EU trade chief seeks more balanced economic ties on China visit

On a four-day trip to China, the trade commissioner for Europe will press Beijing to ease restrictions on European companies. He may anticipate difficult discussions about a proposed EU investigation into imports of electric cars.

During his visit to Shanghai and Beijing from September 23 to 26, Trade Commissioner Valdis Dombrovskis will give two speeches, meet with Chinese officials and European business operations in China, and participate in a joint economic and trade conversation.
The purpose of the visit for the European Union is to restart communication with China following the COVID-19 closure and amid growing EU concern over Beijing’s growing relations with Moscow in the wake of Russia’s invasion of Ukraine in 2022.

Just over a week after the EU executive announced it would consider imposing punitive tariffs to safeguard European companies from less expensive imports of Chinese electric vehicles, Dombrovskis will arrive.

The investigation may lead to a colder reception in China, but individuals familiar with the trip believe it could help focus the conversation on “trade irritants.”

The EU claims that the EU market is generally open and attributes some of its 400 billion euro ($426.32 billion) trade deficit to Chinese restrictions on European companies.

Jorge Toledo, the EU ambassador to China, lamented at an event on Thursday in Beijing that there are “thousands” of hurdles to market access, which have caused the trade gap to reach its “highest in the history of mankind.”

Chinese customs figures show that the EU’s trade deficit with China increased from $208.4 billion to $276.6 billion in 2022.

The 10th such conversation since 2008, which will occur on Monday between Dombrovskis and Chinese Vice Premier He Lifeng, will serve as a “litmus test” for both parties, according to the Chinese nationalist tabloid Global Times.

‘DE-RISK’
In a report released on Wednesday, the European Union Chamber of Commerce in China claimed that Chinese authorities were giving conflicting signals to international companies. Many had hoped for a quick economic recovery following the reopening of China’s borders in January, but this did not happen.

“Although official announcements aimed at improving the business environment have been released, so has a slew of national security-focused legislation, which has deepened uncertainty and raised compliance risks,” according to the research.

This contains legislation against espionage that forbids sharing information about national security and other unspecified purposes. Punishments may follow for foreign businesses conducting ordinary business.

During the visit, it’s also anticipated that the EU would be questioned on the definition of “de-risk” as it applies to China.

According to EU officials, the group wants to reduce its reliance on the world’s second-largest economy while maintaining economic relations, especially for the resources and goods required for its green transformation.

According to Toledo, large European firms have begun reviewing their supply chains to determine where they are overly dependent on China after being “shocked” by Chinese export curbs on critical metals germanium and gallium.

In its latest salvo in a growing conflict between Beijing and Washington over access to minerals required to manufacture high-tech microchips, China set export restrictions on eight gallium and six germanium items as of August.

China has threatened to “stand idly by” should Germany move forward with the ban on Huawei (HWT.UL) and ZTE equipment in 5G networks in response to Germany’s plans to require telecom companies to reduce their usage of this equipment.