The 24th EU-China Summit: diplomacy and dialogue, but few deliverables

President of the European Commission Ursula von der Leyen and President of the European Council Charles Michel, accompanied by High Representative of the European Union for Foreign Affairs and Security Policy Josep Borrell, met with Chinese President Xi Jinping and Premier Li Qiang at the 24^th EU-China Summit in Beijing on 7 December 2023. The dialogue between Brussels and Beijing reiterated the importance of the bilateral partnership but yielded few tangible deliverables.

The summit occurred a few days after Rome had given three months formal warning to Beijing that Italy would be withdrawing from China’s Belt and Road Initiative (BRI) when its agreement was due to automatically renew in March 2024.

“Complex relationship” between the EU and China

In a speech following the summit, Ursula von der Leyen stated: “It was an opportunity to explain clearly our concerns and our expectations to the Chinese leadership and of course to also seek progress in key areas of our bilateral relationship.”

She went on to say that the meeting, which was her second visit to China in 2023, reflected the importance of the EU-China relationship. However, she noted that the EU has a “complex relationship with China which deserves frank and open discussions, to deepen mutual understanding, and we had that today.” Von der Leyen described it as a “summit of choices”.

As a permanent member of the UN Security Council, China, as the EU leaders pointed out, has a responsibility to uphold the UN Charter’s core principles, including territorial integrity and sovereignty. Michel assured President Xi that the EU would “continue to engage with China based on transparency, predictability, and reciprocity.”

Addressing the EU-China trade deficit

The most pressing discussions concerned rebalancing the EU’s trade relationship with China. While the relationship is significant – the EU trades €2.3 billion of goods every day with China – the EU’s trade deficit with China has grown from €40 billion 20 years ago to almost €400 billion today. In the last two years alone, the trade deficit has doubled.

According to the European External Action Service (EEAS), the EU's diplomatic service, EU exports to China grew 3.2% between 2021 and 2022. However, Chinese imports into the EU grew 32.3% in the same period, meaning that the bilateral deficit reached an all-time high in 2022 of €396 billion – a 58.2% increase from 2021.

According to von der Leyen, such imbalance is “unsustainable”, with the root causes ranging from a lack of market access for European companies to the Chinese market to preferential treatment of domestic Chinese companies and overcapacities in the Chinese production.

“This overcapacity is then spilling over onto global markets,” she said, adding: “Politically, European leaders will not be able to tolerate that our industrial base is undermined by unfair competition. We like competition. It makes us better; it lowers prices; it is good for the consumers. But competition needs to be fair.”

She pointed out that EU members insist on fair competition in the European single market and, therefore, they insist on fair competition from companies that come to the single market. However, she stated her satisfaction that President Xi agreed that trade should be balanced between the two entities.

De-coupling vs. de-risking: Managing risk, Increasing resilience

In terms of de-risk vs. de-coupling, von der Leyen made it “very clear” that Europe does not want to decouple from China, rather it was looking to de-risk. The EU needs to manage perceived risks, address excessive dependencies through diversification of its supply chains and, therefore, increase its resilience, and “this is not exclusive to China”, said von der Leyen, adding: “It is about learning the lessons from both the global COVID-19 pandemic and Russia's energy blackmail.”

Following the summit, Wang Lutong, director-general of the Chinese Foreign Ministry's Department of European Affairs, responded: “The Chinese side has expressed concerns to the EU side on its "de-risking" and restrictive economic and trade policies, including the anti-subsidy investigations against Chinese electric vehicles (EV) as well as its 5G policies.”

Wang noted that China has urged the EU to ensure openness of its trade and investment market. “The EV [electric vehicle] industry did not develop on the basis of government subsidies, but has benefited from its own technological innovation and improving competitiveness," said Wang, pointing out that subsidies are an industrial policy tool commonly used by various countries. He noted that the EU has provided around €6 billion of subsidies for its EV battery industry in recent years.

The “digital topic”, AI, and data exchange

What von der Leyen described as “the digital topic in general and specifically Artificial Intelligence (AI),” was also discussed. As well as the opportunities AI brings, there is also a need to manage the “big risks of AI”, she said. The challenge is to ensure safety on the one hand, and innovation on the other, but “ultimately we need binding rules.”

On 18 October, China launched its Global AI Governance Initiative, a framework for promoting equal rights and opportunities for all nations in the development and governance of AI. The EU is currently finalizing its first AI Act. Addressing that, von der Leyen said: “Even if our governance models are different, we agreed that we should seek to cooperate on artificial intelligence at the global level.”

The question of cross-border industrial data flows was also discussed, with the EU expressing concerns about China’s lack of clarity around the topic. According to reports, President Xi stated China's willingness to establish a mechanism to clarify the rules during the summit, which was welcomed by von der Leyen. However, she noted: “After having heard the words, what is now important is that we see progress on this file.”

Climate change and carbon emissions

The issue of climate change was another priority topic, with COP28 concurrently underway during the summit. COP28 saw the launch of the Global Renewables Pledge, which aims to triple global renewable energy by 2030 and double energy efficiency by 2030 – 125 countries have signed up, to date. “I think it would also be a strong message by China if it joined the Global Renewables Pledge. So, I encourage China to join us in this ambition,” von der Leyen said.

Carbon emissions were also discussed. According to EEAS, China’s greenhouse gas emissions accounted for 28% of the global total in 2022, compared to the EU, which is now responsible for 7% thanks to its efforts to reduce emissions. In 2005, the EU established an Emissions Trading System (ETS), which China has also worked on for some years. The summit resulted in a renewal of the Memorandum of Understanding on ETS cooperation between the EU and China. 

EU expresses concerns over Russia and heightened tensions in the Taiwan Strait

During the summit, the EU leaders also:

• Strongly encouraged China to engage on Ukraine’s Peace Formula.
• Insisted that China refrain from supplying lethal weapons to Russia.
• Stressed the importance of China helping to prevent Russia from circumventing sanctions.
• Expressed their concerns about tensions in the region, particularly in the Taiwan Strait.

Concerning Russia, von der Leyen stated: “Russia's war of aggression is a blatant violation of international law and the UN Charter. And it is a serious threat to European security.” Turning to the Taiwan Strait, she added: “Heightened instability in the East and South China Seas put at risk global prosperity and regional security. We stand strongly against any kind of unilateral change of the status quo of Taiwan, in particular by the use of force. We acknowledge the ‘One-China policy'.”

In conclusion, Pamir considers that the summit opened with fairly low expectations from observers and, while it offered multiple potential choices to move forward, no major deliverables were announced. The rhetoric was fairly standard and almost all of the talking points had already been heard before. However, both parties acknowledged that the discussions had been “frank and open”.

The only real deliverable was that the two sides agreed to renew the High-Level People-To-People Dialogue, which was established in 2012 as a forum for dialogue between decision-makers and practitioners in education, culture, youth, sport, and gender to exchange good practice and address areas of common concern. The dialogue was last held in 2020 and will be renewed in 2024 – a concrete outcome of the summit.