EU, China at Inflection Point Over Trade, Russia, Rare Earths

Photo: AFP

The European Union (EU) and China are currently facing serious tensions in their relationship. European Commission President Ursula von der Leyen and Portuguese Prime Minister Antonio Costa recently spoke with Chinese President Xi Jinping about many issues that are causing problems between them.

Von der Leyen told China that it is very important for both sides to understand each other’s worries and come up with real solutions. She said that their ties have reached an “inflection point”, which means things could change a lot if they do not fix their problems now.

Prime Minister Costa also told President Xi that Europe wants to see real progress on trade and economic matters. He said both sides want their relationship to be good for each other and not just one-sided.

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Why Is The EU Worried?

One of the biggest problems for Europe is its huge trade deficit with China. Last year, the EU imported around $360 billion more from China than it exported to China. Von der Leyen said this big trade gap cannot continue because it is unfair to European businesses.

However, China does not think this is a problem. China told Europe that it needs to change how it thinks about their economic ties instead of blaming China. Beijing said Europe should not try to “rebalance” their trade but instead change its mindset.

The Problem With Rare Earths

Another topic that Europe is worried about is access to rare earths. These are special metals used to make many things like electric car batteries, mobiles, and wind turbines. Right now, China controls most of the world’s rare earths and their export rules make it hard for European companies to get them easily.

Von der Leyen said the EU will ask China to make it easier for European companies to enter the Chinese market and to loosen the strict rules on exporting rare earths. She said this is very important because these materials are crucial for Europe’s industries and green energy plans.

Why Did The EU Put Tariffs on Chinese Cars?

Recently, the EU decided to put heavy tariffs on electric vehicles imported from China. The reason is that the EU believes Chinese car companies get unfair financial help from their government. Because of this help, they can sell electric cars at lower prices, which hurts European car makers who cannot compete with such low prices.

China did not like these tariffs and called them unfair. In return, China announced investigations into European products like pork, brandy, and dairy items. Many people believe this is China’s way of hitting back at Europe for its new tariffs.

Russia’s War in Ukraine: Another Big Issue

Apart from trade, there is also a big problem between the EU and China because of Russia’s war in Ukraine. Europe thinks China is silently supporting Russia. Since the war began in 2022, China has increased its political and economic ties with Russia. This has helped Russia’s economy to stay strong despite many Western sanctions.

When Prime Minister Costa met President Xi, he asked China to use its power and influence over Russia to help stop what he called Moscow’s “war of aggression”. Europe wants the war to end soon and believes China can help make that happen because Russia listens to China.

New Sanctions Create More Tension

Last week, the EU introduced new sanctions against Russia because of the war. These new measures included sanctions on two Chinese banks that were helping Russia. After this, China’s commerce minister showed his anger to the EU and gave what they called “solemn representations”, which means strong complaints.

A senior EU official said that China supplying around 80 percent of dual-use goods to Russia is a major worry. These are goods that can be used for both civilian and military purposes. For example, some electronic parts or machines can be used in factories but also in weapons.

The official said Europe is not being naive. They know that China will not cut all ties with Russia, but they want China to increase its checks on what goods go to Russia and make sure that they are not used in war.

Why Are These Talks Important?

Many experts say these talks are very important because they show how difficult the relationship between Europe and China has become. A senior EU official said last week that Europe does not agree with China on many things, but it is very important to sit down together and talk openly at the highest level.

The official added that these talks might be tense, but they are necessary. Europe believes that only by having direct and honest conversations can both sides solve their differences.

As these talks continue, everyone is watching to see what solutions Europe and China will come up with. Europe wants China to reduce its strict trade rules, open its market to European companies, and help end the war in Ukraine by using its influence on Russia.

China, on the other hand, wants Europe to stop what it sees as unfair treatment, like the new tariffs on electric vehicles and sanctions on Chinese banks. China also wants Europe to respect its strong ties with Russia and not interfere.

For now, it is clear that the EU and China are at a turning point in their relationship. What happens next will decide whether they can become strong partners again or continue to face bigger and bigger disagreements in the future.