China and Europe Forge New Path to Ease Trade Tensions: What You Need to Know
China and the European Union aim to ease trade tension by establishing information exchange on export controls, fostering dialogue on trade imbalances and geopolitical matters
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In a bid to ease trade imbalances and address geopolitical concerns, China and the European Union have reached an agreement to share information on export controls.
Europe's trade chief, Valdis Dombrovskis, emphasized the need for improved access to the world's second-largest economy, stating that the current state of the relationship is at a critical juncture. Dombrovskis called for a rebalancing of the relationship to ensure mutual benefits, emphasizing the importance of transparency, fairness, predictability, and reciprocity. He expressed satisfaction over the progress made in addressing certain market access concerns.
The European Commission announced on Monday that both parties have agreed to enhance transparency in supply chains for raw materials and are currently exploring a potential new "mechanism" for achieving this. During his visit to Beijing, Dombrovskis held a meeting with Chinese Vice Premier He Lifeng, where they focused on improving the trade of agricultural products and alcoholic beverages. Furthermore, China has made a commitment to resolve the backlog of license applications for infant formula.
Following the meeting, he informed journalists that China expressed its willingness to increase imports from the EU. Moreover, he expressed hope that Europe would lift constraints on the export of high-tech products to China.
Trade Commissioner Valdis Dombrovskis of the European Union (EU) gestures at a news conference held during an informal meeting of EU economic and financial affairs ministers in Santiago de Compostela, Spain, on Saturday, September 16th, 2023.
Europe's trade chief pledges to adopt a more proactive approach towards China in response to the escalating trade deficit. Relations between the two regions have deteriorated, particularly following the European Union's initiation of an inquiry into China's government support for electric vehicle producers. Heightened concerns for the future of European automobile manufacturers have coincided with a surge in imports of Chinese cars. In response, China's commerce ministry denounced the investigation as clear protectionism.
Ahead of his meeting with He on Monday, Dombrovskis expressed that China's trade practices have compelled the European Union to adopt a more assertive approach when interacting with the world's second-largest economy. Speaking at Tsinghua University, he stated, "We find ourselves at a critical juncture, where we have the choice to foster a relationship that brings mutual benefits through open, equitable trade and investments... Alternatively, we can opt for a path that gradually drives us apart."
Last year, according to EU ambassador to China Jorge Toledo, the trade deficit between the blocs and China reached a historical peak of 396 billion euros ($421 billion), as reported by Reuters.
A view of the BYD ATTO 3, a model from Chinese automobile manufacturer BYD, is displayed at an event one day before the official opening of the 2023 Munich Auto Show IAA Mobility in Munich, Germany on September 4, 2023. (Photo: Leonhard Simon/Reuters)
According to EU statistics, half of the deficit was in vehicles and machinery, with the remaining portion consisting of other manufactured goods, chemicals, and energy.
The increase in Chinese car imports is causing concern and tension among European automakers. This issue has already affected technology supply chains, as China has imposed export restrictions on semiconductor materials in response to restrictions placed on their access to advanced chipmaking equipment by Europe and the United States.
Meanwhile, concerns have been raised by European businesses regarding the operating environment in China, apprehensive of its increasing political and unpredictable nature, stated Dombrovskis at a press conference on Tuesday. He also emphasized that China's stance on the war in Ukraine has had repercussions on the country's image not only among European consumers but also among prospective investors.
"We find China's stance difficult to comprehend," Dombrovskis expressed to reporters.
Following its complete invasion of Ukraine in 2022, Moscow has increasingly relied on Beijing, resulting in a significant rise in trade between Russia and China this year. China maintains its neutrality and expresses its sole desire for peace in Ukraine.
Laura He contributed to this report.
