EU’s von der Leyen to urge ‘fair’ China competition in talks with Xi | International Trade

Chinese President Xi Jinping set to hold talks with Ursula von der Leyen and French President Emmanuel Macron in Paris.

European Union chief Ursula von der Leyen has said she will push for competition with China that is “fair and not distorted” in talks with Chinese President Xi Jinping.

“I have made clear that the current imbalances in market access are not sustainable and need to be addressed,” von der Leyen, who is the president of the EU Commission, said hours ahead of a meeting between her, Xi and French President Emmanuel Macron in Paris.

Xi on Sunday began a three-country tour of Europe as EU officials are probing the trade practices of Chinese firms operating in the bloc.

The European Commission last week opened an investigation to determine if European suppliers of medical devices are given fair market access in China.

The inquiry follows similar probes into Chinese wind turbine suppliers and Chinese subsidies for solar panels, electric vehicles (EVs) and trains.

European carmakers such as Volkswagen and Renault are losing ground to Chinese electric vehicle makers, which have received billions of dollars worth of state subsidies in recent years.

EU officials are also concerned about Chinese spying and Beijing’s military cooperation with Russia as Moscow prosecutes its war on Ukraine.

Von der Leyen on Sunday reiterated the bloc’s position that it should “derisk” ties with China but not decouple from the world’s second-largest economy, in contrast with Washington’s aggressive moves to shut out key Chinese industries entirely.

“We have been very clear-eyed about our relationship with China, which is one of the most complex, but also one of the most important,” she said.

But Von der Leyen said the EU could not accept “market-distorting practices”.

“China is currently manufacturing, with massive subsidies, more than it is selling due to its own weak domestic demand. This is leading to an oversupply of Chinese subsidised goods, such as EVs and steel, that is leading to unfair trade,” she said.

Von der Leyen said she would encourage Xi to address “overcapacities” in the short term.

Xi’s visit is seen as a test of the EU’s efforts to walk a fine line between Beijing and Washington, with the Chinese leader widely expected to attempt to exploit divisions between Western allies.

While European leaders have qualms about Beijing’s growing power and influence, the bloc is divided over how to respond to the heated US-China rivalry.

Macron, who is treating Xi to the formal honours of a full state visit, has often warned against Europe becoming a US vassal and is widely seen to be attempting to forge a third way in geopolitical relations.

“In Europe, we are not unanimous on the subject because certain players still see China as essentially a market of opportunities,” Macron said in an interview with French newspaper La Tribune ahead of Xi’s visit.

After a two-day visit to France, Xi will travel to Serbia and Hungary, both of which are seen as friendly with Beijing.