Europe 'stands to lose' in trade war

Europe will "lose more than it gains" if it starts a trade war with China, a former senior Belgian diplomat has warned.

"I am quite convinced that China's development is the hope of European integration," said Patrick Nijs, who left his position as ambassador to China earlier this year. "But if we start a trade war, Europe will lose more than it gains."

His warning comes as the European Union and China are in the critical, final stages of negotiations over solar panels.

Nijs, who is 62, spent 15 years in China.

Saying that retirement has given him a chance to speak beyond the national interests of Belgium, he added: "Negotiation is the right way for us to resolve the friction, and my guess is that the two sides will also sit down to negotiate over Brussels' anti-dumping allegations concerning China's telecommunications equipment."

Sources said that negotiating teams have returned to Brussels again for round-the-clock talks to reach a final price compromise on China's solar product exports to Europe.

Negotiators completed two rounds of talks in Brussels and Beijing.

The sources said that the results of the negotiations, which both sides agreed would be conducted secretly, should be positive because the talks have continued and it is "quite possible" to reach a final agreement by the middle of this month, which will allow some time for EU member states to review and approve the agreement.

If there is no price agreement, the EU will increase its temporary punitive tariff from the current 11.8 percent to 47.2 percent, effective from Aug 6. Eighteen of its 27 member states were against the decision.

Nijs said he doesn't agree with the European Commission on what he said was its recent resort to protectionism to keep China from the European market. "I do not agree with the European Commission, I think this is wrong.

"If we believe in balanced development and a multi-polar world, the role of China's industry is very essential in Europe," said Nijs. For the big powers, he said, the dominant mindset is that they don't want to accept a changing world.

"From the beginning, people don't want the world to change. This is the key. The world should only be dominated by the old political and businesses players. This is unfair," said Nijs.

He said, China's investment in Europe has helped create jobs because of the investors' local strategies. For example, Chinese mobile telecommunications equipment makers Huawei Technologies Co Ltd and ZTE Corp have created thousands of jobs in Europe.

China's solar exports have created even more downstream jobs in Germany, Italy, Spain and Greece.

But Brussels has also recently announced it would conduct anti-dumping and anti-subsidy investigations into Huawei and ZTE's products.

Nijs said he isn't sure whether the EC will finally impose anti-dumping and anti-subsidy punitive tariffs against the two companies.

Nijs said the EC has triggered trade friction with China mainly to gain "bargaining chips" following the installation of China's new leadership, which has started to think about its European strategy.

"This is a European tactic. You must show that you are going to fight and then you can get bargaining chips in negotiations," said Nijs. "But in fact, you will not fight."