Gaps between Brussels and Beijing on trade issues show little sign of narrowing even as negotiations accelerate ahead of a possible call between US President Donald Trump and Chinese President Xi Jinping.
European Union trade chief Maros Sefcovic and Chinese Commerce Minister Wang Wentao met on the sidelines of an Organization for Economic Co-operation and Development (OECD) ministerial conference in Paris on June 3, their third meeting since March. The two sides have agreed to convene again later this month, as they prepare for a high-level EU-China summit in July.
Brussels is seeking to use the intensified diplomatic exchanges to “rebalance” its trade relationship with Beijing and “level the playing field,” according to an EU spokesperson.
On June 5, Sefcovic told the Brussels Economic Security Forum: “We value the new China economic and trade relationship. However, China’s impressive rise must not come at the expense of the European economy.”
Both China and the EU face heavy trade pressure from the White House. Trump’s tariffs on China remain at 30% even after the two sides reached a truce in mid-May, which has looked shaky in recent days while the US administration pushes for a call with Xi to iron out differences. Trump has threatened the EU with a 50% levy.
This has raised the urgency for China and the EU to cultivate other relationships. But there are several sticking points between Beijing and the bloc, complicated by differing views within Europe and the unpredictability of Trump’s policies.
The EU has become increasingly vocal about China’s industrial overcapacity and the pressure it places on European industries, as well as Chinese support for Russia’s war against Ukraine. China’s restrictions on exports of rare earth minerals have also disrupted some European manufacturing.
German member of parliament Engin Eroglu, who chairs the European Parliament’s delegation to China, expressed skepticism that the ongoing negotiations would yield a sustainable outcome, describing the July summit as “little more than a political gesture.”
“We see Chinese representatives in Europe expressing a desire for active cooperation with the EU, yet in China, the reality often contradicts the promises made,” he said. Eroglu warned that China’s industrial policies are creating strategic dependencies on critical raw materials, which Beijing uses as political leverage.
In a symbolic move to improve European trade ties after Washington ratcheted up tariffs on Chinese imports, Beijing in April lifted sanctions on four EU lawmakers. But EU member states voted to restrict Chinese medical device manufacturers from public procurement tenders after failed talks over reciprocal market access.
Brad Setser, a senior fellow at the Council on Foreign Relations and former adviser to the US Trade Representative, said he is not expecting any major breakthroughs.
“The traditional ‘market access’ agenda is a bit beside the point,” Setser said. While China seeks more access to Europe, European companies are losing ground in China, particularly in the automotive sector. “There are no plausible Chinese concessions that would offset the impact of its firms becoming global competitors.”
The Ukraine war, in particular, is likely to overshadow any EU-China talks.
Last July, all 32 NATO members released a communique that labeled China a “decisive enabler” of Russia’s war against Ukraine through its “no limits” partnership and large-scale support for Moscow’s defense industrial base.
Stefan Auer, professor of European Studies at the University of Hong Kong, suggested the chances of meaningfully enhancing EU-China relations are slim as long as China continues to support Russia. “Unless Europe’s and China’s positions towards Russia can be reconciled, little progress will be made in other areas,” he said.
Despite these tensions, Spanish Prime Minister Pedro Sanchez, during his visit to Beijing in April, called on European leaders to pursue a more balanced relationship with China and seek greater cooperation in areas of common interest.
The difficulty of getting EU members on the same page could undermine Brussels’ position, warned Andrew Yeh, executive director of Europe-based China Strategic Risks Institute. “It’s one thing for the EU to have a coherent China policy, and quite another to get unity across member states,” he said. “From the Baltic states to Germany and Spain, there are wildly different perceptions of the risks and opportunities that China presents.”
Yet, working with the US—a key partner for the EU in defending free trade and a rules-based international order—could pose a greater challenge, as Trump prioritized his trade war with Europe over forming a joint approach toward China.
“The Trump administration’s tariff threat against the EU has made coordination impossible,” Setser said.
Dalibor Rohac, senior fellow at the American Enterprise Institute, said that Beijing is aware of tensions between the US and EU, both on trade and security. “If it plays its cards well, it can insert a further wedge between the allies.”
Joerg Wuttke, partner at global advisory firm DGA Group and former president of the EU Chamber of Commerce in China, stressed that the US remains a far more important economy for the EU. He said that US companies hold USD 4 trillion in foreign direct investment stock across Europe, four times their investment in Asia. By contrast, he said that Chinese companies “invested less than USD 200 billion into the EU over the last years.”
EU investment in the US reached USD 190 billion in 2023 alone, he said.
Still, Wuttke said the Europe’s openness presents a “huge opportunity” for Chinese companies while China remains vital for many European businesses, not just as a market but increasingly as a hub for innovation and engineering. “Unlike the US, the Chinese leadership is no ally, but it is important to continuously find common ground.”
Setser believes that if Europe is willing to unite and take more decisive steps to protect its markets from distortions caused by Chinese industrial policy, the bloc, on its own, still has significant leverage. “China likely views the US market as effectively closed in several sectors,” he said, “making continued access to Europe more valuable.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.