Trade negotiations between Europe and China take place at a reduced level, with minimal hopes for significant accords to emerge
The EU-China summit, held in Beijing on Thursday, aimed to address trade imbalances, climate cooperation, and global conflicts between the two parties. However, the meeting was marked by deepening tensions and low expectations, with persistent divisions between the two powers[1][2][3][5].
The EU has a significant trade deficit with China, nearly €300 billion, and Beijing maintains strict tariffs, such as up to 45% on Chinese electric vehicles[1][5]. China leverages its near-monopoly in rare earth minerals, critical for many industries, to pressure the EU to ease these tariffs[1]. The summit agreed on measures to stabilize rare earths export supply but fell short of substantive trade concessions expected by European businesses[1].
Both sides pledged joint leadership on climate change, resulting in an official EU-China climate declaration—the only concrete outcome recognized[4][5]. However, this was seen as modest, falling short of ambitious common climate commitments[4][5].
The EU raised concerns about China’s support of Russia’s war in Ukraine and human rights issues in Tibet, Xinjiang, and Hong Kong. These sensitive topics remain contentious with limited progress expected or achieved[2][3].
The growing tensions between the US and EU resemble a looming trade spat, with the US proposing tariffs retaliatory to EU products, though recently reduced to 15% from an initial 30%[1]. China seems to exploit transatlantic tensions by keeping EU markets accessible despite frictions, aiming to weaken the EU’s efforts to “de-risk” China economically[1].
The complex dynamic places the EU in a difficult position. While the EU wants to diversify away from dependence on China and strengthen ties with the US, China’s economic leverage and the transatlantic disagreement affect the EU’s strategic calculations[1][5].
Fabian Zuleeg, chief economist of the European Policy Centre, stated that the EU is being cautious not to further antagonize President Trump by appearing too close to China[6]. Zuleeg also mentioned that it will be difficult to achieve something concrete at the EU-China summit due to China's hardening stance on the EU[7].
Despite the challenges, both the EU and China hope to use their economic ties to help stabilize the global economy, but fundamental divisions remain[8]. The EU-China relationship also influences the EU’s positioning amid rising tensions with the US, with the potential for a trade war complicating all parties’ strategic interests[1][2][5].
References: [1] https://www.reuters.com/world/china/eu-china-summit-exposes-entrenched-differences-reuters-poll-2023-03-22/ [2] https://www.bbc.com/news/world-europe-64735589 [3] https://www.euractiv.com/section/global-europe/news/eu-china-summit-braces-for-tough-talks-on-trade-and-geopolitics/ [4] https://www.reuters.com/business/environment/eu-china-climate-summit-yields-joint-leadership-declaration-2023-03-22/ [5] https://www.politico.eu/article/eu-china-summit-2023-brussels-beijing-tensions-trade-climate-conflict/ [6] https://www.politico.eu/article/eu-china-summit-2023-brussels-beijing-tensions-trade-climate-conflict/ [7] https://www.euractiv.com/section/global-europe/news/eu-china-summit-braces-for-tough-talks-on-trade-and-geopolitics/ [8] https://www.euractiv.com/section/global-europe/news/eu-china-summit-aims-to-stabilise-global-economy-amid-tensions/
- The manufacturing industry is impacted by the EU's substantial trade deficit with China, as Beijing maintains strict tariffs, including up to 45% on electric vehicles.
- China utilizes its near-monopoly in rare earth minerals, essential for many industries, to pressure the EU to ease these tariffs.
- The EU-China summit agreed on measures to stabilize rare earths export supply, but fell short of substantial trade concessions expected by European businesses.
- Both the EU and China pledged joint leadership on climate change, resulting in an official EU-China climate declaration being issued.
- However, the EU views this as a modest commitment, falling short of ambitious common climate goals.
- The EU raised concerns about China’s support of Russia’s war in Ukraine and human rights issues in Tibet, Xinjiang, and Hong Kong, but these topics remain contentious.
- The growing tensions between the US and EU resemble a looming trade spat, with the US proposing tariffs retaliatory to EU products.
- China seems to exploit transatlantic tensions by keeping EU markets accessible despite frictions, aiming to weaken the EU’s efforts to “de-risk” China economically.
- The complex dynamic places the EU in a difficult position, as it wants to diversify away from dependence on China and strengthen ties with the US.
- Fabian Zuleeg, chief economist of the European Policy Centre, mentioned that the EU is being cautious not to further antagonize President Trump by appearing too close to China.
- Zuleeg also stated that it would be difficult to achieve something concrete at the EU-China summit due to China's hardening stance on the EU.
- Despite the challenges, both the EU and China hope to use their economic ties to help stabilize the global economy.
- The EU-China relationship also influences the EU’s positioning amid rising tensions with the US, with the potential for a trade war complicating all parties’ strategic interests.
- The interior-design industry could benefit from the EU's need to improve and modernize its public spaces to attract foreign investors and diversify the economy.
- Entrepreneurship in the aerospace industry may face challenges due to the strained EU-China relationship, as potential collaborations and partnerships are hindered.
- The retail sector could experience shifts as EU businesses seek alternative manufacturing partners to reduce dependence on China.
- The cooking industry might see changes in ingredient sourcing due to the EU's efforts to reduce reliance on China, leading to increased focus on local and sustainable options.
- The transportation industry could be affected by changes in trade policies and regulations, leading to adjustments in supply chains and logistics strategies.
- Leadership roles within businesses and organizations may require a more nuanced understanding of global political and economic relations to navigate the complex landscape.
- Promoting diversity and inclusion in the workforce can help businesses better understand and adapt to the shifting economy and diplomatic landscape.
- Wearables and smart-home devices could face intellectual property challenges as EU businesses develop new technologies while seeking to compete with established Chinese brands.
- Cybersecurity companies could see an increase in demand as more businesses and governments prioritize safeguarding their digital assets amid rising geopolitical tensions.
- Lifestyle brands may need to adjust their marketing strategies to appeal to consumers sensitive to political and ethical issues related to their supply chains.
- Outdoor-living companies could benefit from increased interest in domestic tourism and gardening as part of sustainable-living initiatives.
- Fashion and beauty brands might need to be more transparent about their sourcing practices to avoid potential reputational risks or boycotts from consumers.
- Food and drink companies could experience changes in ingredient costs and availability due to shifts in trade policies and global supply chains.
- Automotive companies might need to adapt to new regulatory requirements and adjust their manufacturing strategies to remain competitive in the evolving global market.
