Settlement of China-EU solar row speaks volumes

He Maochun, director of the Economy and Diplomacy Research Center at Tsinghua University

The efficient settlement of the China-EU solar row should be credited first and foremost to the active consultations and negotiations between the two sides at various levels based on mutual respect and mutual benefit. All levels of the Chinese government -- including the State Council and the Commerce Ministry -- and 95 Chinese solar companies were involved in this deal. If the EU had insisted on going their own way, it wouldn't have been good for them. China has been growing too fast in recent years to be a sitting duck. Major economies in the world have played by the free trade rules of the WTO to solve trade disputes. This is a global trend. It is a good thing for China and the EU, the two largest trading entities worldwide, to have resolved a trade dispute involving such big money. This sets a good example for other economies to prevent possible trade wars in the global arena. However, the agreement doesn't mean that the dispute is settled once and for all, because frictions could come up during the implementation if the agreement, involving prices, period, quota and sanction measures. The agreement on solar panel sales is a periodical achievement in the China-EU solar dispute. Further effort is required on both sides.

There are cases worldwide where high-level leadership became involved in solving certain trade disputes. In recent years, Chinese leaders have also been paying more and more attention to trade rows, which is a blessing for Chinese companies. The direct involvement of Chinese Premier Li Keqiang in solving the solar panel dispute is undoubtedly awesome. As a result, the EU had no choice but to reconsider the importance of overall economic cooperation with China. Li's involvement is truly pivotal in this case.

The significance of the deal: The EU is on its way to economic recovery and is endeavoring to boost employment. Therefore it needs to cooperate with its foreign counterparts comprehensively to explore overseas markets.

Trade cooperation between China and the EU is comprehensive and multi-dimensional. The photovoltaic sector is an important business in China, creating jobs for tens of thousands of people. If the EU insisted on setting barriers on China's photovoltaic products, leaving no way out for China, then China would definitely take counter measures for revenge, even at the cost of destroying their overall strategic partnership.

In that case, the employment situation in the EU would deteriorate and costs of its own photovoltaic products would rise as well. The deal avoids losses for both sides.

Trade disputes between China and the EU will not decrease simply because of this deal. China should not be afraid of disputes as it has many countermeasure weapons at hand.