BEIJING, Sept 25 (Reuters) – The European Union has no intention of cutting ties with China even as the bloc takes steps to reduce economic dependency and remove risks, but China “can do a lot” to help reduce the perception of risks. The European Union Trade Commissioner said on Monday.
The EU has long complained about the lack of a level playing field in China and the politicization of the business environment. Concern turned into caution after Beijing moved to strengthen its relations with Moscow despite the war in Ukraine.
European Trade Commissioner Valdis Dombrovskis said in a speech at Tsinghua University in Beijing that economic ties between Europe and China are deep, but China “can do a lot to help reduce our perception of risks.”
China also unveiled new laws this year, including a Foreign Relations Law that warns against “acts” that harm China’s national interests and an Anti-Espionage Law that prohibits the transfer of unspecified national security-related information, raising compliance risks for foreign companies.
“Its ambiguity allows a lot of room for interpretation,” Dombrovskis said.
“This means that European companies are struggling to understand their compliance obligations: a factor that significantly reduces business confidence and prevents new investments in China.”
Dombrovskis is expected to share his concerns with Chinese Vice Premier He Lifeng at a high-level economic and trade dialogue in Beijing on Monday.
He is also expected to reiterate the EU’s dismay over trade imbalances. Chinese customs data showed that the European Union’s trade deficit with China widened to $276.6 billion in 2022 from $208.4 billion the previous year.
At the same time, China will put pressure on Dombrovskis to explain the EU’s risk-mitigation strategy.
“Our strategy is not protectionist, it is neutral for the country,” Dombrovskis said.
As Europe shifts away from Russian oil, gas and coal, the EU is assessing its dependence on China for certain raw materials and components, as well as the factors driving the competitiveness of some Chinese products in the European market.
The European Commission recently announced it would investigate whether to impose tariffs to protect European producers from a “flood” of cheap Chinese electric vehicle imports that it says benefit from government subsidies.
The European Union said it is open to competition, including in the electric car sector, but competition must be fair. China criticized the investigation, calling it protectionist.
“The European side has repeatedly emphasized to the Chinese side that ‘de-risking’ does not mean ‘decoupling’,” Chinese nationalist newspaper Global Times wrote in an editorial.
“We believe they are sincere in saying that. However, we cannot accept and strongly oppose the use of trade protectionism in order to ‘reduce risks,'” he added.
(Reporting by Ryan Wu, Bernard Orr and Yu Lun Tian; Preparing by Mohammed for the Arabic Bulletin) Editing by Himani Sarkar and Jacqueline Wong
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