At a recent summit held in Beijing, a potent message on environmental action seeped out amidst maddening trade disagreements and concerns about warfare in Ukraine. China and the European Union took a unified stand against climate change, propelling a shared appeal for reduced emissions, advancements in applying green technology, and a steadfast commitment to the obligations outlined in the Paris Climate Agreement. The duo also voiced their desire for decisive steps to be taken during the impending COP30 climate summit in Brazil. They highlighted, ‘In these turbulent and evolving global circumstances, it’s pivotal for all nations, particularly those with major economies, to exhibit policy consistency and intensification of efforts to mitigate climate change.’
This climate accord emerged as a beacon of collaboration amidst a tempestuous summit, where European officials made appeals for a more equitably balanced relationship with China in their discussions with President Xi Jinping. In the opening statements, trade was brought to the forefront, with Europe calling for significant progression to rectify its increasing trade deficit with China. European Commission President Ursula von der Leyen emphasised, ‘As we deepen our affiliations, the disparities grow too. We have come to a crucial juncture. The need to rebalance our bilateral relationship is vital now. Sustainability is driven by mutually beneficial relations.’
Ahead of the summit, the anticipation for significant outcomes was significantly tempered. The originally planned two-day talks were eventually condensed to a single day amidst worldwide economic instability, geopolitical unrest in the Middle East and Ukraine, and looming potential of U.S. tariffs. The expectations for either the EU or China to significantly compromise on key matters were low.
European Council President António Costa made an appeal to China to leverage its sway over Russia to work towards ending the war in Ukraine. On the other hand, Xi underscored the need for deepened mutual cooperation between Europe and China for nurturing stability in a rapidly evolving global landscape. He proposed that both parties should strive to resolve their differences and pursue areas of agreement – a sentiment he frequently expresses in geopolitical engagements like those with the EU.
China is ready to ramp up its coordination initiatives on climate issues and make substantial strides in tackling climate change, promised Xi. However, he also expressed his reservations regarding the EU’s restrictions on Chinese exports. He stated, ‘We anticipate the EU to keep its trade and investment markets accessible and refrain from implementing restraining trade measures, thereby creating a conducive business ecosystem for Chinese enterprises to invest and flourish in Europe.’
The summit concluded with almost no discernible progress on pivotal topics such as trade disputes, electric vehicles, or Russia. The trade disagreements between China and the EU span various sectors, ranging from essential minerals needed for the production of electric vehicles to rare earth elements.
Drawing parallels with the United States, the 27 nations in the EU bloc also have a significant trade deficit with China. Especially, their dependence on China for an adequate supply of critical minerals and their resultant products used in automobiles and household goods is fairly significant. The recent cutbacks on these exports from China, a reaction to the US tariffs, have sparked a backlash from European automakers.
Von der Leyen made an announcement during the summit about an agreement with China to initiate an ‘upgraded export supply mechanism’ to expedite the export process for these indispensable minerals. The specifics about this arrangement were not revealed immediately following the announcement.
The EU has introduced tariffs on Chinese made electric vehicles in a bid to counteract and level the hefty subsidies provided by Beijing to its auto industry. The response from China is clear: they are seeking a revocation of these tariffs. The exponential growth of Chinese vehicles in the European market has raised serious concerns about whether EU’s indigenous green technology intended for combatting climate change could be endangered.
Voices from trade unions and the business sector are apprehensive about the potential threat to the employment of approximately 2.5 million personnel involved directly in the auto industry, along with 10.3 million jobs indirectly reliant on the production of electric vehicles. China has retaliated too, by initiating investigations into European dairy and pork products, besides levying taxes on French cognac and armagnac.
China has expressed its discontentment towards new EU regulations governing the sale of medical equipment, and also anticipates forthcoming legislation that could potentially disproportionately affect Chinese industries. However, the EU maintains its bargaining chip, as China is largely reliant on its lucrative export market.
Caught between the assertiveness of Washington and the inflexibility of Beijing, the EU is actively seeking to forge alliances elsewhere. The bloc sees strategic value in developing its relationships with countries like Mexico and South America. Recently, it has even entered into a trade agreement with Indonesia.
Von der Leyen and Costa had visited Tokyo a day prior to the meetings held in Beijing, and had laid the foundation for an alliance with Japan. They aimed to strengthen economic partnership, fortify free trade, and counter unjust trade practices.
The EU and Japan are concerned about the growing protectionist instincts being evoked around the world, along with vulnerabilities being manipulated and dependencies being exploited. Hence, they see an inherent need for like-minded partners to band together for their mutual fortification.
Both blocs aim to stay resilient, despite the tumultuous phase of current global affairs. The EU continues to remain China’s largest export market, indicating the desire of the latter to maintain this relationship. With the added pressure originating from the U.S., China is likely to sustain that intention.
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