Tensions between the European Union (EU) and China have risen recently, partly due to China’s alignment with Russia following the conflict in Ukraine and the EU’s efforts to diversify its economic partnerships. The EU has hence been working to reduce its dependency on China in various sectors while expressing concerns about human rights issues and market access barriers in China.
Valdis Dombrovskis, the Executive Vice President of the European Commission, emphasized that the EU does not intend to sever its relationship with China but rather seeks to protect itself when its open economic ties are exploited. He acknowledged that the trade relationship between the EU and China is “very imbalanced.”
EU looking to reduce dependency on China
Dombrovskis clarified that the European Union’s efforts to reduce dependency on China for strategic products do not imply a complete disengagement from China. The European Union aims to strike a new balance by mitigating risks while maintaining market access.
The recent anti-subsidy probe into Chinese electric vehicles by the European Union sparked tensions with Beijing, which labeled it as an act of protectionism disrupting the global automotive industry chain.
The ongoing talks are part of the EU-China “High-Level Economic and Trade Dialogue,” which addresses macroeconomics, trade issues, supply chains, and financial services. These discussions could pave the way for a summit between President Xi Jinping and the EU’s Ursula von der Leyen later in the year.
Dombrovskis is expected to emphasize the need for concrete agreements to reset the EU-China relationship and clarify that the EV investigation will adhere to procedural steps, seeking cooperation from Beijing.
He also called on China and other organizations like the United Nations to collaborate in safeguarding global food supplies, particularly in light of the disruptions in grain shipments from Ukraine following Russia’s departure from a UN and Turkey-brokered safe-corridor agreement. Dombrovskis criticized Moscow’s behavior in this matter as “disgraceful.”
EU-China trade relations barriers ensues
The European Union attributes its 400 billion euro trade deficit, in part, to restrictions placed by China on European companies. EU Ambassador to China Jorge Toledo expressed concern about the numerous barriers to market access, contributing to the historic trade deficit.
The economic and trade dialogue between Dombrovskis and Chinese Vice Premier He Lifeng on Monday is a pivotal test for bilateral relations. The Global Times, a Chinese nationalist tabloid, highlighted its significance.
Dombrovskis emphasized that substantial technical groundwork preceded the EU’s probe into Chinese-made electric vehicles. They intend to engage both Chinese authorities and the industry in the investigation. He stressed the importance of fair competition in the electric vehicle sector.
Regarding potential trade irritants and barriers in other sectors, Dombrovskis stated they are examining various areas and will discuss any identified issues with their Chinese counterparts. He underlined the need for open dialogue on advancing the relationship while addressing trade barriers.
Dombrovskis also noted that China is undergoing a challenging process of macroeconomic adjustment. He urged Beijing to enhance access for foreign businesses and maintain a stable business environment for equitable trade relations. Additionally, he called on China to counter Russia’s use of food as a tactic.
Former Irish Prime Minister Bertie Ahern highlighted the progress in China-EU economic and trade relations over the past three years. He mentioned the comprehensive investment agreement, which, though concluded, faced a setback in the European Union Parliament in 2021. Ahern emphasized that the agreement is mutually beneficial and contributes to economic recovery and growth.
Notably, China and the EU are significant trading partners. Official figures indicate that bilateral trade between the two reached a record $847.3 billion in 2022, with a year-on-year increase of 2.4 percent.
