China presses Europe for anti-Trump alliance on trade

European Council President Donald Tusk (L) and Chinese Premier Li Keqiang (R) attend last year a meeting of China and EU leaders in Brussels. [Olivier Hoslet/EPA]

China is putting pressure on the EU to issue a strong joint statement against US President Donald Trump’s trade policies at a summit later this month but is facing resistance, European officials said.

In meetings in Brussels, Berlin and Beijing, senior Chinese officials, including Vice Premier Liu He and the Chinese government’s top diplomat, State Councillor Wang Yi, proposed an alliance between the two economic powers and offered to open up more of the Chinese market in a gesture of goodwill.

One proposal has been for China and the EU to launch joint action against the US at the World Trade Organisation.

EU and China pledge to deepen relationship despite trade tensions

The EU and China said on Friday (1 June) they would expand trade and investment cooperation amid the global trade dispute triggered by US tariffs. But as part of the efforts to address outstanding trade disputes, Europe will present a complaint before the World Trade Organisation against China’s intellectual property practices.

But the EU, the world’s largest trading bloc, has rejected the idea of allying with Beijing against Washington, five EU officials and diplomats told Reuters, ahead of a Sino-European summit in Beijing on July 16-17.

Instead, the summit is expected to produce a modest communique, which affirms the commitment of both sides to the multilateral trading system and promises to set up a working group on modernising the WTO, EU officials said.

The EU recently presented a dispute settlement at the WTO in response to China’s intellectual property practices.

Despite the ongoing trade dispute with Trump Administration, last week EU leaders outlined their plan to reform the WTO, in line with the US’s demands.

Summit conclusions detail reform plan for WTO to please Trump

The EU leaders agreed “in substance” on Thursday (28 June) on a set of proposals to improve the World Trade Organisation, which should pave the way for finding common ground with US President Donald Trump and de-escalating the ongoing trade dispute. But Italy blocked their formal adoption until the migration issue was fully addressed.

The EU-US’s WTO reform would help to address some of Beijing’s practices, including its public subsidies to industries and the forced transfer of technology to access the Chinese market.

EU, China turn from trade to climate action to cement relations

The EU and China confirmed today (2 June) their decision to step up their cooperation against climate change. But disagreements over trade soured the end of the summit, as Beijing refused to sign the joint declaration.

Chinese state media has promoted the message that the EU is on China’s side, officials said, putting the bloc in a delicate position. The past two summits, in 2016 and 2017, ended without a statement due to disagreements over trade and the South China Sea.

Vice Premier Liu He has said privately that China is ready to set out for the first time what sectors it can open to European investment at the annual summit, expected to be attended by President Xi Jinping, China’s Premier Li Keqiang and top EU officials.

“China wants the EU to stand with Beijing against Washington, to take sides,” said one European diplomat. “We won’t do it and we have told them that.”

China’s Foreign Ministry did not immediately respond to a request for comment on Beijing’s summit aims.

Shared concerns

Despite Trump’s tariffs on European metals exports and threats to hit the EU’s automobile industry, Brussels shares Washington’s concern about China’s closed markets and what Western governments say is Beijing’s manipulation of trade to dominate global markets.

“We agree with almost all the complaints the U.S. has against China, it’s just we don’t agree with how the United States is handling it,” another diplomat said.

Still, China’s stance is striking given Washington’s deep economic and security ties with European nations. It shows the depth of Chinese concern about a trade war with Washington, as Trump is set to impose tariffs on billions of dollars worth of Chinese imports on July 6.

In striking contrast with G7, Shanghai summit focuses on ‘unity’

Chinese President Xi Jingping has praised the “unity” of the Shanghai Cooperation Agreement (SCO) at the opening ceremony of the organization’s summit in the coastal Chinese city of Quingdao.

It also underscores China’s new boldness in trying to seize leadership amid divisions between the United States and its European, Canadian and Japanese allies over issues including free trade, climate change and foreign policy.

“Trump has split the West, and China is seeking to capitalise on that. It was never comfortable with the West being one bloc,” said a European official involved in EU-China diplomacy.

“China now feels it can try to split off the EU in so many areas, on trade, on human rights,” the official said.

China will meet in early July with 16 European countries to deepen its economic cooperation and trade relations.

China says 16+1 summits are good for EU

Annual summits between China and central and eastern European countries are beneficial to the European Union as a whole, the Chinese government told Bulgaria’s foreign minister, brushing off concerns that Beijing is seeking to divide the continent.

Another official described the dispute between Trump and Western allies at the G7 summit last month as a gift to Beijing because it showed European leaders losing a long-time ally, at least in trade policy.

European envoys say they already sensed a greater urgency from China in 2017 to find like-minded countries willing to stand up against Trump’s “America First” policies.

Minor concessions 

China has promised to open up. But EU officials expect any moves to be more symbolic than substantive.

They say China’s decision in May to lower tariffs on imported cars will make little difference because imports make up such a small part of the market. China’s plans to move rapidly to electric vehicles mean that any new benefits it offers traditional European carmakers will be fleeting.

“Whenever the train has left the station we are allowed to enter the platform,” a Beijing-based European executive said.

However, China’s offer at the upcoming summit to open up reflects Beijing’s concern that it is set to face tighter EU controls, and regulators are also blocking Chinese takeover attemps in the US.

EU lawmakers push to toughen screening of foreign investments

Lawmakers in the European Parliament approved on Monday (28 May) a far-reaching proposal calling for greater scrutiny of foreign investments, part of a bid to respond to a flurry of Chinese acquisitions in the European Union.

The EU is seeking to pass legislation to allow greater scrutiny of foreign investments.

“We don’t know if this offer to open up is genuine yet,” a third EU diplomat said. “It’s unlikely to mark a systemic change.”

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