The joint summit in Beijing between the two powers, scheduled for just a few days later, is the next big test. Yet, they have been tasked with steering through the most perilous economic and political landscape this country has faced. This week, the wireless summit will open with high energy conversations. Chinese President Xi Jinping, European Commission President Ursula von der Leyen, Portuguese Prime Minister António Costa, and Chinese Premier Li Qiang will all be in attendance. It all sets a dismal scene, where pessimism is the prevailing expectation as the meeting convenes, with many important issues still dominating the agenda.
China has responded to Western criticism of its position on the Russo-Ukrainian war, claiming that this is part of its long history of seeking negotiation and peace. This declaration comes at a time when the European Union is worried about Beijing’s increasing economic connections to Russia as EU sanctions on Moscow continue to flow in. This was exactly the step the EU needed to take towards its first ever sanctioning of the two Chinese banks. This action is a key component of a larger package aimed at deterring Russian aggression.
Within 48 hours, China had retaliated with new restrictions of its own in response to the sanctions. Specifically, they target ten European leaders, including several members of the European Parliament. The Chinese Ministry of Commerce strongly condemned the EU’s moves. They announced that these measures “significantly threatened” trade and economic relations between China and the EU.
The intricacies of EU-China relations go further than sanctions. China has launched anti-dumping investigations in response to alleged European “dumping” practices on core products like dairy, brandy, and pork. This move illustrates increasing pressures over unfair trade practices and the importance of defending U.S. industries.
China’s economic policies and their effects on European industries have been a leading concern. The EU is very, very invested in the health of its automotive industry. This sector has already been impacted due to China’s recent move to restrict exportation of rare earth minerals and magnets. As Marta Mucznik, an EU-China relations specialist, pointed out, the implications are quite serious.
“Europe is really concerned about its core industries, including the automotive. There is a huge concern about Chinese EV overcapacity being dumped on the EU market at prices where European companies cannot compete.” – Marta Mucznik
The trade deficit between the EU and China has skyrocketed over 700%. It has doubled from 2015 to 2024, hitting 305.8 billion euros ($359 billion) last year. This imbalance makes managing diplomacy even more difficult, as both sides contend with their own nationalistic economic priorities.
Meanwhile, for Beijing, improving public perceptions in the EU is equally important, if not more so. Beijing wants to shift the story from one of “competitive cooperation” to one defined by “cooperative competition.” Wang Yiwei, one of the most influential Chinese scholars in international relations, underscored this idea.
“China wants the EU to stop portraying their relationship as one of ‘competitive cooperation’, and instead see it through the paradigm of ‘cooperative competition’.” – Wang Yiwei
As Beijing continues to strengthen its ties with Moscow, viewed as a core interest amid its rivalry with the United States, it denies accusations from the EU that it is enabling Russia’s military actions. William Yang, an analyst on Chinese foreign policy, wrote that this perception makes it more difficult for China to achieve its diplomatic aims with Europe.
“Beijing considers its relationship with Russia as a core interest amid ongoing competition with the US, and it keeps denying the EU’s criticism that it is an enabler of Russia’s war against Ukraine.” – William Yang
Notwithstanding these challenges, analysts say that significant opportunities exist for both countries to pursue mutually beneficial cooperation in a serious way. Chinese diplomat Guo Jiakun also stressed that the China-EU relationship was at a historic crossroads today.
“The China-EU relationship is now at a critical juncture of building on past achievements and opening up a new chapter.” – Guo Jiakun
Getting this balance right is not an easy task. To cut a deal, Europe needs to meet American interests, but it needs to put its own economic interests first. Rudyak pointed out that Europe doesn’t have the same competitive narrative as the US.
“The view on the trade and balance in Europe is slightly different from the United States… where it’s basically about who’s going to be number one.” – Rudyak
With tensions already rising in advance of the summit, both sides need to address their disparities while trying to identify areas where they can agree. Further, as the fourth set of Beijing’s five noes, the Beijing leadership has been eager for normalized, stable relations and pragmatic cooperation on mutual interests.
“What we see a lot from the Chinese side… is ‘let’s normalize the relations, let’s focus on pragmatic cooperation, let’s focus on where we agree and accommodate where we disagree’.” – Rudyak
