A Clear Message
EU leaders went into their first in-person summit with China in nearly five years with one main objective: to convey directly to President Xi Jinping the seriousness of their concerns about widening imbalances in the trade relationship and about his country’s ongoing support for Russia. On both issues, and others including tensions in the Taiwan Strait and South China Sea, they delivered a strong, unified message. European Commission President Ursula von der Leyen could not have been clearer on trade. “Politically, EU leaders will not be able to tolerate that our industrial base is undermined by unfair competition,” she said. And European Council President Charles Michel could not have been clearer on Taiwan. “I trust that China is fully aware of the serious consequences of any escalation in this region,” he noted. The two reportedly confronted Xi with a list of 13 China-based entities it accuses of circumventing sanctions against Russia and requested that he deal with them. In this sense, the EU can view the summit as a modest success. But the bar with China is so low these days that even a “mission accomplished” does not feel entirely satisfying.
The Chinese side played down the differences with the EU and pushed back against suggestions that Chinese firms are poised to flood the European market with cheap, subsidized electric vehicles (EVs) and other green technology products. It seems unlikely that Beijing will jettison an economic model that still relies heavily on exports because the EU told it to. So what comes next? The EU is likely to slap duties on imported EVs from China in the first half of 2024. Other measures could be taken to address market access problems in sectors such as medical devices. Taken together with Italy’s recent decision to exit Beijing’s Belt and Road Initiative and a possible German decision to phase out Chinese suppliers from its 5G network, this could create an escalatory dynamic in the relationship as 2024 unfolds.
Still, it seems unlikely that Beijing will strike back hard. It will want to preserve as much access to the European market as possible and avoid measures that further tarnish the luster of its market for European investors. Instead, look for Beijing to play for time, mixing small sticks (a gradual tightening of export restrictions on critical raw materials) with small carrots (such as the recent decision to allow visa-free travel to China for citizens of five EU countries) while hoping that a weakening European economy, and election outcomes in the EU and United States next year, sap Europe’s appetite for confrontation. Nothing will supercharge European strategic autonomy, China’s preferred terminus for Europe, like the reelection of Donald Trump.