European leaders present concerns to China's Xi Jinping in Beijing

Don't miss out on CNN's Meanwhile in China newsletter, delving into the impact of China's rise on the world. The stakes are high as Chinese leader Xi Jinping hosts European Union leaders in Beijing for a critical summit on Thursday, where the future of trade tensions between the two major economies hangs in the balance.

This one-day gathering is the first EU-China summit in person in four years, following a tense and chilly virtual event last year that was later described as a "dialogue of the deaf" by EU diplomat Josep Borell.

Brussels is attending with a list of key economic grievances that its leaders believe need to be addressed in order to improve relations with their most important trade partner. Meanwhile, Beijing has been working to strengthen its relationships with key trading partners and foreign companies as it continues to face growing economic challenges at home.

Earlier this week, Chinese Foreign Minister Wang Yi expressed that the visit presented an opportunity to elevate China-EU relations and emphasized the importance of maintaining composure and prioritizing practical cooperation.

Li Mingjiang, an associate professor of international relations at Singapore's Nanyang Technological University, stated that the current focus for Chinese leaders is to stabilize the domestic economic situation, resulting in a strong incentive for China to enhance its relations with European countries.

Expectations for major breakthroughs are minimal due to the deep-rooted points of contention between the two sides, spanning from economic relations to their starkly different stances on Russia's war against Ukraine, which China has refrained from condemning two years on.

Experts will closely monitor whether Xi is prepared to collaborate with European leaders on crucial matters, despite the rhetoric and economic pressures.

On the table

In the midst of a wide-ranging reevaluation of its approach to China, Europe is convening the meeting. The bloc has initiated efforts to "de-risk" supply chains from China and protect crucial technologies, reflecting growing apprehensions about Beijing's global aspirations and economic policies.

European Commission President Ursula von der Leyen, European Council President Charles Michel, and top EU diplomat Josep Borrell are prepared to address economic concerns with Chinese leaders Xi and Premier Li Qiang during their visit to the Chinese capital. Prior to the summit, European leaders have openly discussed these concerns and indicated that they will take a firmer stance if necessary progress is not achieved.

Key among the challenges is the substantial trade imbalance between the EU and China. Brussels attributes this to Beijing's support for Chinese companies through subsidies and restrictive measures that hinder entry into the Chinese market.

Model BYD ATTO 3, manufactured by Chinese automaker BYD, is on display at a pre-opening event for the 2023 Munich Auto Show IAA Mobility in Munich, Germany on September 4, 2023. The photo is credited to Leonhard Simon of Reuters.

Europe is investigating China's electric car subsidies as imports increase. In a recent address to EU ambassadors, Borrell cautioned that if China does not acknowledge the imbalance and its consequences, there may be growing demand in Europe for increased protection.

In September, the bloc revealed an investigation into China's state support for electric vehicle manufacturers, due to concerns over the impact of soaring imports on European auto manufacturers. China has criticized the investigation as "protectionist," arguing that the growth of its electric vehicle industry is the result of technological innovation, free competition, and a comprehensive industrial supply chain.

The EU has also pushed back against Europe's "de-risking" and launched a diplomatic campaign criticizing the policy as illogical and politically motivated. State-backed media has also criticized von der Leyen for spearheading the policy. In Thursday's summit, Beijing may make some gestures toward further opening its market for European investment or addressing the trade deficit, but analysts say that there are low expectations in Europe for any major progress.

"Europeans have started to realize that the actual outcomes will be limited. European officials and business leaders believe that China's open-door policy is no longer what it used to be," said Philippe Le Corre, a senior fellow at the Asia Society Policy Institute based in Paris, referring to the perception that China is no longer a welcoming place for foreign business.

Another important topic of discussion is Russia's nearly two-year-long conflict in Ukraine and Xi's continued close alliance with fellow autocrat Vladimir Putin. This relationship has led to a significant decline in relations between Europe and China, particularly since Xi has shown no indication of pressuring the Russian leader to withdraw troops as Europe has requested.

The visiting leaders are anticipated to remind China's Xi that the "de-risking" policy to diversify supply chains does not imply a desire to decouple their interconnected economies. Both sides are also expected to seek areas of collaboration.

Constructive relationship

Xi's recent meeting with American President Joe Biden was largely positive, resulting in significant agreements on military communication and environmental protection. However, according to Steve Tsang, director of SOAS China Institute at the University of London, improving ties with Europe may be even more crucial for Xi. With competition with the US in mind, Beijing is eager to ensure that the EU does not align itself too closely with Washington.

Xi will not make significant concessions to the EU without receiving substantial benefits in return," Tsang stated. Beijing has recently made a goodwill gesture by introducing visa-free travel for passport holders from select European countries such as France and Germany.

Gonzalo Fuentes/Reuters

Macron is relying on China's Xi to negotiate with Russia regarding the Ukraine war. Official statements indicate that Beijing is optimistic that the summit will aid in reshaping the relationship between the two countries, aligning with China's increased diplomatic efforts to mend ties with Europe.

Beijing's suppression of freedoms in Hong Kong, reported human rights violations in Xinjiang, and management of the Covid-19 pandemic had already put significant strain on relationships prior to China's refusal to denounce Russia's invasion of Ukraine.

European leaders visiting on Thursday are anticipated to urge Xi to guarantee that Chinese companies are not aiding Russia's military efforts. Unlike the US, Europe has not yet imposed sanctions on Chinese businesses suspected of supplying goods that could be utilized in warfare.

Both parties are expected to address the ongoing conflict between Israel and Hamas militants in Gaza. Despite Europe and the US denouncing Hamas for the attack on Israel that resulted in around 1,200 casualties, Beijing has not condemned the group. Instead, China has criticized Israel's strikes on Gaza, which reportedly resulted in the deaths of over 15,000 individuals, according to the Hamas-run Gaza Ministry of Health.

In the previous month, von der Leyen emphasized the shared interest of China and Europe in stability in the Middle East. She urged China to use its influence over Hamas and Iran to prevent a worsening of the conflict, stating that China's actions have a significant impact on the security, sovereignty, and prosperity of the EU. She emphasized the importance of frankness as a basis for a constructive relationship.

In separate comments also last month, she alluded to the stakes of navigating the relationship: "Getting China right has never been more important than today."