EU should “de-risk” relations with China

European Commission (EC) President Ursula von der Leyen has warned once again that the 27 EU member states should de-risk their economic relationship with Beijing, and that if governments do not act, European businesses in China will eventually be in trouble.

Speaking to conservative lawmakers at the German Bundestag (parliament) in Berlin on November 16, Von der Leyen painted a bleak picture of bilateral relations ahead of her trip to Beijing next month for an EU-China summit.

It is the latest attempt by the head of the EU executive to rally support for his de-risking agenda.

World - EU should “minimize risks” in relations with China — European Commission President Ursula von der Leyen arrives for a meeting with Chinese President Xi Jinping and French President Emmanuel Macron at the Great Hall of the People in Beijing, April 6, 2023. Photo: Getty Images

According to Ms. Von der Leyen, entire industries and value chains that China once relied on from the rest of the world are increasingly being moved inland. Many European investors like to call this “in China for China.” “But this only works until European companies are outcompeted by Chinese competition or caught up in political turmoil,” she warned.

“Geopolitics and geoeconomics need to be looked at more closely and addressed at the European level,” she said, in the context of a rather lukewarm response from member states to her economic security strategy.

“We have strengthened investment screening and export controls to Europe, and we have precisely calibrated the responsibilities of players at all levels. This means that not only Europe but also Member States at different levels – all have to contribute to the overall picture,” said Von der Leyen.

Noting that China's trade surplus with the EU was the highest in history last year, at nearly €400 billion, Ms Von der Leyen said this was one of the market distortions that would be exacerbated if the bloc did not achieve a level playing field in its trade relationship with China.

The head of the 27-member bloc stressed that this was also the main goal of the EU-China Summit scheduled to take place in Beijing on December 7-8. The EU will defend its interests but will also seek to resolve differences with China through dialogue, she said.

“We will go to China with goodwill,” she said. “We will never be afraid to raise our concerns. But we must make room for a discussion about a more ambitious relationship that benefits both sides.” She also expected action from China to address the current imbalance.

Earlier, on November 13, EU foreign ministers once again removed the debate on economic security from the agenda at their monthly meeting.

The risk mitigation strategy, first proposed in June, could impose restrictions on private sector investment in some high-tech sectors in China and expand the EU's export control regime.

However, some EU member governments are skeptical about this prospect because of a lack of consensus on issues that are typically dealt with at national rather than union level. Raising more trade barriers has also met with opposition .

Minh Duc (According to SCMP, Reuters)

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