China and the European Union (EU) are set to convene a critical summit in Beijing on Thursday, amid escalating tensions and mistrust between the two entities. This meeting aims to address various economic concerns but is likely to expose the deep-seated frictions that have emerged over trade practices, technology access, and geopolitical alignments.
The timing of the summit could not be more critical, as China is being accused of wielding its economic clout to intimidate Europe. This tension has grown over a multi-year chain of trade battles. These tactics, rooted in a classic tit-for-tat, have combined several issues into one tangled web, adding yet another layer of complexity to a fraught relationship. The EU is getting more and more jittery over China’s subsidized overcapacity. They call it dumping on global markets and poisoning the well for European industries.
Economic Disparities and Trade Frictions
Thus, the economic relationship between China and the EU is characterised by huge imbalances. Meanwhile the EU itself is still struggling with finding a deficit that is above 300 bln Euros. This is something that Ursula von der Leyen, President of the European Commission, has emphasized by calling for immediate action to close these gaps. She later urged for a collective position from the G7 countries to put pressure on Beijing for its economically coercive practices.
“China is using this quasi-monopoly (on rare earths) not only as a bargaining chip, but also weaponizing it to undermine competitors in key industries.” – Ursula von der Leyen
China’s control over critical minerals, particularly rare earths essential for electric vehicle (EV) batteries, cell phones, and military technology, has raised alarms in Europe. Unsurprisingly, the EU therefore argues that China’s actions do more than distort trade—they threaten core European strategic interests. Von der Leyen is clear-eyed that China’s subsidized overcapacity is resulting in market flooding, making it even more difficult for European manufacturers to compete.
“Floods global markets with subsidized overcapacity that its own market cannot absorb.” – Ursula von der Leyen
China’s response to these allegations has been dismissive, with officials labeling Europe’s concerns about industrial overcapacity as baseless. The Chinese Ministry of Commerce criticized the EU’s decision to impose sanctions on two Chinese banks connected to Russia, asserting that such measures only exacerbate tensions.
Geopolitical Underpinnings and Strategic Concerns
The geopolitical landscape has had a key impact on the dynamics of the China-EU relationship. Perhaps most notably, China’s support for Russia in the ongoing conflict with Ukraine has put significant stress on its relationship with Europe. During her tenure, the EU has been wary of offending Brussels’ main pillar on keeping a constructive relationship with Beijing while trying to “rebalance” its economic relationship.
Noah Barkin, a transatlantic relations expert and TIRP advisor, underscored the high stakes with Europe’s vulnerable position. That’s in addition to the growing tensions on both sides with China and the US, which he highlighted. He cautioned that Europe could soon face a two-front trade war. This is happening at the same time that former President Trump is calling for negotiations with Beijing.
“The worst-case scenario would be for Europe to find itself in a two-front trade war with the US and China at a time when Trump is pressing for some sort of Faustian bargain with Beijing.” – Noah Barkin
Despite these challenges, there is still a recognition within both parties of their seemingly opposite, but actually complementary, interests. Wang Yiwei, a prominent Chinese scholar, suggested that cooperation on global issues like climate change and artificial intelligence requires collaboration between China and the EU.
“To solve challenges from climate change to AI and global conflicts, the European Union needs China, and China needs the European Union.” – Wang Yiwei
Future Prospects and Collaborative Opportunities
Moving forward, there are agreements to be made and pressures on both sides to make them. They would prefer to set the minimum price below which its EVs can enter European markets instead of using tariffs. The EU is very interested in protecting its technological leadership and securing access to strategic resources.
As talks continue at the summit, it’s still unclear if any meaningful deals will be reached. Analysts predict that without addressing fundamental issues, such as China’s economic practices and its support for Russia, the summit’s outcomes may not differ from previous encounters.
“We haven’t had an EU-China summit that produced real deliverables for many years and this one won’t be any different.” – Noah Barkin
China is looking to “derisk” its supply chains. Yet, at the same time, it demands full market access in Europe, illustrating its long-term strategic goals within this complicated relationship. The EU’s ongoing lobbying for a recalibration of trade dynamics to promote mutual benefits, without abandoning central tenets of their activity, remains an encouraging counterpoint.
“Rebalancing trade needs to recalibrate its mentality.” – State media outlet
