China's industrial overcapacity, particularly in the steel sector, poses an increasing threat to European economies, the EU Chamber of Commerce said Monday.
China has been accumulating machinery and manpower faster than demand has been growing in recent years, chamber head Joerg Wuttke said ahead of the release of its study on the topic.
"The protectionism of local employment and business needs to be broken down," Wuttke said, indicating that Chinese authorities need to address the problem more urgently.
“The longer they wait, the bigger the pain is."
Overcapacity in China's steel sector rose from 132 million tons in 2008 to 327 million tons in 2014, according to the report.
The excess leads to China offloading its steel at dumping prices on the international market.
The European Commission this month announced provisional anti-dumping duties on cold-rolled flat steel from China and Russia, and an investigations into the imports of seamless pipes, heavy plates and hot-rolled flat steel from China.
The EU earlier imposed a slew of anti-dumping and anti-subsidy duties on Chinese products ranging from solar panels to ceramic tiles and ironing boards.
The bloc applies measures to China on the basis of it not being a market economy. It is due to review that status by the end of the year, potentially changing the way it calculates wether Chinese imports are fairly priced.