Xi Jinping arrives in Europe on Sunday on a mission to ease escalating tensions that threaten to ignite a commerce warfare between China and the EU.
On his first journey to the area since 2019, Xi will face powerful talks in France on commerce and Ukraine earlier than having fun with a hotter welcome in Serbia and in Hungary, the place hovering Chinese language funding underlines each the advantages of shut ties with Beijing and EU divisions on worldwide coverage.
“China is determined not to let its relationship with Europe slide further towards the direction of its ties with the US,” mentioned Yu Jie, an analyst at UK think-tank Chatham Home. “There will be a renewed charm offensive from Beijing, but it will equally give the EU tough warnings on trade protectionism”.
Xi’s prime precedence for his six-day go to can be injury limitation, Chinese language officers mentioned. The president is intent on countering a litany of commerce investigations into Chinese language corporations by the EU, together with a blockbuster anti-subsidy probe into electrical automobiles anticipated to conclude in weeks.
EU officers have instructed the Monetary Occasions that preliminary duties on EVs might be imposed in Could, whereas everlasting tariffs that want the assist of a majority of member states might comply with in November. Researchers on the Rhodium Group mentioned the duties on Chinese language EV imports to the EU might vary from 15-30 per cent.
“China cannot afford the closure of the European market to Chinese companies,” mentioned Abigaël Vasselier at Merics, a Berlin-based think-tank. “The main question is . . . how successful President Xi can be in altering the current trajectory on Europe-China relations.”
Emmanuel Macron, France’s president, has invited Ursula von der Leyen, European Fee president, to Paris to satisfy Xi on Monday.
Von der Leyen has advocated “de-risking” Europe’s industrial relationship with China and has blamed the EU’s large bilateral commerce deficit — €291bn in 2023 — partly on Beijing’s limits on market entry for European corporations. Lately, the EU has fallen behind south-east Asia to develop into China’s second largest regional commerce accomplice.
Xi meant to play onerous ball, Chinese language officers and analysts mentioned. Behind the anticipated shows of public bonhomie and guarantees of Chinese language funding, he would warn European leaders that duties on Chinese language exports would elicit an uncompromising response, they added.
“China could impose restrictions on the export of materials needed to make microchips and on French exports to China and several other items,” mentioned one Chinese language analyst who requested to not be named.
Beijing has additionally signalled rising willingness to impose its personal retaliatory tariffs. Macron is predicted to take up with Xi the reason for French cognac makers, after China in January launched an anti-dumping investigation into French brandy imports.
French brandy is essentially the most imported liquor into China and tariffs would hit the income of well-known manufacturers comparable to Rémy Cointreau, Pernod Ricard and LVMH-owned Hennessy.
France’s cognac trade affiliation, the BNIC, mentioned Xi’s go to was “a unique opportunity for an agreement” to resolve an “unjustified” Chinese language probe that threatened a sector that straight and not directly using some 70,000 individuals.
Whereas the talks in Paris are anticipated to be difficult, Xi’s visits to Serbia and Hungary would strike a way more constructive tone, Chinese language officers mentioned. China sees Hungary as a genuinely loyal buddy within the EU and has been showering the nation with funding guarantees.
In accordance with official Chinese language estimates, collected international direct funding by Chinese language enterprises in Hungary might attain €30bn by the tip of this yr — suggesting a number of extra billions of euros in funding are within the pipeline.
One mission beneath dialogue is a possible funding by China’s Nice Wall Motor to construct an EV plant, Chinese language officers mentioned.
“Hungary is greatly over-represented in Chinese FDI into the region, amassing more volume in the past two to three years than in the preceding decades,” mentioned Daniel Hegedüs on the German Marshall Fund in Berlin.
“This is politics. Hungary has been loyal and reaps the rewards,” Hegedüs mentioned.
However Xi’s go to to Hungary is certain to antagonise many leaders in western Europe. “Hungary is considered a pariah,” mentioned one senior western European diplomat.
Even because the EU more and more views China as a “systemic rival”, Hungary has develop into the principle defender of Beijing’s pursuits. Between 2016 and 2022, it has used its veto energy on a number of events to dam European Council choices condemning Chinese language actions.
As well as, Xi’s go to to Serbia on Tuesday, the twenty fifth anniversary of Nato’s unintentional 1999 bombing of the Chinese language embassy in Belgrade, might additionally alienate opinion in western Europe, the diplomats mentioned.
After Russia’s full-scale invasion of Ukraine in 2020, the Chinese language mission to the EU cited the 1999 bombing to clarify Chinese language sympathy for Russia’s argument that the western navy alliance was accountable for the newer battle.
“Chinese people can fully relate to the pains and sufferings of other countries because we will never forget who had bombed our embassy in the Federal Republic of Yugoslavia,” a spokesperson for the mission mentioned.
Certainly, the Ukraine warfare is ready to loom massive over Xi’s Europe journey.
Chinese language lecturers mentioned Beijing seen the US as utilizing the warfare to increase its hegemony over Europe, whereas placing stress on China for its alleged function in supporting Russia.
They mentioned Chinese language leaders believed Macron wished Europe to train extra strategic autonomy from the US, an aspiration Beijing shared. Nevertheless, Xi’s friendship with Russian President Vladimir Putin means something he says on Ukraine shall be seen with deep mistrust in a lot of Europe.
Nonetheless, Macron is predicted to attempt to persuade the Chinese language chief to make use of his affect with Putin to alter the course of the warfare, although comparable efforts throughout a go to to China final yr didn’t bear fruit.
“Our aim is to encourage China to use the levers at its disposal with Moscow to influence Russia’s calculations and try and contribute to a resolution of this conflict,” an Elysée official mentioned.
