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China could do ‘a lot’ to reduce EU perception of risk – EU trade chief

The European Union has no intention of cutting ties with China even as the bloc takes steps to lower economic dependencies and de-risk, but China “could do a lot” to help reduce the perception of risk, the EU trade chief said on Monday.

The EU has long complained about a lack of level playing field in China and the politicisation of the business environment. Concern turned to wariness after Beijing’s move to strengthen ties with Moscow despite the war in Ukraine.

Europe’s economic ties with China are deep, but China “could do a lot to help reduce our perception of risk,” Trade Commissioner Valdis Dombrovskis said in a speech delivered at the Tsinghua University in Beijing.

China also unveiled new laws this year including a foreign relations law warning against “acts” detrimental to China’s national interests and an anti-espionage law barring the transfer of information linked to national security that it does not specify, raising compliance risks for foreign companies.

“Their ambiguity allows too much room for interpretation,” Dombrovskis said.

“This means European companies struggle 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 EU displeasure 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 show.

At the same time, Dombrovskis will be pressed by China to explain the EU’s de-risking strategy.

“Our strategy is not protectionist, and it is country-agnostic,” said Dombrovskis.

Just as Europe is pivoting 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 in the European market.

The European Commission recently declared that it would investigate whether to impose tariffs to shield European producers from a “flood” of cheaper Chinese electric vehicle imports it says benefit from state subsidies.

The EU said it was open for competition, including in the electric vehicle sector, but that competition had to be fair. China has blasted the probe as protectionist.

“The European side has repeatedly assured the Chinese side that ‘de-risking’ does not mean ‘decoupling’,” the nationalist Chinese tabloid Global Times wrote in an editorial.

“We believe that they are sincere in saying this. However, we cannot accept and strongly oppose the use of trade protectionism to ‘de-risk’,” it said.
Source: Reuters (Reporting by Ryan Woo, Bernard Orr and Yew Lun Tian; Editing by Himani Sarkar and Jacqueline Wong)

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