Amid trade and Ukraine concerns, EU takes strong stance in Beijing

Amid trade and Ukraine concerns, EU takes strong stance in Beijing

The European Union’s top officials had a strong message when they met Chinese leaders Thursday in the two sides’ first in-person summit in four years: Things must change if they are to get better.

Europe’s top two officials, EU Commission President Ursula von der Leyen and EU Council head Charles Michel, visited Beijing with a list of economic grievances, calling on Chinese leader Xi Jinping to improve market access for products from the bloc’s 27 member states and address a trade deficit that has ballooned to more than $400 billion: a situation Brussels views as “unsustainable.”

“If you just look at the last two years, the trade deficit has doubled. This is a matter of great concern for a lot of Europeans,” von der Leyen said during a news conference alongside Michel, who struck a similar tone.

With €2.3 billion ($2.48 billion) in goods trade per day, the EU-China relationship is “one that matters,” Michel said.

“But we need to make our trade and economic relations more balanced, reciprocal and mutually beneficial,” he added, with Brussels pushing to “resolve irritants” and level the playing field with its largest economic partner.

The main factors behind China’s massive trade surplus, said the officials, involve a lack of market access for European companies, Beijing’s preferential treatment of domestic companies, as well as manufacturing overcapacity in China for products such as steel and electric vehicles that have flooded foreign markets.

In October, Brussels launched an anti-subsidy probe into EV imports from China, arguing that their price is being “kept artificially low” owing to “huge state subsidies,” a move that has been heavily criticized by Beijing.

Meanwhile, the EU officials, who met Chinese Premier Li Qiang in a separate session, made it clear that Brussels intends to “de-risk” economic ties with Beijing. The aim, they said, is to reduce “excessive dependencies” and increase supply chain resilience, a process that Beijing appears to want to hinder — or at least delay — as the EU already plans to restrict the flow of sensitive tech to China.

“Beijing is concerned that the EU de-risking strategy will reduce China’s influence and limit its development toward a tech superpower,” said Roderick Kefferputz, director of the Heinrich-Boll-Stiftung European Union think tank.

Despite the strong message from Brussels, there was no sign that any of the major issues were resolved.

But this was expected. Indeed, Noah Barkin, an expert on Europe-China relations with the Rhodium Group, noted that the summit was not about producing deliverables.

“With bilateral relations at their worst point in decades, it was about managing differences and preventing a descent into confrontation,” he said. “And on that, the jury is still out.”

Grzegorz Stec, a Brussels-based analyst at the Mercator Institute for China Studies, described the gathering as a “summit of choices” designed to set the fundamentals for the relationship going forward.

“Brussels put on the table its structural and strategic concerns, requesting Beijing to take meaningful, concrete action,” he said, adding that the EU primarily wants to re-balance economic ties, de-risk the relationship without decoupling and see China adhere to international law.

Stec pointed out that while the EU would prefer to achieve those objectives with limited disturbance to the bilateral relationship, it will not shy away from implementing de-risking measures should Beijing fail to react.

Europe may have felt in a stronger position to deliver this warning now that the Chinese economy has slowed.

Nevertheless, Beijing appears to have downplayed most of the thorny issues, stating only that the two sides should not see each other as rivals due to their different systems and not confront each other over their differences. Xi focused mostly on the positive aspects of the trade relationship, saying that China was willing to make the EU a key economic and trade partner and bolster tech cooperation.

The summit, which followed a series of high-level bilateral talks, took place shortly after Italy confirmed it would withdraw from Beijing’s Belt and Road initiative, one of China’s most ambitious trade and infrastructure projects. Italy, the EU’s third-largest economy and the only Group of Seven nation to have joined the initiative, justified the move by saying that it had not produced the “desired effects” and was no longer a priority.

But trade issues were not the only item on Brussels’ list of concerns.

The European leaders also urged China to use “all its influence on Russia” to stop the war in Ukraine. They pressed Beijing to help prevent Moscow’s attempts to circumvent sanctions amid media reports that the EU could impose export curbs on a handful of Chinese entities believed to be sending dual-use items to Russia.

Von der Leyen even warned that China’s position on Russia’s war of aggression will define bilateral relations.

Alicja Bachulska, a policy fellow at the European Council on Foreign Relations, said Brussels views China’s close ties with Russia, along with its tacit approval for the war in Ukraine, as an attempt to reshape the European security architecture in line with Moscow’s interests.

“That is unacceptable for most European capitals, especially in Central and Eastern Europe,” she noted.

Nevertheless, there was no indication that Brussels managed to persuade Beijing to curtail its support of Moscow, which includes purchasing Russian oil and supplying the Kremlin’s military with dual-use equipment.

Li Xing, an international relations professor at Aalborg University in Denmark, said that one of the issues vexing the EU-China relationship is that Beijing does not perceive Brussels as an independent actor but rather a “shadow of U.S. foreign policy,” especially on major issues related to China and other global affairs.

“To be able to present itself as a united front, the EU must be able to show that it does not want to remain entrenched in the dispute between the U.S. and China,” he added.

While the summit focused mainly on exchanging positions, progress was made on less divisive areas, with the two sides agreeing to relaunch a high-level people-to-people dialogue and signaling cooperation on cross-border data flows, climate change and artificial intelligence.

“Whereas last year hopes hung on the imperative to partner on fighting climate change, artificial intelligence has moved into a more prominent role that offers promise for joint cooperation,” said Emily Benson, an international trade expert at the Washington-based Center for Strategic and International Studies.

China’s recent participation at the Bletchley summit in Britain, where world leaders convened to discuss AI regulation, represents a new potential pathway to deepening cooperation on an emerging global threat, she added.

Despite the few deliverables, experts agree that the face-to-face meeting was important, particularly for Brussels, as it allowed the bloc to convey the seriousness of its concerns over trade and China’s support for Russia.

“But it would be wrong to expect the fundamental changes from Beijing that the EU is seeking,” warned Barkin, noting that China will likely seek to “export its way out of its current economic malaise” and continue to brush up against the West’s red lines in its relationship with Russia.

“For economic and geopolitical reasons, China will not want to enter into a tit-for-tat with Europe,” he said.

“Instead, I expect Beijing to bide its time, in the knowledge that a return of Donald Trump to the White House would open up a trans-Atlantic divide that forces Europe into a more risk averse stance toward China.”