Chinese and EU leaders are about to meet — but the U.S. is complicating things

CNBC

2 days ago

China and the European Union will hold a top-level meeting in Beijing on Thursday, while the U.S. is making their already tense relationship more complicated.
Clashes over trade and economic policy, technological issues and defense and security have been commonplace between China and the EU — and tensions have recently been heating up.
For example, the EU imposed restrictions on Chinese companies taking part in public tenders for medical devices in the bloc, prompting China to respond with countermeasures.
In large part, the strain between the two trading partners is linked to concerns about how domestic economies and companies could be impacted by imports.
The high-stakes summit, which is the 25th between the partners and marks 50 years of bilateral relations, was therefore already taking place under less than ideal circumstances.
Initially scheduled to take place in Brussels, the meeting was then cut from two days to one — which was widely understood as another sign of fragile EU-China ties.
"Relations between Brussels and Beijing are particularly tense," Jörn Fleck, senior director at the Europe Center at the Atlantic Council, told CNBC.
"The EU and China have more to argue about than they agree on, even if neither side can afford to let the relationship deteriorate much further given the global outlook and their respective economic positions," Fleck said.
And then, there is U.S. President Donald Trump's tariff policy to contend with.
"Largely irreconcilable EU-China differences will severely constrain potential cooperation, despite mutual interest in countering some of President Trump's policies — led by US trade measures and unilateralism," Emre Peker, director for Europe at Eurasia Group, told CNBC.
The U.S.' actions could even trigger a worsening of EU-China relations, Peker said. Brussels, for example, could sharpen its position on measures targeting China if the U.S. puts pressure on the bloc to do so as part of trade talks, he continued.
"The extent of Brussels's alignment with Washington on supply chains, export controls, and other issues will signal the level of EU frustration with China — and influence their relationship," Peker said.
The EU and China together account for almost 30% of global trade, according to the European Council. When taking goods and services into account, EU-China trade was valued at over 845 billion euros ($989 billion) in 2024.
Henrietta Levin, a senior fellow at the Freeman Chair in China Studies at CSIS, told CNBC that China may try and influence the EU with regards to its talks with the U.S.
"Chinese leaders may press their European counterparts on the EU's ongoing trade negotiations with the United States, urging them to reject any measures that would disadvantage China," Levin said.
The EU and U.S. have so far not agreed on a trade framework, with talks ongoing as the bloc faces a 30% tariff on most of its exports from Aug. 1.
China and the U.S. meanwhile in June said they had come to an agreement, which covers tech regulations and provisions around hotly contested rare earths, which are often used in the automotive, defense and energy sectors.
Additionally, Levin also noted that Trump's more adversarial approach to the EU may complicate the bloc's ability to counter China.
"It will be difficult for the EU to stand up to China's economic coercion while also managing largescale economic coercion from its American allies," she said.
Analyst expectations for the summit appear relatively low.
"That the summit is going forward is likely to be the biggest deliverable," the Atlantic Council's Fleck said.
"The best possible outcome is that the EU and China's negotiators will agree to keep talking on the various issues at play, including tariffs, market access, and Chinese subsidies and overcapacity," Fleck said, pointing to some of the many points of contention between the partners.
One positive sign, Fleck said, was confirmation that Chinese President Xi Jinping will meet European Commission President Ursula von der Leyen and European Council President Antonio Costa.
There may also be other, smaller hints of change in EU-China relations, Lukas Fiala, project coordinator of the China Foresight programme at LSE IDEAS, told CNBC.
"The summit can hardly reset years of economic and geopolitical tensions between the two sides," Fiala said, saying that the worsening of EU-China relations had "structural and longer-term" reasons.
EU member states also have differing views on China, which makes it hard for the EU to express a united position, he added.
"I will look out for smaller changes and language related to export controls on EVs and rare earths during and after the summit, but do not expect a big shift in the status quo," Fiala said.