Steel rolls Photo: Xinhua

A Chinese trade expert on Tuesday criticized reported plans by the US and the EU to form a so-called metals alliance targeting China, warning that such an exclusionary and discriminatory arrangement runs counter to market principles and the logic of global industrial chain operations and could backfire by disrupting the global supply-demand balance in related sectors.

The US and the EU will develop a metals alliance to mitigate the impact of what they claim to be "subsidised" Chinese production on global markets as part of their trade deal, European Trade Commissioner Maros Sefcovic said on Monday, according to Reuters. 

The report said that both sides reached an agreement, saying EU steel and aluminium makers will be granted a quota system with minimal or zero tariffs to replace the US' 50 percent import tariffs. But the system is yet to be finalized, Reuters reported.

"The move to establish a metals alliance appears to be directed at China's industries and production capacity," Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Tuesday. "Its nature is clearly protectionist and discriminatory, an attempt to protect their own industries through exclusionary tactics."

However, Zhou said he does not expect the attempt to address structural issues within the US and the EU's own industries in a meaningful way. 

"Resource-related challenges should be addressed from the perspective of the entire industrial chain. Measures that violate market logic and industrial operation rules will fail to incentivize business investment and production, and will be ineffective in improving industrial efficiency or advancing growth," Zhou said. "It is unreasonable and inaccurate to label China's industrial policies as 'illegal subsidies.' China's support measures are in line with international trade rules and do not target specific countries."

Zhou also stressed that China plays a critical role in many of the world's key metal industrial chains - not only in terms of production capacity, but also in processing efficiency, market integration, and equipment manufacturing. "Excluding China from global industrial cooperation will inevitably lead to serious imbalances in supply and demand across the sector," he warned.

The US and the EU had reached a trade deal under which the US would impose a baseline tariff of 15 percent on EU goods. However, existing 50 percent tariffs on EU steel and aluminium exports to the US will remain in place, according to the Xinhua News Agency.

The deal has drawn widespread criticism within the bloc. Bernd Lange, chair of the European Parliament's Committee on International Trade, criticized the newly reached deal as "unsatisfactory" and "significantly imbalanced," warning that it could undermine the EU's economic stability and job security, the Xinhua report noted.

Asked to comment on the US-EU trade deal at a regular press briefing on Monday, Guo Jiakun, a spokesperson for the Chinese Foreign Ministry, said that China, as always, believes that all parties should resolve economic and trade differences through equal-footed dialogue, uphold a sound environment for international trade and economic cooperation, and observe the WTO rules. 

"That said, we firmly oppose any party's move to strike a deal at the cost of China's interests," Guo said.