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Tariffs on Chinese aluminum wheel will cause "lose-lose" situation

05-14-2010 11:02 BJT

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Preliminary tariffs on Chinese aluminum alloy wheel hubs will last six months before the European Union makes its final ruling. Analysts warn keeping the tariffs could result in a lose-lose situation for both Chinese wheel hub makers and European car makers.

Liu Wei works at China's largest wheel hub factory in the country's northern Hebei Province. His company has already suspended all exports due to the EU's preliminary ruling. He worries about his future and that of his 40 fellow workers.

Liu Wei, worker, CITIC Dicastal Wheel Manufacturing, said, "This production line is mainly for EU exports. Now it faces production reduction or even suspension. Most of the workers on this line will be transferred to other positions, or even laid off."

China's aluminum alloy wheel hub industry employees about a hundred thousand people. The EU's preliminary ruling is poised to have a significant impact on their lives, especially those who work with EU-export oriented companies.

Expensive test equipment has been imported from Europe. If the EU upholds its preliminary, all such equipment will become useless.

Geng Diaojun, Deputy GM, CITIC Dicastal Wheel Manufacturing, said, "Our company exports around one million wheel hubs to the European Union, with a total value of over 20 million euro. If we lose this part of business, that will be 30 to 40 million yuan's loss for us."

Chen Huiqing, official, CCC for Machinery Exports, said, "The tariff will result in a lose-lose situation for both Chinese wheel hub makers and European car makers. Car makers usually place their orders two years in advance, and work together with manufacturers to jointly design and develop the products. If the EU upholds the preliminary ruling, all that preparation work will be a waste of time and money."

China's wheel hub exports to the European Union account for 15 percent of its total exports. A 20.6 percent tariff will hit companies that heavily relying on the EU markets the hardest.

Analysts have slammed the EU charges as groundless, pointing out no winners will arise from the situation. The EU's anti-dumping investigation has also reignited the protectionism debate.

Costs are predicted to rise for EU car makers, which are likely to mean higher prices for EU consumers and deal a blow to the auto industry's recovery.

Editor:Zhang Jingya |Source:

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