The EU-China summit that started yesterday in Beijing has a lot on its agenda. Growing tension between the two economic superpowers is sure to take center stage. Chinese President Xi Jinping is set to meet with European Commission President Ursula von der Leyen and European Council President Antonio Costa. They seek to tackle pressing challenges, including rampant inflation and a large trade deficit, not to mention increasing geopolitical tensions.
In recent years the EU-China trade relationship has certainly soured. At the same time, last year China was faced with a huge trade deficit of €305.8 billion with the EU. That’s nearly half a trillion dollars or £360 billion! This figure illustrates that the deficit has more than doubled in nine short years. This dangerous trend should make us question how long their economic relationship can remain mutually beneficial.
Throughout the course of the summit, high-level leaders from each country will dive into a diverse array of issues. Trade wars are escalating. Especially as China doubles down on export controls for rare earths and other critical minerals, and the war in Ukraine provokes new geopolitical instability. The European Commission has made strong allegations against China. They argue that China is deploying its “quasi-monopoly” in the rare earths market as a weapon against its rivals in important high-tech industries.
“The EU’s threefold positioning of China is like a traffic light going green, amber and red lights all at once. Not only does it fail to direct traffic, it only creates difficulties and obstruction.” – Cai Run
China’s move to raise export controls on these crucial materials has drawn criticism from the EU, exacerbating tensions ahead of the summit. In June, the EU executed a ban on Chinese medical electronics. This move forced Beijing to retaliate by restricting government purchases of EU medical devices at the beginning of this month.
The geopolitical landscape further complicates matters. Kaja Kallas, the EU’s foreign policy chief, has labeled China as the “key enabler of Russia’s war” in Ukraine. Now, European leaders are becoming just as concerned about China’s expanding clout. They are especially worried about China’s alleged assistance to Russia in the current war.
Chinese Foreign Minister Wang Yi recently suggested that the Russia-Ukraine conflict might serve to distract the United States from its rivalry with China. China’s conspicuous presence — for the first time ever — at Russia’s annual May 9 World War Two victory parade turned everybody’s head. More than any other event, this named—the increasingly close ties developing between Beijing and Moscow.
Even in the face of these challenges, there is hope on both sides for a continued productive dialogue. Back in April, President Xi Jinping declined an invitation to visit Brussels. His decision further demonstrates him to be a coward unwilling to face European leaders directly. A spokesperson from China’s foreign ministry emphasized that the bilateral relationship is at a “critical juncture of building on past achievements and opening up a new chapter.”
European Commission President Ursula von der Leyen outlined her plans for future cooperation between the EU and China earlier this month. She hopes that their friendship could help shape the next 50 years of the organization. She described this summit as “one of the most defining and consequential for the rest of this century,” highlighting its potential impact on global dynamics.
“I’m convinced there can be a mutually beneficial cooperation… One that can define the next 50 years of our relations.” – Cai Run
As negotiations continue, the Administration and congressional negotiators on both sides face the daunting task of bringing together their competing conceptions of cooperation and competition. The EU’s characterization of China as a “partner for cooperation, economic competitor, and systemic rival” has not been well-received in Beijing. Chinese officials said this sort of mixed messaging makes it difficult to make meaningful progress while causing confusion and uncertainty in diplomatic circles.