Meeting on Thursday 18 June in the evening for a debate devoted to global macroeconomic challenges, European leaders showed their willingness to respond in a more coordinated way to economic imbalances with China, while avoiding embracing a logic of confrontation with Beijing.
At the end of lengthy discussions after midnight, the heads of state or government agreed on the need for a European response based on two pillars:
- continuing a constructive dialogue with the EU’s main economic partners, which must lead to concrete results;
- developing and, “eventually”, completing the range of trade defence and industrial policy instruments, to ensure that the European Union has all the tools necessary to defend its interests and reduce risks.
However, the draft conclusions of the European Council were not adopted during this first working session.
Despite the worsening European trade deficit with China and widely shared concerns linked to Chinese industrial overcapacity or export restrictions on critical materials, the issue remains politically sensitive.
Towards a turning point in relations with China? For the first time, Europeans seem to share the same analysis of the situation, but for the moment they are not yet presenting a united front towards Beijing.
China has long benefited from these divisions by cultivating bilateral relations with European capitals.
Yet “the European Union, as a bloc of 27 Member States, must adopt a common approach towards China, because we are clearly stronger when we negotiate at the level of the EU27 rather than when each Member State negotiates on its own”, the President of Cyprus, Nikos Christodoulides, said on his arrival in Brussels.
A shift appears perceptible on the German side, traditionally keen to preserve economic relations with Beijing. Berlin now sees the growing difficulties encountered by its companies on the Chinese market, which is gradually closing, while China continues to offload its production surplus in Europe.
However, leaders are expected to take care to maintain a measured approach, taking into account different sensitivities among the capitals.
“We need friends. We must be pragmatic and we need to build bridges, both with major economies, potential allies such as China, and with traditional allies such as the United States”, Spanish Prime Minister Pedro Sánchez stressed ahead of the summit.
Adapting the instruments. Anti-dumping measures, taxation of ‘small parcels’ worth less than €2, safeguard measures in the steel sector... Europe has not stood idly by in the face of China in recent years. But it is adopting extremely targeted measures. That is where the problem lies, according to Esther Goreichy, associate researcher at the Mercator Institute for China Studies (MERICS), interviewed by Agence Europe.
“Current trade defence instruments are not sufficient, because they address each situation on a case-by-case basis and require months of investigation. By contrast, China has a model of structural support for its economy. Targeted tools are not enough to deal with this competition”, she explained.
Hence the idea, mentioned on Thursday evening, of revising and completing the EU’s trade defence arsenal.
But before addressing the question of the tools, leaders will have to converge on a common position. “One meeting alone will not be enough to solve this problem. But if we do not fix the economic and trade imbalances, this represents an existential threat to our industries and our economies”, Luxembourg’s Prime Minister Luc Frieden summed up. (Original version in French by Juliette Verdes, with the editorial staff)