EU-China summit: thorny issues to dominate as tense ties reflect ‘sober realism’

Even on arguably the longest-standing bilateral grievance, both agreed that “all human rights are universal, indivisible, interdependent”.

The statement was signed just weeks after the EU first designated China a “systemic rival”, giving Brussels leverage in negotiations, according to people involved in the talks. But four years on, it provides a perfect illustration of how far ties have slipped.

Sources say Germany, the bloc’s biggest member, is on the verge of following 10 others in kicking Chinese companies like Huawei out of its 5G network. And on human rights, the EU sanctioned Chinese officials for alleged abuses in the Xinjiang Uygur autonomous region in 2021, helping scupper an investment pact the pair were prioritising in 2019.

Moscow’s 2014 annexation of Crimea has evolved into the bloodiest armed conflict on the European continent since the second world war, with China’s close ties to Russia hugely denting its standing in Europe.

Even Taiwan – an issue previously only whispered in closed-door meetings in Europe and not mentioned by name in the 2019 statement – is now discussed at the bloc’s top-level summits, amid fears China may alter the status quo by force.

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So when leaders sit down for a day of talks in Beijing on Thursday, there will be no joint statement. Indeed, recognising it would be impossible to negotiate, neither side bothered to propose one.

“The times of intense negotiations over days and nights for joint statements seem to be over,” said Gunnar Wiegand, until recently the top EU official for the Asia-Pacific and now at the German Marshall Fund. “These things happen in international relations. It shows our relationship is in a period of sober realism.”

This is despite intense engagement before the summit. Eight EU commissioners visited China in recent months, teeing up narrow technical deals, some of which are bearing fruit.

An EU-China working group on export controls met for the first time on October 26, for instance, while similar formats on market access for European firms in China’s wine and spirits and cosmetics sectors will convene before the end of the year.

But EU leaders Ursula von der Leyen and Charles Michel declined the opportunity to sign other oven-ready agreements proposed by Beijing, preferring instead to use valuable face time with President Xi Jinping and Premier Li Qiang to push them on the prickliest geopolitical and commercial issues of the day.

Gunnar Wiegand, a former top EU diplomat for the Asia-Pacific, says the bloc’s ties with China are in a period of “sober realism”. Photo: Friends of Europe

“In a system which is centralised very much on one individual, if you’re not having a discussion with that individual, and you’re not spending time and you’re not passing your messages, how on earth do you expect to have any influence?” asked one senior EU official involved in the planning.

A second said China needed to “offer us more on the political front before we give them their photo opportunity” with deal signings that they worried would gather dust in a Beijing drawer.

Instead, over lunch with Xi and then dinner with Li, they will again urge them to exert influence over Russian leader Vladimir Putin to end his nearly two-year war on Ukraine and to go back to engaging with Kyiv-backed multilateral peace talks.

While China has not condemned the invasion and Xi has maintained a close relationship with Putin, Brussels believes its constant warnings that systemically arming Russia would irreparably damage EU-China ties have hit home.

“China has been very cautiously operating,” said a third senior EU source. “If there was support, it was in a way that was very, very difficult to see and not publicly advertised. An unlimited partnership would allow for direct military support, which we have not seen.”

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Still, the leaders will personally press Xi over 13 Chinese firms that they accuse of circumventing EU sanctions on Russia, allowing its military to access goods that have been placed under the bloc’s embargo.

A failure to do so could result in those firms being added to a blacklist, a move that would cause more reputational damage to China than commercial harm.

“There’s no doubt in my mind, if they want that they can handle it, they can fix the problems that we see,” the source said.

Some experts consider the plan risky.

“I am not sure on the political calculation,” said Abigaël Vasselier of the Mercator Institute for China Studies and until recently the deputy head of the China desk in the EU’s diplomatic service.

A Ukrainian tank crew takes part in military training in the Chernihiv region on Tuesday. China’s close relationship with Russia amid Moscow’s invasion of Ukraine is a source of tension between Beijing and Brussels. Photo: AFP

“By raising it at this level, EU leaders will invest their political capital on it,” Vasselier added. “If the Chinese leadership strongly pushes back, which is highly likely, you know that this is going to become the next irritant in the relationship. Is this level the most appropriate?”

Further ultimatums will be delivered on trade, with many in Europe growing weary over Beijing’s unfulfilled promises to open up its giant market to the bloc’s firms.

For months, the European Commission has been ready to launch an investigation into China’s medical devices sector in what would be an early use of its new international procurement instrument.

Beijing has promised to issue guidelines granting EU firms making these devices in China access to its procurement market by the end of the year.

But if nothing positive comes from the summit, the trigger could be pulled, sources said, eventually excluding Chinese firms from procurement processes in Europe.

EU-China summit: the trust deficit threatening trade and diplomacy

The bilateral trade deficit, meanwhile, has doubled in the space of two years. On this, the EU largely blames China’s domestic policies of restricted market access and overcapacity stemming from illegal subsidies.

With India, Japan and the United States broadly closing their markets to Chinese products because of these practices, Europe is one of the few remaining destinations.

Brussels is already investigating subsidies in China’s electric vehicle sector, and it will lobby Xi to rein in the practice in other key “sunrise sectors” such as wind turbines, heat pumps and solar panels.

The EU will also ask him to control the level of bank credit being extended to manufacturers in these sectors and suggest they reduce production targets in saturated sectors.

“There are different ways to address overcapacity and I think the most powerful way is for the Chinese to address overcapacities themselves,” said one of the sources. “There are always trade defence instruments to protect your market, but the smartest way is for China to act against it now.”

China-made electric vehicles bound for shipment to Europe in Taicang, Jiangsu province in August. Beijing and Brussels have clashed over Chinese subsidies in the EV sector. Photo: Bloomberg

EU sources have described the preparations as constructive, and while the Chinese government declined to add Taiwan or human rights to the official agenda, sources said it had acquiesced to the issues being discussed under other agenda items.

But these overtures will not change the overall dynamic. A senior EU official said the visa gesture had not been made “in a fair way, because it’s only a few member states” rather than 27.

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A few weeks ago, industry figures visiting China were given a heads-up on the visa news by Chinese interlocutors and were surprised when it was announced so quickly.

“It shows they can move quickly when they want to,” said a business leader, who described the news as welcome but doing little to address the many issues facing European businesses in China.

The sense of control in the country was strangling international businesses, they said, using the example of one firm that was offered a 5-square-metre corporate booth at a trade expo only to be told that a space of that size would require five security cameras.

In conversations with Chinese ministries, business figures noted official translators were editing their responses in real time, omitting words such as “war” when they discussed Ukraine.

The anecdotes left the impression that China had changed drastically since 2019.

“We thought we would get a diversity of voices among think tanks and non-government bodies,” said a second businessperson. “But nothing, the message was the same wherever you went. Everyone is singing from the same sheet.”

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Officials in Europe, meanwhile, have been frustrated by Chinese diplomats’ efforts at events to gloss over the irritants in the relationship.

Europeans’ complaints are often dismissed, with China blaming the US for poisoning the well, and insisting that Beijing and Brussels are partners, rather than rivals.

The dynamic moved the EU’s top diplomat to dismiss last April’s summit as a “dialogue of the deaf”.

“China wanted to set aside our differences on Ukraine. They didn’t want to talk about Ukraine,” Josep Borrell told the European Parliament days later.

Officials have since “worked hard to try to explain that our issues with China are stemming from its own coercive behaviour, its overcapacity, its overreactions”, said a senior official who recently visited Beijing.

“But the responses to me and my colleagues is usually the same,” the official added. “It’s America, stupid.”

South China Morning Post