Tensions simmer as Xi courts EU while Brussels demands trade rebalance
As Chinese President Xi Jinping vowed to deepen ties with the European Union, the bloc’s top official raised concerns over a growing trade imbalance, underscoring the strains beneath the diplomatic niceties.
Chinese and EU leaders held a meeting Thursday as the 25th EU-China summit got underway.
Xi described the bilateral relationship as “mutually beneficial,” saying the ties have become all the more crucial as geopolitical tensions mount globally. “The more severe and complex the international situation is, the more China and the EU should strengthen communication, enhance mutual trust, and deepen cooperation,” Xi told the EU leaders, according to a translation by CNBC.
European Council President Antonio Costa and European Commission President Ursula von der Leyen, however, struck a firmer tone, urging the Chinese leader to address the rising trade imbalance between the two major economies.
“We have reached an inflection point. Rebalancing our bilateral relation is essential,” she said, according to the official readout, stressing that both sides needed to “acknowledge respective concerns and come forward with real solutions.”
Trade tensions globally have taken centerstage this year, with the EU-China relations strained by Beijing’s export of excess industrial supply amid weakening domestic demand.
The bloc, which China counts as its second-largest trading partner, raised tariffs on Chinese electric vehicles last year in an effort to protect its domestic industry, drawing Beijing to launch anti-dumping probes into European brandy, dairy and pork.
“What we have seen is a reiteration of both sides’ respective positions,” said Daniel Balazs, a research fellow at S. Rajaratnam School of International Studies, highlighting the underlying differences in the two sides’ objectives.
The EU wants “more balanced economic ties” and for China to do more in bringing Russia to the negotiating table over the Ukraine conflict, but Beijing seeks to reverse the EU’s restrictions on Chinese firms and duties on its electric vehicles, Balazs said.
Earlier this month, Von der Leyen said that China was “enabling Russia’s war economy.”
In the first half of this year, China had a goods-trade surplus of nearly $143 billion with the European Union, 21% higher than a year earlier, according to official customs data.
Other than trade imbalances, clashes over restrictions on their businesses operating in the respective markets and China’s stance on the Ukraine war have been complicating relations between Beijing and Brussels.
Earlier this month, China’s finance ministry introduced measures restricting government procurement of medical devices from European companies, after Brussels moved to curb Chinese companies from participating in EU public tenders for medical equipment.
European industries were also hit by China’s curbs on rare-earth exports globally, which led to temporary production halts at several European carmakers. China has since moved to ease those restrictions, with some measures tailored specifically to expedite issuance of such export licenses to European businesses.
Despite the relaxation, the “weaponization of rare earth elements left a deep mark on Europe,” geopolitics consultancy Eurasia Group said, noting that officials in Brussels have been frustrated over Beijing’s actions and could seek to accelerate the bloc’s “de-risking” from China.
The high-stakes summit, initially scheduled to take place in Brussels, was moved to Beijing and was shortened from two days to one, in a what was widely viewed as another sign of fragile EU-China ties.
Eurasia Group attributed the shortening of the summit to “hardening stances and mismatched expectations” between the two sides.
