The Great Wall Between China and the EU

The Diplomat

2 days ago

In times of evolving transatlantic dynamics under the second Trump administration, and in response to shifting global power balances, some within the European Union have shown interest in exploring a more nuanced engagement with China. However, there are structural obstacles to a warming up between Brussels and Beijing, considering China's unfair trade practices in the economic sphere, its troubling human rights record, and its alliance with Russia and support for Moscow's war on Ukraine in the security sphere. China's leadership is not willing to change course. Instead, China is gambling on the EU's weakness and hoping that Brussels will simply give in. While the EU is indeed in a tough spot currently, it cannot agree to a 'grand deal' if China is unwilling to make major concessions on its unfair economic practices and support for the war in Ukraine.
Now all eyes are on the upcoming China-EU summit to take place in Beijing on July 24, an important gathering that will mark 50 years of diplomatic relations. But if the summit demonstrates anything, it will be the fact that China is unwilling to play by the rules of the international order and that it is in neither in the EU's nor in the United States' interests to try to make a grand deal with Beijing without a major paradigm shift in China's behavior.
The months-long discourse about an China-EU rapprochement and the China-EU summit take place against the backdrop of major divisions between the EU and the United States in recent months. The second Trump administration's initial ambiguity on support for Ukraine and the assertive approach toward the EU in its trade policy created uncertainty in Europe, encouraging the advocates of European 'strategic autonomy.' On the trade front, Trump started with the introduction of 25 percent tariffs on EU auto, steel, and aluminum imports, followed by the warning of a 50 percent tariff on all EU goods in absence of a trade deal. Finally, a July 12 announcement placed a 30 percent tariff on EU imports. These policies have created worries in Europe about the future of the transatlantic economy.
Trying to capitalize on the transatlantic rift, Beijing started a charm offensive toward Europe last February with tailor-made messages such as 'your best friend has abandoned you' and 'China and the EU should serve as the world's anchors of stability.' Chinese Foreign Minister Wang Yi and two of his deputies have been touring Europe, accusing the United States of abandoning the international order while touting that China was interested in maintaining that order. An important part of their agenda was to convince the Europeans to revive the previously abandoned Comprehensive Agreement on Investment and to rescind EU sanctions against China.
These diplomatic overtures resonated with some decision-makers in the EU, while others, like Commission President Ursula von der Leyen, signaled openness if China was ready to commit to real change on structural issues. As a result, there were several steps taken by both sides toward a potential rapprochement.
In March, EU Trade Commissioner Maros Sefcovic met with Chinese leaders in Beijing to discuss ways 'to improve and rebalance China-EU trade and investment relations.' In April, von der Leyen held a phone call with Chinese Premier Li Qiang to discuss how to improve bilateral relations. In May, China and the European Parliament agreed to lift restrictions on mutual exchanges, including China's sanctions on some members of European Parliament.
However, what the Europeans have been waiting for has not arrived from Beijing. Citing China's lack of reciprocity and unfair trade practices, the EU skipped the usual High-Level Economic and Trade Dialogue, signaling clear frustration and skepticism. The Chinese government has not put a serious offer on the table, which would require major change on structural economic and security issues.
On the economic front, the list of deep structural issues that have prevented the EU from creating some kind of détente with China is long and includes chronic trade deficits, restricted access for European companies to the Chinese market due to non-tariff barriers and opaque regulations, market asymmetries, forced technology transfer, and currency manipulation.
A major issue for the EU is Chinese industrial overcapacity, aided by state subsidies, which leads to export dumping in EU markets, depressing prices and undermining European industries. In a notable example, the EU hit Chinese electric vehicles with penalties of running from 17 percent to 45.3 percent over dumping allegations. However, Chinese electric vehicle and battery manufacturers have established production capabilities in EU countries, thereby seeking to establish their goods as 'made in the EU,' threatening European industries. While China has been a major trading partner for the EU for years, the EU's trade deficit with China has increased in the last decade, exceeding 300 billion euros ($350 billion) in 2024.
Another structural issue faced by the EU for decades is China's restrictions on market access. The head of the European Chamber of Commerce recently spoke out on one of the problems in this area, saying that 'a lack of fair access to government procurement in China has been a long-standing issue for European companies operating in the country.'
The EU has responded to these obstacles with a new tool of its de-risking strategy, the International Procurement Instrument (IPI). In the first-ever use of the IPI, the EU recently restricted the access of Chinese medical device manufacturers to the EU's sizable procurement market for five years.
At the summit, the EU and China are expected to tackle another pressing issue: China's restrictions on rare earth exports to the EU. While these critical minerals are crucial for the EU's auto, defense, and renewable energy industries, China has been slow-rolling rare earth licenses for months, in an outgrowth of the China-U.S. trade war.
In the security domain, the primary source of tension in China-EU relations is China's role in supporting Russia's war against Ukraine. Von der Leyen sharply criticized China's 'unyielding support for Russia,' warning it is fueling instability in Europe and 'de facto enabling Russia's war economy' – a stance she said the EU 'cannot accept.' Von der Leyen further warned that 'how China continues to interact with Putin's war will be a determining factor for China-EU relations going forward.'
Ignoring European criticisms, China's Foreign Minister Wang Yi recently told the EU's foreign policy chief, Kaja Kallas, that it was not in China's interest for Russia to lose the war in Ukraine. Wang said the war currently keeps the focus of the United States on Russia and Eastern Europe, and a Russian loss would shift U.S. attention back on China and the Indo-Pacific.
The China-EU summit will coincide with the 50th anniversary of diplomatic relations between the two sides, but the occasion is unlikely to be celebratory given the many divisions that currently strain their relationship. Chinese leadership has made clear in recent months that, while it wants a rapprochement with Europe, it is unwilling to make sacrifices for it by significantly modifying China's conduct on structural issues in the economic, technology, and security domains.
It is time the EU's decision-makers and opinion-leaders recognized that China continues to be a strategic competitor and systemic rival that is intent on perpetuating its unfair economic practices and doubling down on its alliance with Russia and support for the Ukraine war. As a result, China-EU rapprochement is an unrealistic pipedream. Even if the transatlantic relationship is going through a rough patch, it is worth remembering that the United States and its European allies were the founders of the liberal international order, built on the values of human rights, democracy, free markets, the rule of law, and non-aggression. Communist Party-ruled China, contrary to what its leaders like to say during their charm offensives, does not embrace these values and seeks to transform the international order in its own authoritarian image.
As long as China continues to flout the rules of the international order with its unfair economic practices, widespread human rights violations, and support for unlawful aggression, it is not in the EU's interest to warm up its relations with Beijing. The China-EU summit will hence serve to confirm how differently the two sides see the world, how different are the values they hold dear, and how widely their interests diverge. Held in the proximity of the Great Wall, the discussions between European and Chinese leaders will once again demonstrate that there continues to be a great wall between the EU's values and interests and those of China's.