EU tiptoes around China as bloc refuses to cut ties despite imbalance

The European Union’s trade commissioner hit out at the bloc’s economic relationship with China, calling it “very imbalanced”.

Valdis Dombrovskis, who is also the EU’s executive vice president, issued a call for action as he noted there is clearly an imbalance between the bloc and China’s imports and exports.

In 2022, the 27-strong group exported to the Asian country goods worth €230.3billion (£200.2bn), while it imported some €626bn (£544.2bn) in goods, Eurostat data shows.

This trade imbalance of nearly €400bn (£347bn) could drive a wedge between Beijing and Brussels, Mr Dombrovskis suggested on Saturday in a speech at the annual Bund Summit conference in Shanghai.

Mr Dombrovskis also said: “Creating an open market among its members was one of the EU’s founding principles.

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“We are also committed to free and fair global trade. And ‘fair’ is the key word here.”

The bloc, he added, needs to “protect itself in situations when its openness is abused” – however, it has “no intention of decoupling from China”.

The EU has partially blamed its trade deficit with China on restrictions applied by Beijing on European companies.

The EU trade envoy has embarked on a four-day trip to China, where he is co-chairing high-level economic and trade talks with Chinese Vice Premier He Lifeng.

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The aim of Mr Dombrovskis’ trip is to restart a dialogue with China following the forced pause caused by COVID-19 and rekindle Beijing and Brussels’ relations in the wake of clashes on the economy, foreign investments and geopolitics.

On top of this trade imbalance, he noted, the two forces are also facing significant political headwinds – most notably Beijing’s position on Russia’s invasion of Ukraine.

A prepared text of his remarks read: “The strongest, yet not the only, headwind is Russia’s war of aggression against Ukraine, and how China positions itself on this issue.”

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While China has formally remained neutral in the conflict between Russia and Ukraine, its government has deepened its political and economic alliance with Moscow over the past months.

Mr Dombrovskis’ remarks came just days after European Commission President Ursula von der Leyen announced an investigation into subsidies that China provides to electric vehicle makers.

This probe, sparked by concerns over the effects a flood of cheaper Chinese cars could have on the European market, could result in new tariffs protecting EU producers and was slammed by Beijing as a protectionist act aimed at distorting the supply chain.

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