EU trade chief Valdis Dombrovskis says bloc doesn’t intend to decouple from China

In 2022, the EU racked up a deficit of almost €400 billion (US$426 billion) out of a total trade volume of €865 billion. Two-way trade dropped 7.8 per cent in US dollar terms in the first eight months, according to Chinese customs authorities.

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Dombrovskis is the highest-ranking EU official to visit China this year as Beijing and Brussels navigate a complex geopolitical situation.

Both sides have a long list of gripes and demands. The EU has long complained about the trade deficit and a lack of fair access to the Chinese market. The bloc has also prodded Beijing to cooperate on climate change and the conflict in Ukraine.

Meanwhile, the EU’s talk of “de-risking” policies has led to consternation in China, with Beijing demanding clarification as Brussels appears more hawkish in aligning with Washington’s combative approach towards China.

China has condemned Brussels’ “sheer protectionism”, suggesting EVs will be front and centre on the agenda when Dombrovskis heads to Beijing. The EU claims to have ample evidence that Chinese carmakers have been given state subsidies.

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The rise in geopolitical tensions “increases uncertainty for international businesses, leads to more state involvement in the economy and risks starting subsidy races,” Dombrovskis said in his speech.

The EU trade chief also said Beijing and Brussels should work to tackle global issues such as food security, climate change and debt distress.

He Weiwen, a senior fellow with the Chinese think tank Centre for China and Globalisation (CCG), said Dombrovskis’ talk with He Lifeng would be vital to defuse trade tensions and stabilise ties.

“Such top-level talks between the EU and China will lay down some prerequisites to insulate trade from politics. Equal negotiations can pave the way for the future of Chinese EVs in the EU, and I’m optimistic as the auto sector is the core of bilateral trade,” said He, who is also a former economic and commercial counsellor at the Chinese consulates in New York and San Francisco.

EU trade chief heads to China for prickly talks amid EV and de-risking disputes

“This year’s trade figures are not that rosy,” said Sun Yongfu, a senior fellow at CCG and former head of European affairs at the Chinese Ministry of Commerce.

“So we are changing the so-called unfair trade. On the contrary, the leaders of the EU announced an anti-subsidy investigation into Chinese EVs. I don’t think this is a very healthy signal for the high-level economic and trade dialogue,” said Sun, who has been involved in coordinating trade talks between senior Chinese and EU leaders.

Sun said although the EU said it did not intend to decouple from China, de-risking would still hurt cooperation between Beijing and Brussels.

South China Morning Post