European Commission on a difficult mission
In light of a significantly expanded trade deficit with China, the European Commission is pushing for fairer market access in the Middle Kingdom. Commission Vice President Valdis Dombrovskis criticized the harassment of European companies during his multi-day trip to China. Conversely, he faced criticism over the anti-dumping investigation into Chinese electric vehicles. Overall, both sides made efforts to not further strain the tense atmosphere.
Dombrovskis cited issues with the export of medical equipment, but also reported some progress. The two sides agreed to "exchange information on export controls, establish a new working group for financial services, and resume our macroeconomic dialogues." Dombrovskis referred to it as an important step at a time when EU companies were increasingly encountering obstacles.
Call for new balance
Among the agreements is the creation of a new working group focused on financial regulation. The aim is to open up mutual investment opportunities for financial institutions, according to a statement from the EU Commission. Additionally, cooperation in areas of sustainable finance and financial startups (fintechs) is intended to continue, and rules for the technical infrastructure of the financial sector will be improved. The working group will also address regulations for foreign financial institutions, including the possibility of cross-border sharing of financial data.
Various European industries continue to complain about disadvantages in the Chinese market compared to domestic companies. From the EU Commission's perspective, Beijing is not doing enough to promote equal opportunities. Relations must be "rebalanced," said Dombrovskis, referring to the imbalance between exports and imports, which reached a record of €396 billion in 2022.
"Deep concerns and dissatisfaction"
At the same time, the EU Commission is noticeably more assertive and is not shying away from China-critical rhetoric and instruments. The recent initiation of an investigation into subsidies for electric cars by Commission President Ursula von der Leyen is the latest point of contention. The result could potentially entail the imposition of tariffs.
The Chinese side was careful in its response, aiming to reject the actions without escalating tensions. Vice Premier He Lifeng expressed "deep concerns and dissatisfaction" and urged the Commission to proceed cautiously: "We hope the EU exercises caution and continues to keep the automobile market open and free."
While Dombrovskis' purpose was to showcase a more forceful stance from Brussels in the China dialogue, Beijing, mindful of its domestic economic and investment challenges, is eager to avoid creating any perception of strained relations. This can further be observed in the response of the Chinese state media, which prominently highlighted the "productive" nature of the meeting. It emphatically assured that the first personal meeting of trade representatives since the pandemic would strengthen "confidence in the business community" of China and the EU, contributing to the ongoing reduction of any remaining "mutual trust deficit.". However, a critical nuance underscores that the EU's assurances of not seeking to decouple from China should be reinforced not only through rhetoric but also through clear actions.