German auto lobby warns of China trade imbalances, backs WTO-based response

Sept 24 (Reuters) - The head of Germany's auto industry association VDA on Thursday warned of growing trade imbalances with China, saying the EU has tools to safeguard fair competition if WTO rule violations lead to market distortions.

While differences should be resolved through dialogue, these tools can be deployed once competition has been distorted beyond a certain point, VDA President Hildegard Mueller said in a statement.

Any measures must be assessed in close consultation with the affected industry.

"Isolationism and protectionist measures always carry the risk of escalating trade disputes," Mueller said.

Handelsblatt had reported Mueller's explicit endorsement of imposing new tariffs on China under certain conditions earlier on Thursday.

(Reporting by Rachel MoreWriting by Linda PasquiniEditing by Kirsti Knolle and Friederike Heine)