Trade tensions between the European Union and China are escalating. In recent weeks, the EU has restricted Chinese companies from participating in public tenders for medical equipment, prompting Beijing to retaliate by limiting imports of EU medical equipment and imposing tariffs on EU spirits. Both sides have been criticizing each other over these measures.
According to Marc Julienne, director of the Asia Program at the French Institute of International Relations (Ifri), the overall trade relationship between Europe and China is “quite bad” at the moment.
Grzegorz Stec, a senior analyst at the Mercator Institute for China Studies, also shared concerns with CNBC, stating that the EU-China relationship is facing numerous challenges and risks, with a key focus being China’s overcapacity and its competitive pricing of products in the European market.
With China’s sluggish economic growth and persistent overcapacity, the need to find export markets to absorb excess capacity has become urgent. Stec explained, “Beijing’s export demand is becoming increasingly pressing, conflicting with the EU’s need to protect its own industries.”
Apart from the United States, the EU’s vigilance against dumping of Chinese products has also heightened, putting pressure on China from all sides.
Julienne discussed a series of factors contributing to the complexity of EU-China relations, including the increasingly challenging business environment for European companies in China and the widening trade deficit with China.
He pointed out that Beijing is exerting pressure on Europe through “trade weaponization,” citing the example of the tariffs on spirits. Last year, the EU imposed tariffs on Chinese electric cars, prompting China to intervene in European spirits imports through investigations.
Stec believes that the unresolved trade disputes between Beijing and Brussels are “unlikely to find a solution,” anticipating more problems to arise in the future.
He said, “Issues of overcapacity, trade diversion, and Beijing using rare earth export controls as leverage in electric car tariff negotiations indicate more turbulence ahead.”
Jean-Marc Fenet, a senior researcher at the ESSEC Institute for Geopolitics & Business, echoed similar sentiments, noting that the EU Commission’s firm stance and use of trade protection measures are increasing the likelihood of friction between the EU and China.
The EU-China summit is scheduled to take place in Beijing on July 24, where Von der Leyen will meet with Xi Jinping, but expectations for the meeting are low.
Fenet expressed, “Both parties seem to anticipate that this will be a difficult meeting with little chance of success.”
(Partial information sourced from CNBC)