EU calls for balanced trade with China, warns Ukraine could divide them

Valdis Dombrovskis, EU trade commissiner in speech at China's prestigious Tsinghua University, said that EU, China face significant political, economic headwinds that could cause them to drift apart

The European Union's trade commissioner called for a more balanced economic relationship with China on Monday, noting an EU trade deficit of nearly 400 billion euros ($425 billion), while also warning that China's position on the war in Ukraine could endanger its relationship with Europe.

Valdis Dombrovskis, in a speech at China's prestigious Tsinghua University, said that the EU and China face significant political and economic headwinds that could cause them to drift apart.

The strongest, yet not the only, headwind is Russia's war of aggression against Ukraine, and how China positions itself on this issue, he said.

Dombrovskis spoke before high-level economic and trade talks with Chinese Vice Premier He Lifeng.

EU leaders have expressed concern about the bloc's growing trade deficit with China, which reached 396 billion euros last year. European Commission President Ursula von der Leyen recently announced an investigation into Chinese subsidies to electric vehicle makers, saying a flood of cheaper Chinese cars is distorting the European market.

The Chinese government has called the investigation a protectionist act aimed at distorting the supply chain. Dombrovskis, in his Tsinghua address, said the probe would follow well-established rules and be done in consultation with Chinese authorities and stakeholders.

The EU trade commissioner urged China to address the lack of reciprocity in the economic relationship, saying the figures speak for themselves.

He said that China has created a more politicised business environment to protect its national security and development interests, resulting in less transparency, unequal access to procurement, and discriminatory standards and security requirements.

Dombrovskis cited as examples a new foreign relations law and an updated anti-espionage law that has European companies struggling to understand their compliance obligations.

Their ambiguity allows too much room for interpretation, he said about the laws, adding they deter new investment in China.

Chinese Foreign Ministry spokesperson Wang Wenbin said that China provides a market-oriented, law-based business environment for foreign companies.

As long as the companies are operating in accordance with the law, they don't have to worry, he said.

Chinese officials have been trying to lure back foreign investment to help the economy emerge from a sluggishness that has persisted despite the lifting of pandemic restrictions last December.

The Chinese government has tried to remain neutral in the war in Ukraine rather than joining the United States and much of Europe in condemning the Russian invasion. Dombrovskis, who is Latvian, noted that territorial integrity has always been a key principle for China in international diplomacy.

Russia's war is a blatant breach of this principle, he said. So it's very difficult for us to understand China's stance on Russia's war against Ukraine, as it breaches China's own fundamental principles.