China and EU leaders agree on need for ‘balanced’ trade relations

BEIJING, Dec 7 (Reuters) – China and the European Union agreed their trade relations should be more balanced at their first summit in four years on Thursday, but showed no sign of resolving differences on a range of issues.

EU leaders, while pressing Beijing over the EU’s large trade deficit with China, said Europe would not tolerate “unfair competition” from China, and Beijing warned the EU that it expected wisdom from Brussels when implementing “restrictive” trade policies.

There has been no sign that the European Union has made any progress in persuading China to use its influence over Russia more to end the Ukrainian war – a source of tension in EU-China relations – and to help prevent Moscow from circumventing sanctions imposed on it over the war.

European Council President Charles Michel said in a press conference after the European Union delegation met with Chinese President Xi Jinping and Premier Li Qiang that China and the European Union have a common interest in establishing a stable and constructive relationship based on respect for the rules-based international order.

“We need to make our trade and economic relations more reciprocal and balanced,” Michel said, adding that the bloc expects China to take more concrete measures to increase market access for foreign companies.

European Council President Ursula von der Leyen said the two sides discussed the root causes of the trade imbalance, from lack of access to the Chinese market and preferential treatment of Chinese companies, to excess capacity in Chinese production.

“Politically, European leaders will not be able to tolerate our industrial base being undermined by unfair competition,” she said.

The European Union says its trade deficit of about 400 billion euros ($431.7 billion) with China reflects restrictions imposed on EU companies operating there.

A number of EU commissioners have visited Beijing since China lifted pandemic border restrictions this year, including the trade and climate chiefs. There are still basic annoyances in the relationship, but there has been limited progress on technical issues.

Von der Leyen said the leaders discussed medical devices, cosmetics and geographical indications for food products in relation to addressing trade imbalances.

She added that “progress” had been made on China’s willingness to clarify restrictions on cross-border data flows that affected EU companies operating in the world’s second-largest economy.

But Italian government sources told Reuters on Wednesday that in a blow to EU-China relations, member state Italy formally informed China “in recent days” that it would leave Xi’s Belt and Road Initiative.

“Confrontation”

Xi said China and Europe should not view each other as competitors or “go into confrontation” because of their different political systems.

Xi said China is ready to make the 27-nation EU a major economic and trade partner and cooperate in science and technology, including artificial intelligence.

Wang urged the EU during his talks at the Diaoyutai Guest House in Beijing to “eliminate all kinds of interference” in bilateral relations, state broadcaster CCTV reported.

Xi said the two sides need to develop a “correct perception” of each other and encourage mutual understanding and trust.

Li told a separate meeting that China opposes “large-scale politicization and securitization” of economic and trade issues in violation of basic norms of market economies.

“We hope that the EU will be wise when implementing restrictive economic and trade policies and when using trade remedy measures to keep its trade and investment markets open,” Li said.

The main focus of the EU visit was to urge Xi to prevent Chinese private companies from exporting European-made and dual-use materials to Russia for its military campaign in Ukraine.

Michel urged China to “engage constructively” in Kiev’s peace proposals, but EU officials gave no indication of action on the issue of returning Chinese private exports to Russia.

China has opposed the EU’s anti-subsidy investigation into Chinese electric vehicles and the EU’s “de-risking” policy to reduce its dependence on Chinese imports, especially vital raw materials.

China believes the investigation “seriously disrupts and distorts the global auto industry chain… and will have a negative impact on economic and trade relations between China and the EU,” said He Yadong, a spokesman for the Chinese Ministry of Commerce.

Noah Barkin, a senior visiting fellow at the German Marshall Fund, said the summit was largely about “managing differences and preventing a slide into confrontation.”

He added, “The European Union side achieved its main goal, which is to convey the seriousness of its concerns about the imbalances in the trade relationship and China’s support for Russia.” “But it would be a mistake to expect from Xi Jinping the fundamental economic and political changes that the EU seeks.”

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