Some progress, but SOEs and tech transfers still issues

Even though EUCCC President Mats Harborn acknowledged the U.S. had a point in seeking to alter the dynamics of its trading relationship with China, he emphasized that tariffs were not the solution.

“The most important thing is we get away from using tariffs as a tool. That is very dangerous for the world economy, dangerous for our operations,” he told CNBC’s Eunice Yoon, adding that in the worst case scenario, the escalation in tensions could trigger the end of the business cycle.

“We don’t need to talk about taking sides. We just need to commit to economic globalization,” Harborn said.

The organization called for Beijing to adopt “deep and far-reaching market reforms” going forward, pointing out the Trump administration’s more aggressive approach to China, and the European Union’s attempt to get tough on unfair technology transfers as instances of the patience of stakeholders worn thin.

But ultimately, the European Chamber’s members “need China’s economy to be successful as much as China does,” the report said.

That comes as Chinese Premier Li Keqiang visits Bulgaria and Germany ahead of a two-day Sino-European summit beginning on July 16. Reuters reported on Monday that Germany and China had signed deals worth some 20 billion euros ($23.6 billion) during Li’s visit.

China and the European Union have been taking steps to strengthen trade ties recently in the wake of the U.S. sharking up the world trade order and implementing duties on several of its key trading partners and allies, including the EU.

— CNBC’s Silvia Amaro contributed to this report.

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