FT: China-EU summit overshadowed by Ukraine war and soaring trade surplus

The European Union is preparing for challenging talks with China’s President Xi Jinping in Beijing this week, amid ongoing trade tensions and concerns over China’s alleged support for Russia in the Ukraine war.

The summit, marking 50 years of EU-China relations, comes at a time of increased geopolitical friction, with Beijing eager to showcase the meeting as a success for multilateralism and a sign of Europe distancing itself from former US President Donald Trump’s policies. However, according to the Financial Times, Brussels is focused on addressing issues such as China’s growing trade surpluses and accusations that it supplies dual-use goods to Moscow for the war effort, allegations China denies.

EU Chief Diplomat Kaja Kallas described China as a key enabler of Russia’s war in Ukraine and highlighted concerns about Chinese industrial overcapacity, trade imbalances, and coercive economic practices, particularly in sectors like critical raw materials, chemicals, and consumer drones. She stressed the interconnectedness of trade and security. During the one-day visit, European Commission President Ursula von der Leyen and European Council President António Costa will meet with Xi Jinping for a summit, working lunch, and a meeting with China’s Premier Li Qiang.

Beijing has framed the summit as a meeting of two major global powers supporting globalisation and cultural diversity. However, Xi’s refusal to visit Brussels for the originally planned summit earlier this year was viewed by the EU as a diplomatic slight. Brussels also postponed a key economic meeting last month in response.

Despite these tensions, EU officials see the fact that dialogue is continuing at the highest level as a positive outcome. Yet the two sides remain deeply divided. China’s trade surplus with the EU reached nearly €400 billion in 2022 and remains substantial, fueling European complaints about Chinese dumping of cheap goods and market access barriers. The EU has launched over 25 trade defence investigations into Chinese imports in the past year alone, quadrupling the number from the previous year.

China’s refusal to condemn Russia’s invasion of Ukraine has further strained relations. Chinese Foreign Minister Wang Yi reportedly told Kallas that Beijing does not want Russia to lose the war, fearing the US would then shift focus to China and Asia—remarks that surprised EU officials. A senior EU official estimated that 80% of dual-use goods for Russia pass through China, a troubling fact for Brussels. Just days before the summit, the EU sanctioned two small Chinese banks for facilitating trade with Russia, prompting Beijing to threaten retaliation.

Beijing’s Foreign Ministry acknowledged current challenges, accusing some EU members of exaggerating disputes and unfairly blaming China on Ukraine-related issues, thereby disrupting bilateral ties. Nonetheless, both sides are cautious about confrontation, focusing on their respective trade conflicts with the US and racing to conclude new trade agreements by next month.

China’s response to EU trade measures, such as tariffs on electric vehicles and restrictions on Chinese medical device companies, has been relatively muted. A senior EU diplomat noted that China is focused on the US and prefers not to see the EU align too closely with America.

Experts suggest progress could be made on stabilising supply chains, reforming the World Trade Organisation, and tackling climate change. China has agreed to expedite export approvals for rare earths to certain European companies, easing some restrictions imposed in response to Trump-era tariffs. Meanwhile, China has expressed frustration over Dutch export controls on semiconductor equipment influenced by the US.

Beijing is also trying to manage the negative effects of manufacturing overcapacity, known as “involution,” to avoid harmful competition. EU diplomats are still negotiating with China on climate commitments, with Brussels insisting that any joint communiqué must include stronger Chinese pledges to reduce greenhouse gas emissions.

Despite Ursula von der Leyen’s tougher stance on China compared to her predecessors, EU officials emphasise that neither side wants to escalate tensions unnecessarily. Both parties seem intent on maintaining a stable relationship without rocking the boat during these sensitive discussions.

By Tamilla Hasanova