FT: China courts EU amid US tariff turmoil, but trade tensions persist

China is stepping up diplomatic and commercial outreach to the European Union in a bid to strengthen economic ties and offset the shock of steep new tariffs imposed by Donald Trump. But despite Beijing’s push for rapprochement, deep-seated mistrust and trade tensions continue to cloud prospects for a reset in EU-China relations.

Trump’s latest tariff measures — up to 145 per cent on Chinese exports — have prompted fears of a major breakdown in US-China trade, and Beijing has retaliated with tariffs of up to 125 per cent. As pressure mounts, China is turning to Europe as a potential lifeline. Trade delegations have been dispatched to capitals across the continent, and Chinese factories are exploring ways to reroute exports to European markets.

“We should export more to Europe and import more as well,” said Zhang Yansheng, a senior researcher at the state-backed China Academy of Macroeconomic Research, quoted by the Financial Times.

Trump’s upheaval, he noted, offers an “opportunity to rethink our trade relationship” with the EU. “It is time for China and Europe to start over.”

European leaders, while publicly emphasising the need for cooperation, remain wary. European Commission President Ursula von der Leyen, a vocal advocate of “de-risking” EU supply chains, recently told Chinese Premier Li Qiang that both sides must provide “stability and predictability” for the global economy. Still, the bloc remains sceptical about becoming a dumping ground for goods displaced by US tariffs.

At the heart of European concerns are China’s large trade surpluses, persistent barriers to foreign market access, and its tacit alignment with Russia amid the war in Ukraine. “Europe’s relationship with Beijing has been plumbing new lows,” said Noah Barkin of the Rhodium Group, citing growing trade imbalances and cybersecurity fears. “It is difficult, given this backdrop, to envision some sort of détente.”

Despite these tensions, Beijing is actively courting EU business leaders. Recent “Invest in China” events in Stockholm, Oslo, Budapest, and London have featured senior Chinese officials and executives urging more foreign investment. “For international business, China is saying you are welcome and we want you to do more,” said Peter Burnett, head of the China-Britain Business Council.

Chinese exporters are also targeting Europe as demand from the US weakens. “We’re working hard to expand our business in Europe — and we’re making progress,” said a manager at Petpal, a major Chinese pet-food company. Demand for logistics infrastructure is rising: “Chinese companies going global” is accelerating, said Jaromir Cernik of CTP, a European industrial real estate group.

Still, foreign businesses remain cautious. An EU Chamber of Commerce survey last year found more than a quarter of companies in China were pessimistic about growth prospects, and nearly half were doubtful about profitability. Sluggish domestic consumption and rising price competition have made China a less attractive market.

Tensions have also flared over political symbolism. Xi Jinping reportedly plans to skip a summit marking 50 years of EU-China relations, instead asking EU leaders Ursula von der Leyen and António Costa to travel to Beijing in July. Meanwhile, Xi will attend a Victory Day parade in Moscow, a gesture likely to irritate Brussels.

Trade disputes are growing as well. The EU has launched multiple anti-dumping investigations into Chinese products — including electric vehicles and plywood — leading to tariffs exceeding 100 per cent in some cases. Beijing has retaliated with probes into EU pork, dairy, and cognac. Von der Leyen has said the EU “will take safeguards” to protect against unfair competition, while China has pledged to boost domestic consumption to reduce overcapacity.

Despite their differences, both sides appear to recognize the value of closer dialogue. “Both need alternative markets as well as a sense of stability,” said François Chimits of the Mercator Institute for China Studies. Greater cooperation, he added, could enhance both powers’ leverage in negotiations with Washington.

Recent freight data hints at a shift already underway: the Ningbo Containerised Freight Index showed shipping rates to the US west coast fell 18 per cent in early April, while rates to the Mediterranean rose 15 per cent.

Zhang Yansheng acknowledged last year’s diplomatic chill with the EU. “Europeans were looking at China with a biased perspective — they wanted ‘de-risking,’” he said. “But we were also flexing our muscles too much. China and Europe need to re-understand each other.”

By Tamilla Hasanova