The European Union’s top diplomat has waited all year for the right moment to visit China. Now, he’s finally arriving with the differences between Brussels and Beijing looking larger than ever.
Josep Borrell’s three-day visit starting Thursday comes as the EU navigates a delicate task: pushing back against Chinese subsidies it says disadvantage European companies, while trying to prevent the $900 billion relationship from imploding into a trade war.
Deadly assaults on Israel by Hamas are also likely to cast a long shadow on talks. President Xi Jinping has so far remained silent over the hundreds of civilian deaths, while European Commission President Ursula von der Leyen has blasted the attack as “terrorism in its most despicable form.”
Beijing’s failure to condemn Hamas puts China and the EU on opposite sides of a second major conflict in as many years: Xi’s backing for Russia after its invasion of Ukraine has been a growing thorn in the relationship, with a top EU official warning China last month that its war stance is hurting its investment potential.
The timing of Borrell’s trip lays bare the sensitivities: he will depart China just a few days before Russian President Vladimir Putin — whose nation has been heavily sanctioned by the EU — lands in the capital to meet with Xi, avoiding an awkward overlap that could raise tensions.
The top diplomat will meet Chinese officials including Foreign Minister Wang Yi during the trip, in talks seen as the final step in smoothing a path for von der Leyen to visit China later this year.
Both sides are going to be trying to make sense of each other’s positions, according to Alicja Bachulska, policy fellow, European Council on Foreign Relations.
“The EU wants to communicate where its red lines are,” she said. “On its security environment and economic competitiveness, Brussels is trying to recalibrate its position toward Beijing.”
Third Time Lucky?
Borrell’s visit comes after two failed attempts earlier this year. The EU official’s first trip in April was scuppered after he tested positive for Covid-19. Then China abruptly postponed a planned July meeting — one of the first signs then Foreign Minister Qin Gang had been ousted from his job.
On this week’s long-awaited visit he’ll first meet with business people in Shanghai, according to one EU official familiar with his agenda. That comes after a record share of European companies said doing business in the Asian giant is getting more difficult in a survey published in June by the EU Chamber of Commerce in China.
Tensions over trade are only likely to intensify. The EU and US are set to announce a provisional political agreement on the so-called Global Steel and Aluminum Arrangement at a summit in Washington on Oct. 20, Bloomberg News reported.
That pact could introduce new tariffs aimed at excess steel production from China at a fragile moment for its economy: The nation’s post-pandemic recovery has disappointed this year, as the Asian powerhouse faces headwinds from depressed global demand and turbulence in its indebted property market.
Beijing is likely to see any steel curbs as an “attack on its economy at a time when it is already under stress,” said Noah Barkin, senior advisor of the Rhodium Group’s China practice.
“Borrell will need to make a strong case for why these measures are necessary at a time when concerns in Europe are growing about possible Chinese retaliation,” he added.
‘De-risking’
China’s difficulty in compartmentalizing human rights issues from its trade with the EU was exposed in December 2020 when the bloc froze a major investment pact that had taken seven years to negotiate.
The deal fell apart at the eleventh hour after China imposed tit-for-tat sanctions on members of the bloc over allegations of human rights abuses in its Xinjiang region.
Beijing has since tried to steady bilateral ties as it courts the EU as a counterweight to the US, as the world’s largest economy ramps up trade curbs and political pressure on China. But as concern mounts in the West over Xi’s military aggression toward the self-ruled island of Taiwan, the EU’s approach has increasingly looked more in-step with that of President Joe Biden’s government.
The European Commission has increased pressure on member-nations to stop using Huawei Technologies Co. and ZTE Corp. equipment in their most advanced mobile networks. It has also pledged to “de-risk” sensitive supply chains from China, in language mirrored by the Biden administration, and is now considering trade curbs in at least two key industries.
Dong Yifan, an academic at the China Institutes of Contemporary International Relations, told the state-run Global Times newspaper the EU has been coordinating its trade policies with the US more since Russia’s war in Ukraine. The EU’s actions are “trade protectionism intertwined with a political mindset,” Dong added.
‘Naked Protectionism’
Last month, the EU dispatched its top trade negotiator Valdis Dombrovskis to Beijing days after it announced a probe into China’s electric vehicle subsidies. Brussels said the investigation was needed to protect jobs and supply chains at home.
While Beijing initially blasted the EV probe as “a naked act of protectionism,” it was the EU official who had the sharpest rhetoric for Beijing on that trip. He delivered some of the bloc’s most direct criticisms of China’s economic and political policies, and said those two pillars of their relationship couldn’t be separated.
With Borrell arriving in China straight from talks in Oman, the conflict in the Middle East will likely be front and center. That sets the stage for a potentially thorny series of meetings that will test how far the world’s second-largest economy is willing to go to keep Europe on side.
“Beijing wants to improve its ties with Brussels in the context of China’s rivalry with the US,” said Bachulska, the foreign policy fellow. “But it won’t do it at a heavy cost.”
--With assistance from Fran Wang, James Mayger and Natalia Drozdiak.
