China and the European Union meet today to discuss their relationship. They want a lot from each other, but leading up to the meeting, they have mainly argued. The chance of an agreement is therefore small.
Now that the economic relationship with the United States is strained, China wants to show that it wants to improve relations with the EU. The country therefore hopes to strengthen mutual ties on Thursday. For example, China recently eased visa rules for Europeans.
However, Europe has not been looking at that gesture with confidence lately. For example, the mutual summit is taking place in Beijing against the agreement. The duration of the meeting has also been reduced from two days to one day.
The meeting marks the fiftieth anniversary of diplomatic relations between the People’s Republic of China and the EU. But in recent months, the relationship has deteriorated. Europe imposed import tariffs on electric cars from China, which retaliated with levies on European cognac.
In addition, the European delegation will also travel to Japan and Taiwan in the coming days, a thorn in Peking’s side. Preparatory talks on trade also came to nothing earlier this month. That is all the result of European distrust and disappointment over China’s attitude.
Chinese products can flood the European market
The EU is concerned that the European market will be flooded by Chinese products, says economist and China researcher Andrew Polk. “If Chinese producers can no longer enter the US with their goods, they can flood Europe with cheap products.”
That may be good for consumers, but not for European industry. Companies cannot compete with dirt-cheap Chinese goods, Polk says. “In the long term, European industry could go bankrupt and it could cost jobs.”
But concrete agreements are unlikely, according to Xiaoxue Martin, China researcher at knowledge institute Clingendael. “They are going to talk about it, but that is probably all it will be.”
Furthermore, Brussels finds the European auto industry too dependent on China. For the manufacture of engines, manufacturers use strong magnets, which are almost all made in China. But recently, the Chinese government decided to introduce extra controls on “critical metals” needed for the production of magnets.
Due to that measure, the sale of rare earth metals must always be approved by the Chinese government. Foreign companies must therefore wait 45 days before they receive magnets or critical metals, sometimes even longer. This is also difficult for the US, as can be seen in the video below.
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Car manufacturers are suffering from Chinese export restrictions
The Chinese export restrictions can hurt important European car manufacturers, says analyst and consultant Jost Wübbeke. “So far there have only been minimal delays in the production process, because the manufacturers still have stocks.”
According to Wübbeke, it could be that China is deliberately causing that delay to put pressure on Europe. But that is not certain, he says. “At the beginning, there were fewer than ten officials who had to approve tens of thousands of companies. So it doesn’t have to be intentional.”
But that does not make the situation any less difficult. “There are no alternative suppliers, and it takes between five and ten years to set up such a factory yourself. The dependence on China is therefore great,” explains Wübbeke.
War in Ukraine is a difficult topic
But the most sensitive file is the war in Ukraine. The EU believes that China is helping Russia in the war against Ukraine. “The EU is particularly concerned that China is selling goods such as drones to Russia,” explains Martin.
Another source of irritation is that China buys oil from Russia, thus indirectly financing the war. In addition, China does not condemn the Russian invasion of Ukraine. But China is absolutely not going to pursue a different policy in this area due to pressure from the EU, Martin assures. “China is not going to listen to the EU.”
With such a wish list, it is clear what the EU wants. But can she also demand something from China? According to Wübbeke, yes: “China is not happy with the European levies on electric cars. In addition, China would like to buy chip machines from ASML again.”
But the relationship is not good and there is a lot of distrust. As a result, the chance of an agreement is not great.
A rare bright spot in the relationship is climate. “China and the EU like to say that ‘green’ is the color of their cooperation,” says Martin, who adds that China wants to make a joint statement in this area. “Europe wants to agree to this, provided China offers guarantees, for example about CO2 emissions. That could be one of the few exciting outcomes of the summit.”