Against the backdrop of the EU’s investigation into Chinese subsidies for electric vehicles and its efforts to de-risk economic relations with China, EU Executive Vice President and Trade Commissioner Valdis Dombrovskis this week visited Beijing and Shanghai. In the Chinese capital, he co-chaired the first in-person EU-China High Level Economic Dialogue since 2018 with his recently appointed Chinese counterpart, Vice Premier and Director of the Finance and Economic Commission He Lifeng.
Dombrovskis conveyed European priorities and raised issues of market access, including European companies’ access to China’s financial sector, level playing field and other governmental trade irritants. Both sides agreed to set up a mechanism to help EU firms comply with Chinese data laws and to establish a new EU-China working group on financial regulations. China’s criticism of the EU’s perceived protectionist turn had solidified low expectations – although a pragmatic approach by Dombrovskis allowed agreement on low hanging fruits, while leaving aside EU’s top priorities of better market access and lifting trade barriers on pork, beef and poultry through the recognition of EU’s regionalization policy.
Europe’s top trade official stressed that the EU’s wish to “de-risk” economic and political relations with China in no way meant decoupling. However, given the EV subsidies investigation and rumors of others under consideration, EU leaders will need to better explain their de-risking concept to their Chinese counterparts. China remains convinced that the EU is turning protectionist, and “the burden of proof falls squarely on the EU side" as Bai Ming, a research fellow at the Ministry of Commerce’s Chinese Academy of International Trade and Economic Cooperation, told the newspaper Global Times.
Dombrovskis took the time to visit Shanghai and Suzhou, demonstrating that trade relations are not just made in Beijing. The EU is intent on reestablishing communication with European and Chinese business communities beyond the capital, not only to better understand the (currently tricky) business environment, but also to leverage its offensive interests with the Chinese leadership. Dombrovskis repeated the EU‘s priority of getting Russia to end its war on Ukraine and making China a constructive partner, in particular regarding the Black Sea Grain Initiative for food security. But his Chinese counterparts signaled neither issue is seen as pressing by China’s leaders.
MERICS analysis: “Dombrovskis‘ visit was a balancing act between leveraging EU’s position against the backdrop of the investigation into Chinese subsidies on electric vehicles and addressing long standing trade and economic issues,” said Abigaël Vasselier, Head of MERICS’ Foreign Relations team. “Although there were no breakthroughs, it demonstrated the EU is sharpening its strategy towards China at a critical time. Pushing an offensive agenda through more processes is almost like taking the Chinese leadership to its own game.”
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