European leaders were pushing for a readjustment of trade at the EU-China summit with President Xi Jinping on Thursday.
They focused their opening remarks on trade and called for concrete progress to address the European yawning trade deficit with China.
“As our cooperation grows, so does our imbalance,” said Ursula von der Reyen of the European Commission. “We have reached an inflection point. Re-aligning bilateral relations is essential because, in order to be sustainable, relationships need to be mutually beneficial.”
Although expectations for discussion were low, initially it was supposed to last for two days, but it returned to one. They come amidst economic uncertainty around the world, wars in the Middle East and Ukraine, and the threat of US tariffs. Both the EU and China could hamper the key issues of splitting two economic juggernauts.
Council of Europe President Antonio Costa called on China to use its influence over Russia to end the war in Ukraine.
He expressed a possible climate agreement, saying he is looking forward to a “strong joint political message” from the summit ahead of the UN climate talks to be held in Brazil in November. It could follow their talks with Chinese Prime Minister Li Qiang later on Thursday.
Xi called on China and Europe to deepen cooperation and mutual trust in providing stability in an increasingly complex international environment, China’s state broadcaster CCTV reported online. They should put the differences aside and seek a common foundation, he said, a phrase he often uses in relations like the EU.
Take care not to get too close
In addition to trade imbalances and the Ukrainian war, von der Leyen and Costa were expected to raise concerns about China’s cyberattacks and espionage, as well as restrictions on rare earth mineral exports and their human rights records.
Meanwhile, the EU is concerned about the looming trade battle with the US.
Fabian Zuleeg, chief economist at the European Policy Centre, said: “It would be very difficult to achieve anything concrete.”
China’s stance has been strengthened in the EU despite several olive branches, including the suspension of sanctions against European lawmakers who criticized Beijing’s human rights records in Xinjiang, home to Uyghur in northwestern China.
Noah Birkin, an analyst at the Rhodium Group think tank, said China believes it has managed to overcome the US tariff storm due to its aggressive stance. Birkin said Beijing’s bold tactics that he worked with Washington should work with other Western countries.
“China was encouraged by the trade conflict with Trump, which reduced its desire to make concessions to the EU,” he said. “Now that Trump has retreated, China believes there is less need to plead with Europe.”
China is the EU’s second largest commodity trading partner after the US, with around 30% of global trade flowing. Both China and the EU want to use their economy to stabilize the global economy, and they share some climate targets.
However, deep differences of opinion are carried out through their overlapping interests.
The trade division
China and the EU have multiple trade disputes across a variety of industries, but there is no sharp disagreement than the enormous trade imbalance.
Like the US, the 27-nation bloc has experienced a massive trade deficit with China last year. This is about 300 billion euros. It relies heavily on China for important minerals that are also used to make magnets in automobiles and electrical appliances. When China cut exports of these minerals in the wake of US President Donald Trump’s tariffs, European automakers cried out a foul.
The EU has tariffs on Chinese electric vehicles to support car manufacturers by balancing Beijing’s own heavy car subsidies. China wants to cancel these tariffs.
The rapid growth of China’s market share in Europe has sparked concerns that Chinese cars will ultimately threaten the EU’s ability to produce their own green technology to combat climate change.
Business groups and unions also fear that the work of 2.5 million automotive workers can be put at risk. They also fear employment of 10.3 million people whose employment is indirectly dependent on EV production.
China has also launched a survey of European pork and dairy products and has placed tariffs on French cognac and almagnac. They are criticising new EU regulations on the sale of medical devices and are afraid of upcoming legislation that could further target Chinese industries, said Alicia Garcia Herrero, a Chinese analyst at the Bruegel think tank.
In June, the EU announced that Chinese medical device companies would be excluded from government purchases of more than 5 million euros (nearly $6 million). The measure is trying to encourage China to stop discrimination against EU businesses, the bloc said, and it “denies China of “building important and repeated legal and administrative barriers to its procurement markets.”
European companies are primarily seeing China’s decline in profitability. However, the EU has leverage as China still needs to sell goods to the block, Garcia Herero said.
“The EU remains China’s biggest export market, so China has every intention to keep it this way, especially given pressure from the US,” she said.
It was unclear why the initial plan for the two-day summit was cut by one in Beijing.
War with the European gateway
The obvious majority of Europeans support increased aid to Ukraine and more sanctions against Russia.
The latest sanctions package on Russia also listed Chinese companies, including two large banks, accused of linking the EU of Russia’s war industry. China’s Commerce Ministry said it “prayed to respond with necessary measures to firmly protect the legitimate rights and interests of Chinese companies and financial institutions, and is strongly dissatisfied with the ‘listing’ and is firmly opposed.”
Xi’s close association and Putin have a close relationship, and this is reflected in the national relationship. China became a major client of Russia’s oil and gas, and became the source of its main technology after sweeping out Western sanctions in Moscow. In May, XI took part in the Victory Day celebration with Putin in Moscow, but did not attend a similar EU event in Brussels, celebrating the end of World War II.
Von Der Leyen and Costa will press Xi and Li to reduce their support for Russia, but with little effect.
Beyond Beijing and Washington
Exhausted between militant Washington and Hardline Beijing, the EU has more publicly sought new alliances elsewhere, signed trade agreements with Indonesia, praised Japan, and drafted trade deals between South America and Mexico.
“I also know that 87% of global trade is with other countries, many of whom are looking for stability and opportunities. So I’m here to deepen our relationship for this visit,” Von der Leien said in Tokyo on the way to Beijing.
“Both Europe and Japan see the world around us where protectionist instincts grow, weaknesses become weapons and all dependencies are exploited. It’s normal for two like-minded partners to come together to make each other stronger.”
To promote relations with Europe is one-third of Japan’s new 2025 military doctrine after maintaining defensive links with the US and investing in capabilities at home such as missiles, satellites, warships, drones and more.