EUROPE'S political leaders are bracing themselves for a big new row about global competition: over China. The China threat has become well-embedded as a motif of American politics, with a stash of China-bashing bills always lurking in Congress. But Europeans have taken longer to wake up to China's rise. That is partly because fears of globalisation at first meant worrying mainly about people moving from central Europe westwards and factories moving in the other direction, suggests Katinka Barysch, at the London-based Centre for European Reform. While Americans were talking about “the China price”, she says, “we were still talking about the Polish plumber.”

This mythical figure, branded a public menace to the French people just before they voted down the draft EU constitution, appeared in 2005, during a previous anti-globalisation spat. There was a xenophobic edge to the talk of invasion by low-paid, lightly regulated workers from the EU's newest members. But the debate quickly drifted into pantomime. The Polish tourist board hired a beefy model to pose as a plumber, promising that he was staying in Poland, and inviting tourists to come and admire him. A row about China threatens to be far more serious.

A chat about globalisation at an informal summit of European leaders in Lisbon later this month will be one possible flashpoint for the new row. Another will be a planned EU-China summit in November. In the words of one official, the EU may soon be “nostalgic” for quarrels over Polish plumbers. Three linked China problems are now causing big ructions.

The first is one of sheer scale. Low-key policies that seemed adequate a couple of years ago have struggled to keep pace with the explosive growth of trade. Two-way trade between the EU and China expanded by over 20% last year to a total value of €254 billion ($319 billion), and the trade balance has swung sharply in China's favour. Compared with America, the EU has shunned confrontation, preferring dialogue with China over such concerns as the deficit or intellectual property. But this calm approach may be a harder sell when the bilateral trade deficit with China is running at an average of €15m an hour.

The second problem is that China ignores gentle hints to stick to commitments it made when it joined the World Trade Organisation. The charges are numerous: there are perennial (and hard to prove) accusations about state subsidies and a failure to guard against the theft of intellectual property. A bleak report by the EU Chamber of Commerce in China notes a fresh threat: the unequal treatment of foreign companies by newly muscular Chinese regulators. Chinese officials are even accused of diverting EU energies into “process”—endless argument over when and with whom meetings will take place. It does not help that many commissioners fall for this nonsense, tripping over each other in their eagerness to visit China and meet the right officials. The 27 member countries are worse, eagerly undermining agreed positions in a quest for national advantage.

The third problem is China's currency, the yuan, which has lost about 40% of its value against the euro since 2000, making Chinese exports ever cheaper. President Nicolas Sarkozy of France loudly argues that euro-area governments should join forces with the European Central Bank (ECB) and back American demands for the Chinese to let their currency appreciate (it is still loosely pegged to the dollar). But the sad reality is that any finger-wagging by the Europeans might serve only to expose their impotence. Noting the euro's steady rise against the yuan, several American analysts conclude that the Chinese have taken a deliberate decision to allow Europe to foot the bill for any small concessions they may offer to America on the yuan.

Superficially, this impotence is odd. As a single trading block, the EU is by some way China's largest trading partner. Every year, more Chinese diplomats are posted to Brussels to study EU regulations (there are said to be four Chinese officials whose sole task is to monitor the European Parliament).

Divide and rule

But China knows perfectly well that the EU functions only rarely as a single block. It has learnt from experience how easy it is to divide the Europeans on tough political questions such as their arms embargo on China. Moreover, EU citizens cannot even agree on whether China is an economic threat or an opportunity. Some countries, such as Germany and Sweden, make lots of money selling machine tools and other capital goods to China. In southern Europe, businessmen complain vociferously that their traditional exports such as shoes and textiles are being killed by China. In eastern Europe, businesses built on (relatively) cheap labour fear China mightily.

Once a China row starts, camps will quickly form. Unsurprisingly, France is likely to lead calls for “negative reciprocity”: ie, slamming markets shut unless China heeds EU demands. Britain will take the opposite view, arguing for open markets as desirable in themselves. British officials are hostile to calls for action against “sovereign funds” flush with the cash of foreign governments, seeing these calls as another recipe for protectionism. Germany may be the swing voter in such cases.

Yet regardless of the economics, an argument can be made that it may become politically impossible for Brussels to seem inactive on China without further damaging fragile support for free trade. Already, complaints about Chinese goods being dumped at below production cost take up an inordinate amount of time (recent footling disputes have involved light bulbs and tinned satsumas). One response may be to go after China on non-footling disputes, but strictly within the context of enforcing rules and legally binding commitments. This could mean taking China to the WTO a lot more often. That could prove bumpy, but less so than an outbreak of xenophobic China-panic that no amount of pantomime can soothe.