EU-China Ties Strain Amid Trade Disputes
Despite shared trade anxieties about the U.S., the European Union and China are struggling to maintain a positive relationship. A growing list of trade disputes overshadows efforts to find common ground.
Tensions Rise Before Summit
Ursula von der Leyen, the European Commission President, recently highlighted the need for a “genuine rebalancing”
in the relationship between China and Europe. Her statement casts doubt on the possibility of productive discussions at the upcoming China-EU summit. The two sides are scheduled to address pressing geopolitical and economic issues during this summit.
Von der Leyen criticized China’s practice of using “global markets with subsidized overcapacity”
to “choke international competition.”
She also claimed that European products face systematic discrimination within China.
Beijing responded that “what needs to be rebalanced right now is Europe’s mentality.”
As trade tensions rise, the already fragile relationship between the two powers may further deteriorate.
Medical Device Spat
The latest disagreement stems from government procurement of medical devices. China will halt the procurement of European medical equipment for contracts valued above $6.3 million. Further restrictions apply to non-EU companies when over half the contract value involves importing EU components. These measures are in direct retaliation for the EU’s mid-June decision to block Chinese-made medical devices for contracts exceeding $5.8 million.
Brussels defended its initial decision as a “response…proportionate to China’s barriers.”
A prior European Commission investigation found that China unfairly excluded European medical devices from government contracts.
Brandy and EVs in the Crosshairs
The trade disputes extend beyond medical devices. Recently, China imposed anti-dumping taxes on European brandy, with the highest rates affecting French company Jas Hennessy at 34.9%. Additional tariffs have been threatened or imposed on European dairy and pork products.
These actions follow the European Commission’s anti-subsidy tariff on Chinese-made electric vehicles in October. The EU launched an investigation into potential unfair state support from Beijing to Chinese EV companies. The probe concluded that Chinese subsidies were excessive, warranting countermeasures.
Rare Earths and Overcapacity Concerns
Beyond tariffs, concerns linger over China’s control of rare earth minerals, essential for electronics. China imposed export controls on rare earths earlier this year. Data indicates a substantial drop in rare earth exports to Europe, falling by over 80% in May.
European leaders also voice concerns about China’s alleged overcapacity, accusing the nation of relying on excessive manufacturing to fuel economic growth. They fear that surplus goods will flood the European market.
Geopolitical Fault Lines
Disagreements on issues like Russia’s invasion of Ukraine further complicate relations. China’s stance on the conflict has created friction with many European nations. According to the Kiel Institute, trade between China and Russia reached a record $240 billion in 2023, highlighting their strengthening economic ties (Kiel Institute 2024).
With both sides digging in their heels, the prospect of improved EU-China relations appears increasingly distant.
