EU Trade Commissioner Calls for Balance

In a compelling address at China’s esteemed Tsinghua University, European Union (EU) Trade Commissioner Valdis Dombrovskis delivered a resounding call for a recalibration of the economic rapport between the EU and China. Dombrovskis, who is currently in China to co-chair high-level economic and trade discussions with Chinese Vice Premier He Lifeng, emphasised the pressing need to address a staggering trade imbalance that reached nearly €400 billion ($425 billion) last year.

In his discourse, Commissioner Dombrovskis articulated that the EU and China find themselves navigating through turbulent political and economic waters, with potential for an undesirable drift apart. While underscoring various challenges, he particularly underscored the cataclysmic ripple effects emanating from Russia’s unrelenting aggression in Ukraine and China’s stance on this pivotal geopolitical issue.

According to Dombrovskis, the most formidable, albeit not the exclusive, impediment is Russia’s war of aggression against Ukraine and how China aligns itself with regard to this predicament.

This stern pronouncement comes against the backdrop of escalating concern within EU leadership circles regarding the mounting trade deficit vis-à-vis China. Indeed, the €396 billion trade deficit recorded last year has raised alarm bells. European Commission President Ursula von der Leyen recently declared the initiation of an investigation into Chinese subsidies provided to electric vehicle manufacturers. Von der Leyen’s rationale was that an inundation of competitively priced Chinese automobiles was distorting the European market.

China, in response, has decried this investigation as an act of protectionism, aimed at skewing the global supply chain in Europe’s favour. Commissioner Dombrovskis, during his Tsinghua address, assuaged these concerns by asserting that the investigation would adhere rigorously to established protocols and be executed in consultation with Chinese authorities and stakeholders.

In a bid to redress the trade balance, Dombrovskis implored China to confront the profound lack of reciprocity that characterises the economic partnership. He did not mince words when he stated, “The statistics themselves lay bare the stark reality.”

Moreover, Dombrovskis decried the emergence of a more politically charged business environment in China, designed to safeguard national security and development interests. This, he argued, had led to diminished transparency, inequitable access to procurement, and the imposition of discriminatory standards and security prerequisites.

Illustrating his point, Dombrovskis cited two prominent enactments – a new foreign relations law and an updated anti-espionage law. These legislative measures, he contended, had left European enterprises grappling with ambiguities and excessive room for interpretation, thus deterring fresh investments within China.

Despite ongoing efforts by Chinese officials to entice foreign investments and resuscitate an economy still grappling with post-pandemic sluggishness, these legal developments have raised significant hurdles.

Turning his attention to the elephant in the room, Dombrovskis addressed China’s conspicuously neutral stance in the Ukraine conflict, a stark contrast to the positions taken by the United States and much of Europe. Dombrovskis, a native of Latvia, noted that territorial integrity had historically constituted a cornerstone of China’s international diplomacy.

“Russia’s war constitutes a flagrant violation of this principle,” he asserted, according to the prepared text. “Hence, comprehending China’s stance on Russia’s aggression against Ukraine remains an arduous task, as it directly contradicts China’s own foundational principles.”