EU-China Relations Face Tensions as Inflection Point Arises

At a recent summit, EU leaders expressed concerns over an increasing trade deficit and China's alliance with Russia, marking a significant moment in EU-China relations.

European Union relations with China have reached a crucial turning point, as highlighted by European Commission President Ursula von der Leyen during a high-profile summit held in Beijing. As Von der Leyen addressed her Chinese counterpart Xi Jinping, she noted the "imbalances" emerging alongside deepening cooperation, particularly referencing the substantial trade deficit faced by the EU with China. Xi Jinping countered by asserting that Europe's current challenges do not stem from China, emphasizing the need for both sides to manage their differences constructively.

The summit, which was abruptly shortened to one day at China's request, was perceived with low expectations for breakthroughs. During discussions at the Great Hall of the People, Von der Leyen and European Council President António Costa urged for practical solutions to ongoing issues. They notably underscored the importance of acknowledging each other's concerns in order to foster cooperation. Xi, for his part, called for mutual trust while warning against the dangers of decreasing interdependence through decoupling.

The EU recorded a staggering €305.8 billion ($360 billion) trade deficit with China last year — a number that has doubled over the past nine years. The bloc has criticized China for its excess industrial capacity and imposed tariffs on Chinese electric vehicles, prompting retaliatory measures from Beijing such as increased duties on European products. Rebalancing this trade relationship will necessitate greater market access for EU firms, streamlined export controls, and addressing overcapacity issues, according to Von der Leyen.

Beijing has expressed a willingness to enhance dialogue on export controls post-summit. Additionally, EU leaders implored China to leverage its influence over Russia regarding the ongoing war in Ukraine, a matter Von der Leyen labeled as pivotal for future relations between the two powers.

Upon her arrival in Beijing, Von der Leyen had characterized the summit as a stepping stone toward a more balanced relationship, expressing optimism for a mutually beneficial partnership that could shape future ties. However, the atmosphere was reportedly tense. The recent deterioration in trust was further emphasized by China's rejection of an invitation to Brussels and its participation in Moscow's World War II victory celebrations.

Tensions have escalated, particularly due to the ramifications of the Russia-Ukraine war. The EU's recent sanctions against Chinese banks involved in supporting Russia have strained preparations for the summit. Reports suggest Chinese Foreign Minister Wang Yi conveyed to EU foreign policy chief Kaja Kallas that Beijing wishes to see Russia prevail in the conflict, which directly contradicts its stated neutrality and significantly complicates the diplomatic landscape.

Trade relations consistently underlie the EU's concerns. Retaliatory measures from both sides, including Chinese restrictions on government purchases of EU medical devices and increasing export controls on rare earths, have raised alarms. European officials assert that China's dominance in the market undermines competitors, leading to growing frustrations regarding economic inequality.

Ambassador Cai Run of China has criticized the EU's mixed approach of classifying China as both a partner and a rival, adding to the complexity of the relationship. The summit concluded with mutual acknowledgments of the precarious state of their interactions, leaving many questions about the future of EU-China relations unresolved.