China-EU summit: no breakthrough in trade imbalances or over the war in Ukraine

China and the EU have agreed that they have a shared interest in a balanced trade relationship, and promised to step up people-to-people exchanges after three years of mutual isolation during the coronavirus pandemic.

But the first in-person EU-China summit in Beijing on Thursday produced no breakthroughs in the areas of greatest friction such as trade imbalances and the war in Ukraine.

Xi Jinping told European Council president Charles Michel and European Commission president Ursula von der Leyen that China saw the EU as a key partner for economic and trade co-operation, scientific and technological co-operation, and industrial and supply chain co-operation.

“We should not view each other as rivals just because our systems are different, reduce co-operation because competition exists, or engage in confrontation because there are disagreements,” he said.

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But speaking to reporters after the meeting Ms von der Leyen said the EU’s €400 billion annual trade deficit with China was unsustainable. And she warned that national governments in Europe were under growing pressure to protect their manufacturers from Chinese competition.

“Politically European leaders will not be able to tolerate that our industrial base is undermined by unfair competition. We like competition. It makes us better, it lowers prices, it’s good for the consumers. But competition needs to be fair. We insist on fair competition within the single market. Therefore we also insist on fair competition from companies that come to our single market,” she said.

As China has moved ahead of the EU in the production of electric vehicles the commission has ordered a probe into Chinese state supports for the industry. Brussels also complains that Beijing limits European companies’ access to the Chinese market, offers preferential treatment to indigenous companies and has created overcapacities in production that hurt European producers.

The EU leaders also urged Mr Xi to put pressure on Vladimir Putin to end the war in Ukraine and called on Beijing to engage with the Ukrainian peace proposal. China took part in a number of international meetings about the proposal but has been absent from the most recent talks.

“As a permanent member of the UN Security Council China has a special responsibility, because this Russian war threatens global stability and the world economy. It also affects the most vulnerable around the world, for instance by increasing food insecurity and driving up commodity prices. This is not in Europe’s interest, this is not in China’s interest, this is not in the world’s interests,” Mr Michel said.

“This is why we strongly encourage China to engage constructively on Ukraine’s peace formula. Russia continues to look for ways to access technology to power its war. Once again we insisted that China should not supply military tools to Russia. And we reiterated how important it is that China help to prevent Russia from circumventing sanctions.”

The Chinese readout of the meeting mentioned Ukraine only in passing, saying that the EU wanted “close communication and co-ordination with China, uphold multilateralism and the purposes and principles of the UN Charter, and work for the settlement of regional hotspots including Ukraine and the Middle East.”

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