PARIS, Feb 9 (Reuters) - The European Union should consider either an unprecedented 30% across-the-board tariff on Chinese goods or a 30% depreciation of the euro against the renminbi to counter a flood
of cheap imports, a French government strategy report said on Monday.
Europe is facing a surge in Chinese competitive pressure, with Chinese firms gaining market share, including in industries once dominated by European countries, the report said, while acknowledging that its proposals would be hard to implement.
It was prepared by the Haut-Commissariat à la Stratégie et au Plan, a French government advisory body that reports directly to the prime minister and guides long-term public policy.
The analysis found that sectors central to Europe's industrial base, including cars, machine tools, chemicals and batteries, are now under direct threat, with a quarter of French exports and up to two-thirds of German production exposed to Chinese competition.
The surge is being driven by higher-quality Chinese products and sustained cost advantages of 30% to 40%, according to consultations with European manufacturers.
Combined with an "undervalued" Chinese currency, Beijing's industrial advance risks pushing Europe into a cycle of "destructive destruction" if no action is taken, the head of the institution, Clément Beaune, said.
He said existing EU trade-defence tools - which have often included lengthy anti-dumping investigations - were now insufficient and called for a "massive and vital" policy shift.
Beaune acknowledged that engineering a euro depreciation - or a renminbi appreciation - would be more difficult than imposing tariffs, though tariffs would also be far from simple and require qualified majority backing among EU states.
French Finance Minister Roland Lescure said last week he could put currency-market volatility on the agenda of France's presidency of the Group of Seven economic powers this year if needed.
France aims to use its year-long G7 presidency to focus on global macroeconomic imbalances Lescure described as driven by credit-fuelled over-consumption in the U.S., under-investment in Europe and export-led growth in China.
(Reporting by Leigh Thomas. Editing by Mark Potter)
