One must feel a slight degree of sympathy for Hermann Van Rompuy. His maiden voyage to the middle kingdom as EU President has not seemed an overwhelming success. From the start, it has been overshadowed, firstly by the alleged misdeeds of another European abroad, and secondly by growing trade tensions between the EU and China. The somewhat ill-timed antidumping tariffs the EU levied on Chinese coated fine paper this week were immediately – and completely coincidentally we are led to believe – followed by tariffs leveled at potato starch from the EU by China. A stern finger-wagging from the Chinese Ministry of Commerce followed. Van Rompuy’s key speech in Beijing on Monday continued a long tradition of European and American leaders seeking to influence Chinese policy – joining the chorus demanding a more rapid appreciation of the renminbi in this instance – without offending their hosts. On a more upbeat note, statistics showed a surge in China’s imports from the EU – although this may have more to do with the earth-shattering events in Japan than representing any seismic shift in trade patterns.
On the home front, China continues to battle the triple threats of rising property prices, food safety concerns and an impending power crunch. Despite numerous cooling measures, including new powers for commercial lenders to increase mortgage down-payment rates, statistics released this week showed property prices continuing their relentless upward trajectory. The one thread of comfort being a drop in floor space sold. Exploding watermelons – not a phrase we get to write too often at China Economic Review – rather dramatically brought China’s food safety issues back into the limelight (if they in fact had managed to leave the limelight). The injudicious application of the accelerant forchlorfenuron – yep, me neither – led to 47 hectares of watermelons dramatically splitting open, adding a slightly new twist to the expression “bursting with flavor.” As if exploding fruit was not enough of a challenge, the China Electricity Council reported on Tuesday that the country faced “its most severe electricity shortage since 2004.” Power has already been rationed in a number of provinces, as China’s breakneck growth continues to outpace its ability to churn out power stations.