China's MOFCOM says they hope that France and Germany will uphold open cooperation and free trade, abide by WTO rules and refrain from encouraging the EU to use protectionist tools at every turn

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China's MOFCOM says they hope that France and Germany will uphold open cooperation and free trade, abide by WTO rules and refrain from encouraging the EU to use protectionist tools at every turn

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  • Adds that this will avoid taking the wrong path in the wrong way and ultimately backfiring on themselves.

Context

Rhetoric of this kind from China's commerce ministry fits an established pattern in trade disputes: public appeals to WTO rules and warnings of backfiring tend to precede, and signal, a harder phase of the standoff rather than resolve it. The naming of France and Germany is the notable feature; Beijing has historically tried to split the EU's more trade-dependent member states from the bloc's protectionist centre, particularly where Chinese market access for those countries' exporters is at stake. The usual sequence in these episodes is rhetorical escalation, then targeted countermeasures aimed at politically sensitive European exports, with the auto and luxury sectors the customary pressure points. For the euro the transmission channel is the terms-of-trade and growth exposure of the bloc's exporters rather than any direct FX mechanism, and past episodes have tended to weigh on the single currency only once rhetoric hardens into measures. Worth watching is whether this stays at the level of exhortation or moves to concrete steps, and whether Paris and Berlin diverge in their responses, which is precisely the split the statement is designed to probe.

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