China Opens Europe Charm Offensive as Trump Stokes Trade Dispute

(Bloomberg) -- China is reaching out to Europe with pledges to improve market access for companies in a charm offensive that contrasts with President Donald Trump’s escalation of trade disputes worldwide.

China’s ambassador to the European Union, Zhang Ming, has been touring EU institutions to promote President Xi Jinping’s message delivered to the Boao Forum in April of a “new phase of opening up.” That translates into new opportunities for European companies in finance, clean energy and environmental cooperation, Zhang said.

“Some European friends say that though the current system works, it is not fair enough,” Zhang told the European Parliament’s International Trade Committee on April 23. “China is always ready to listen to the EU’s suggestions on how to make the system better.”

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China has been pledging to open up since Xi addressed the World Economic Forum in Davos last year, with few signs of action. However, it now appears to be making a broader push to counter Trump by mending ties with powers from India to Japan and Indonesia.

The conciliatory tone toward Europe is all the more striking as the Trump administration sets a deliberate course of confrontation with some of its closest allies and trading partners. A Chinese official told Bloomberg News in April that the government was considering offering major concessions on trade and investment to the EU and countries such as Japan and Mexico -- all now subject to punitive U.S. tariffs.

Global Realignment

Traditional U.S. alliances are giving way under the pressure of Trump’s America First policies, according to Feng Zhongping, vice president of the China Institutes of Contemporary International Relations (CICIR).

“China and the EU now have a shared stance against unilateralism and upholding the WTO as a dispute-settlement mechanism because they have a common interest in this regard,” said Feng. While this shared focus on the U.S. “will make China and the EU set aside their conflicts,” it won’t lead to any “immediate change in China-EU relations due to economic and trade frictions,” he said.

The EU and China have been at odds over issues including the lack of reciprocal access for European firms and the EU’s reluctance to endorse China’s Belt and Road program. As China steps up its engagement in Europe, the EU is working on measures to tighten screening of outside investments to protect critical technology and key infrastructure. On Friday, it said it would complain to the World Trade Organization over China’s technology-transfer practices - a move met with Chinese “regret.”

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Still, there is mutual interest in improving relations.

The 28-member EU, the world’s largest trading bloc, holds an annual summit with China, yet the past two meetings have failed to agree on a common statement. With the next summit due in Beijing in July, both sides are keen to avoid tabling any sensitive issues to minimize the chances of a third straight meeting ending without a joint communique, according to an EU diplomat with knowledge of the preparations.

Shared Interests

Last week, when the U.S. introduced tariffs on steel and aluminum imports from the EU, Mexico and Canada, Chinese Foreign Minister Wang Yi was in Europe to meet with German and EU counterparts.

Wang, speaking in Brussels on Friday, acknowledged that “there might still be some disagreements” with the EU, but spoke of an expansion of common interests.

“In particular, in the context of growing uncertainties in the world, it is even more important for China and the EU to deepen our comprehensive strategic partnership,” he said.

Jan Weidenfeld, head of the European China Policy Unit at the Mercator Institute for China Studies in Berlin, said it’s natural that both China and the EU will seek to stress their common interests in areas such as saving the WTO and defending the Iran nuclear accord abandoned by Trump. But that can’t paper over their outstanding differences.

“The idea that China might become a critical partner in fighting the protectionism of the Trump administration bolstering the rules-based global free-trade order is nothing but wishful thinking,” he said.

©2018 Bloomberg L.P.

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