make satisfactory agreements that can maximize their interests," he says.

Li Jian, a researcher with the International Trade and Economic Cooperative Research Institute, a think tank under the Ministry of Commerce, says all parties involved in the disputes today are rational enough to solve the friction in a peaceful way.

"Compared with the Great Depression in 1929, the countries today are more connected and no country will be a complete victor in a trade war. In many industries, Chinese companies are just a key link in the global industrial chain, the loss of Chinese companies will also affect the survival of other points of the whole chain," he says.

Shen Danyang, a spokesperson for the Commerce Ministry, said at a news conference that the EU's possible restrictions against China's solar companies will make its local companies reap what they have sown.

"Chinese companies imported 40 billion yuan ($6 billion, 5 billion euros) worth of solar-panel production equipments, and 45 percent of them were from European companies," he says.

Frank Heinricht, chairman of German heavy metal and technology company Heraeus Holding, said in an interview that the European Commission should reject European companies' appeal to charge higher duties on Chinese solar products.

"Higher import duties are against the core spirit of free trade and market competition. Looking at the long-term perspective, no company will benefit from this," he said.

In July, European solar companies asked the European Commission to probe Chinese exports to the EU. The commission will decide in September whether to launch the probe.

This appeal was submitted right after the US announced anti-dumping duties on Chinese solar product makers ranging from 31 percent to 250 percent. The final decision will be made in October.

"Renewable energy is one industry in which Chinese companies are very competitive in the international market, so it becomes a target. This time, China is getting wiser and more mature in protecting its own commercial interests under the WTO framework," says Li from the International Trade and Economic Cooperative Research Institute.

As for China, he says it is better for local industries, not only the renewable energy industry, to look back and improve vulnerable points.

"It is an opportunity for China to think about how to change the traditional way of stimulating trade growth and adopt a healthier and more scientific way. Some of China's industries are expanding too fast, which leads to them lacking key technologies and certain market regulations. Chinese companies should try to be competitive not only in terms of price, but also in technology," Li says.

yanyiqi@chinadaily.com.cn

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