BEIJING (Reuters) – The European Union has no intention of cutting ties with China even as the bloc takes steps to reduce economic dependencies and eliminate risk, but China “could do a lot” to help reduce perceptions of the risk. the EU trade chief said on Monday.
The EU has long complained about the lack of a level playing field in China and the politicization of the business environment. Concern turned to caution after Beijing’s decision to strengthen ties with Moscow despite the war in Ukraine.
Europe’s economic ties with China run deep, but China “could do a lot to help reduce our perception of risk,” Trade Commissioner Valdis Dombrovskis said in a speech at Beijing’s Tsinghua University.
China also unveiled new laws this year, including a foreign relations law that warns against “acts” harmful to China’s national interests and an anti-espionage law that prohibits the transfer of unspecified information linked to national security, which increases compliance risks for foreign companies.
“Its ambiguity leaves too much room for interpretation,” Dombrovskis said.
“This means that European companies are struggling to understand their compliance obligations: a factor that significantly decreases business confidence and deters new investments in China.”
Dombrovskis is expected to share his concerns with Chinese Vice Premier He Lifeng at a high-level economic and trade dialogue in Beijing on Monday.
He is also expected to reiterate the EU’s discontent over trade imbalances. The EU’s trade deficit with China widened to $276.6 billion in 2022 from $208.4 billion a year earlier, Chinese customs data shows.
At the same time, China will press Dombrovskis to explain the EU’s risk reduction strategy.
“Our strategy is not protectionist and is independent of each country,” said Dombrovskis.
Just as Europe is moving away from Russian oil, gas and coal, the EU is assessing its dependence on China for some raw materials and components, as well as the factors driving the competitiveness of some Chinese products on the European market.
The European Commission recently stated that it would investigate whether to impose rates to protect European producers from a “flood” of imports of cheaper Chinese electric vehicles that it says benefit from state subsidies.
The EU said it was open to competition, including in the electric vehicle sector, but that competition had to be fair. China has called the investigation protectionist.
“The European side has repeatedly assured the Chinese side that ‘reducing risks’ does not mean ‘decoupling,'” Chinese nationalist tabloid Global Times wrote in an editorial.
“We believe they are sincere in saying this. However, we cannot firmly accept and oppose the use of trade protectionism to ‘de-risk’,” he said.
Reporting by Ryan Woo, Bernard Orr and Yew Lun Tian; Editing by Himani Sarkar and Jacqueline Wong
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