Xi Jinping arrived in Europe on Sunday on a mission to ease rising tensions that threaten to spark a trade war between China and the European Union.
On his first trip to the region since 2019, Xi will face tough trade talks in France and Ukraine before receiving warm welcomes in Serbia and Hungary. There, the surge in investment from China highlights the benefits of both China and the EU’s close ties to the divide in international policy.
“China is determined not to tilt relations with Europe any further in the direction of relations with the United States,” said Yu Jie, an analyst at Chatham House, a British think tank. “There will be a new charm offensive by the Chinese government, but it will also give the EU a stern warning about protectionism.”
Chinese officials say Xi’s top priority during his six-day visit will be to limit the damage. The president is keen to counter a series of EU trade investigations into Chinese companies, including a major anti-subsidy probe into electric vehicles that is expected to be concluded within weeks.
EU officials told the Financial Times that preliminary tariffs on EVs could be imposed in May, with permanent tariffs, which require support from a majority of member states, likely to follow in November. . Rhodium Group researchers said tariffs on EV imports from China to the EU could range from 15-30%.
“China cannot afford to close off European markets to Chinese companies,” said Abigael Vasselier of the Berlin-based think tank Merix. “The main question is… how successful will President Xi be in changing the current trajectory in Europe-China relations?”
French President Emmanuel Macron invited European Commission President Ursula von der Leyen to Paris on Monday to meet with Mr. Xi.
In a weekend interview with La Tribune newspaper, President Macron said he wanted to ensure greater reciprocity in trade with China to strengthen France’s economic security.
“I’m asking for updates because China has excess capacity in many areas and is exporting a lot to Europe,” Macron said, adding that all the continent’s leaders agree in this regard. He said he did not agree and noted that some people still view China as a “market.” of chance.”
“Let me be clear: I’m not suggesting we distance ourselves from China. . . . Whether it’s climate change or security, we need the Chinese,” he said. “But I think we have to better protect our national security and sovereignty . . . and be more pragmatic in protecting our interests.”
Ms von der Leyen advocated a “de-risking” of trade relations between Europe and China, saying that the EU’s huge bilateral trade deficit, which will reach 291 billion euros in 2023, is partly to blame for the Chinese government’s control of European companies. They argued that this was due to market access restrictions. In recent years, the EU has fallen behind Southeast Asia to become China’s second-largest regional trading partner.
Chinese officials and analysts say Mr. Xi intended to play hardball. He added that behind the expected public displays of goodwill and promises of investment from China, tariffs on Chinese exports would warn European leaders that they would provoke an uncompromising response.
“China could impose restrictions on exports of materials needed to make microchips, exports from France to China, and several other items,” said a Chinese analyst who requested anonymity.
Beijing has also signaled an increasing willingness to impose its own retaliatory tariffs. Mr Macron is expected to take up the cause of French cognac makers with Mr Xi after China launched an anti-dumping investigation into imports of French brandy in January.
French brandy is the most imported alcoholic beverage in China, and the tariffs will hurt the profits of big-name brands such as Remy Cointreau, Pernod Ricard and LVMH-owned Hennessy.
French cognac industry association BNIC said Xi’s visit was a “unique opportunity to reach an agreement” to resolve China’s “unjustified” investigation that threatens the sector, which directly and indirectly employs around 70,000 people. He said that.
While talks in Paris are expected to be difficult, Chinese officials said Xi’s visits to Serbia and Hungary are likely to create a more positive tone. China considers Hungary a true and loyal friend in the EU and has made investment commitments to the country.
Official Chinese estimates suggest that cumulative foreign direct investment by Chinese companies in Hungary could reach 30 billion euros by the end of this year, with billions more planned. There is.
One project under consideration is a possible investment by China’s Great Wall Motors to build an EV factory, Chinese officials said.
“Hungary accounts for a very large share of Chinese direct investment in the region, accumulating more in the past few years than in previous decades,” said Daniel Hegedus of the German Marshall Fund in Berlin. ”
“This is politics. Hungary has been loyal and has benefited from it,” Hegedus said.
However, Xi’s visit to Hungary is certain to provoke opposition from many Western European leaders. “Hungary is considered a pariah,” said one senior Western European diplomat.
As the EU increasingly views China as a “systemic rival,” Hungary has become a key protector of Beijing’s interests. Between 2016 and 2022, it used its veto power several times to block European Council decisions condemning China’s actions.
Additionally, Xi’s visit to Serbia on Tuesday, which marks the 25th anniversary of the NATO bombing of the Chinese embassy in Belgrade, could also alienate public opinion in Western Europe, diplomats said.
After Russia’s full-scale invasion of Ukraine in 2022, Chinese missions to the EU cited the 1999 bombings to demonstrate Chinese sympathy for Russia’s claims that the Western military alliance was to blame for the recent conflict. explained.
“The Chinese people can fully empathize with the pain and suffering of other countries, because we will never forget the perpetrators of the bombing of the embassy in the Federal Republic of Yugoslavia,” a spokesperson for the mission said.
In fact, the war in Ukraine is starting to overshadow President Xi’s visit to Europe.
Chinese academics said Beijing believes the United States is using the war to expand its hegemony over Europe while putting pressure on China, which is said to be supporting Russia.
Chinese leaders said they believed President Macron wanted Europe to exercise more strategic autonomy from the United States, and that Beijing shared that desire. But Mr. Xi’s friendly relationship with Russian President Vladimir Putin means that anything he says about Ukraine is met with deep distrust in many European countries.
Still, Macron is expected to use his influence with Putin to try to persuade the Chinese leader to change the course of the war, even if similar efforts during a trip to China last year proved fruitless. There is.
“Our aim is to encourage China to use the tools at its disposal against Moscow to influence Russia’s calculations and contribute to the resolution of this conflict,” the Elysée official said.
