EU Trade Commissioner Valdis Dombrovskis has told China that the EU does not intend to decouple from the country, one of its largest trading partners. “De-risking is not decoupling. And the EU has no intention of decoupling from China,” Dombrovskis said when addressing the Bund Summit in Shanghai on September 23, ahead of the 10th China-EU High Level Economic and Trade Dialogue held on September 25 in Beijing. During the first eight months of this year, the EU was China's second-largest trading partner, with bilateral trade down 1.5% year-on-year to CNY3.68 trillion. During the first eight months, FDI from France shot up by 105.6% from the same period last year, while FDI from Switzerland, the Netherlands, and Germany increased by 59.2%, 25.3% and 20.8%.
Dombrovskis vowed to step up ties with China to manage trade issues and address global crises such as climate change. But he also stressed that the EU should minimize dependencies for “a select number of strategic products” and act in a proportionate and targeted way to maintain the bloc’s “open strategic autonomy”. “We have to protect ourselves in situations when our openness is abused,” Dombrovskis said. He cited trade figures that showed that the EU racked up a deficit of almost €400 billion out of a total trade volume of €865 billion last year. Two-way trade also dropped 7.8% in U.S. dollar terms in the first eight months, according to Chinese customs authorities.
Both sides have a long list of complaints and demands as Beijing and Brussels navigate a complex geopolitical situation. The EU has long complained about the trade deficit and a lack of fair access to the Chinese market. The bloc has also prodded Beijing to cooperate on climate change and the conflict in Ukraine. Meanwhile, the EU’s talk of “de-risking” has caused consternation in China, with Beijing demanding clarification as Brussels appears more hawkish in aligning with Washington’s combative approach towards China. The EU’s latest probe into imports of cheap Chinese electric vehicles (EVs) has added fresh strains to trade ties that have long been hailed as the ballast for a broader relationship. China has condemned Brussels’ “sheer protectionism”. The EU says it has ample evidence that Chinese carmakers have been given state subsidies.
The rise in geopolitical tensions “increases uncertainty for international businesses, leads to more state involvement in the economy and risks starting subsidy races,” Dombrovskis said in his speech in Shanghai. “This year’s trade figures are not that rosy,” said Sun Yongfu, Senior Fellow at the Center for China and Globalization (CCG) and Director of European Affairs at the Chinese Ministry of Commerce (MOFCOM). Sun said although the EU said it did not intend to decouple from China, de-risking would still hurt cooperation between Beijing and Brussels, the South China Morning Post reports.
At the Bund Summit in Shanghai, former U.S. Secretary of State and National Security Advisor Henry Kissinger said via video link that a U.S.-China decoupling would lower living standards in both countries and harm their ability to manage the emerging field of artificial intelligence (AI). “In this sense, it is essential that we learn from each other and that we should not proceed in the decoupled way,” Kissinger said.
