‘Dominance, dependency and blackmail': EU and China talks overshadowed by deep divisions

Irish Times

4 days ago

Ursula von der Leyen
and António Costa arrive in Beijing on Thursday for an
EU
-
China
summit that has been cut down, scaled back and relocated halfway around the world.
Xi Jinping
will meet the two European Union presidents before the summit begins but he will leave it to premier Li Qiang to co-chair the meeting.
The summit, which coincides with the 50th anniversary of diplomatic relations between China and the EU, was due to be held in Brussels but the Chinese side insisted on moving it to Beijing. Beijing also reduced the summit to a one-day event, cancelling a planned trip with the European presidents to Anhui province on Friday.
'The China-EU relationship is currently more and more complicated,' said Shi Zhiqin, a professor of international relations at Tsinghua University in Beijing.
The two sides are at odds over everything from trade policy to the war in Ukraine, with climate action almost the only major policy area where they are likely to make progress this week. And
Donald Trump
's return to the White House, instead of bringing China and the EU closer together, appears to be driving them farther apart.
When von der Leyen met Trump and six other world leaders at a Group of Seven (G7) summit last month, she used a prop to make a point. The European Commission president held up a rare earth magnet, a crucial component in electric vehicles and solar panels, which was manufactured in Estonia.
What followed was a broadside against China and its economic model, which von der Leyen said had created a pattern of 'dominance, dependency and blackmail' that was killing key European industries. China controls much of the global supply of rare earth minerals, a fact Europe increasingly views as a concern and von der Leyen pushed for the EU to 'de-risk' and limit its economic dependency on the Asian economic superpower.
The big problem, as many European leaders see it, is not just that China sells much more to Europe than it buys, but that state-subsidised Chinese industries are producing an excess of goods, which then end up flooding the European market.
BYD electric cars waiting to be loaded on a ship are stacked at the international container terminal of Taicang Port at Suzhou Port, in China's eastern Jiangsu Province. Photograph: AFP via Getty Images
The commission last year accused the Chinese state of unfairly subsidising BYD, SAIC and other electric carmakers, allowing them to produce cheaper EVs to undercut competitors made in Europe.
EU officials were worried that the domestic European automotive sector would be muscled off the pitch and China would effectively dominate the EV market, at a time when European policymakers are encouraging a climate-conscious switch away from petrol and diesel engines.
The same thing happened with solar panels several years back, another key industry in the EU's planned move away from fossil fuels. More than 90 per cent of the solar panels Europe buys now come from China.
'I think we still see China as a partner, but also a rival and a competitor,' a diplomat from one EU state said of the changing relationship.
It is official EU policy to view China as a partner for co-operation, an economic competitor and a systemic rival, a description that rankles with Beijing. Shi said that China sees the relationship as essentially interdependent and regards the EU's approach as contradictory.
'If you think we are rivals, how can we co-operate?' he said.
Some Chinese international relations experts expected Trump's return to the White House to bring China and the EU closer together. But others believed that the EU was unlikely to move towards Beijing, partly because many European policymakers are clinging to the transatlantic relationship in the hope that it will return to normal after Trump leaves office.
Some Chinese international relations experts expected Trump's return to the White House to bring China and the EU closer together. Photograph: Alex Brandon/AP
'China was mentally and materially ready for the tariff war,' Shi said.
'China produces or exports almost 90 per cent of the rare earths. The rare earths are very, very important to the USA and very important to the EU. Since the EU are targeting China as its rival, why can't China use its rare earths?'
When China introduced an export licensing system for rare earths last April, it applied to the EU as well as the US. Companies have to apply for a new license every six months and the speed of processing applications appears to vary according to the diplomatic temperature.
The EU's new eyes-wide-open approach has seen it hike up tariffs on imports of Chinese EVs, to protect European producers from being crowded out. China responded with its own tariffs on French cognac and other brandy sold from the EU, with threats more import levies on dairy could follow.
China has placed tariffs on French cognac and other brandy sold from the EU, with threats more import levies on dairy could follow. Photograph: Regis Duvignau/Reuters
Abigaël Vasselier, a former official in the EU's diplomatic corps who worked on China policy, said the EU was looking for a 'level playing field', but that was something Beijing could not deliver.
'We are asking the Chinese: 'Yes please could you change your entire economic model',' she said. That was something that was not going to happen, so Europe needed to look after itself as a result, she said.
Ms Vasselier, now head of foreign relations at the Mercator Institute for China Studies think tank, said the EU recognising that areas where it co-operated with China were also simultaneous points of competition, was a bit of a recent 'mini revolution' in thinking.
Russia's invasion of Ukraine has been another flashpoint in EU-China relations, one that may cast a shadow over the upcoming summit. The EU is frustrated about the ongoing support China provides Russia in the war, with the Nato military alliance calling out Beijing as a decisive enabler of Moscow's military campaign.
The EU says China is a key supplier to Russia of 'dual-use' goods that have civilian and military uses. It is also seen as playing an important role in Russia's evasion of economic sanctions aimed at hobbling its war effort.
A staff member prepares for the arrival of officials in advance of a recent China-EU meeting Beijing. Photograph: Wang Zhao/ AFP
One EU source said China's support for Russia was a block to any reset in the relationship. 'If you want to get closer to us ... that is only possible if you don't go through the backdoor continue to harm our security interests,' the official said.
It was worth Europe putting China's support for Russia's war at 'the centre of the agenda' in the upcoming summit, Ms Vasselier said.
'At best the European objective should be that China limits its support to the Russian war economy,' Ms Vasselier said. Chinese entities that help Russia get around sanctions should themselves face EU sanctions, she said.
The delegation from Brussels is expected to press China to stop 'any direct or indirect assistance' it is providing to Russia in its war with Ukraine, one EU official involved in the summit preparations said.
The EU side would also be looking to have a 'frank' discussion about China's unfair trading practices, another EU official said.
'We have reached a point where the situation is becoming unsustainable for the European Union and those imbalances have to be addressed,' the official said.
Beijing's official position on Ukraine is one of neutrality but when foreign minister Wang Yi met EU foreign policy chief Kaja Kallas this month, he is reported to have told her that China does not want Russia to lose the war. Such an outcome would allow the United States to shift its whole strategic focus towards confronting Beijing, he is reported as saying.
When Chinese foreign minister Wang Yi met EU foreign policy chief Kaja Kallas this month, he is reported to have told her that China does not want Russia to lose the war. Photograph: EPA
'For a long time, the Soviet Union was a big threat to China. Since the collapse of the Soviet Union, we have wanted Russia to keep stable. Because if Russia is not stable, it is threat to its neighbours, it is threat to EU, it is threat to China,' Shi said.
'Why is there a war between Russia and Ukraine? I think there is a quite different understanding between European countries and Chinese people because Russia has its security concern. Its security concern is Nato, Nato's enlargement, Nato's expansion ... China understands Russia's security concern. Chinese policy is to try to keep neutral, although the European Union and the USA do not think so.'
China has condemned the EU's sanctioning of two Chinese banks Brussels believes to have provided cryptocurrency services that were frustrating European sanctions against Russia. Beijing warned that it could take retaliatory action against the measures, insisting that its trade with Russia is legitimate and consistent with World Trade Organisation (WTO) rules.
'Maybe when Wang Yi said that we don't want Russia lose, he means we don't want Russia to collapse. Russia is a very big power with many, many nuclear weapons. So the nuclear weapons could proliferate and that's a very serious threat to European security, to the world's security,' Shi said.
'If Russia collapses, the USA will try to target China as an enemy. That's why we want our world to be balanced, a balance of power.'