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Asia-Pacific

Trump drives EU and China closer to each other

media Chines Prime Minister Li Keqiang with EU Council President Donald Tusk at the EU-China Summit in Beijing, 16 July 2018 REUTERS/Thomas Peter

European Union leaders on Monday called on the United States, China and Russia to work together to calm worsening global trade tensions. After meeting Chinese Premier Li Keqiang at an annual EU-China summit, EU Council president Donald Tusk warned that global trade discord could spiral into "conflict and chaos".

The EU is unhappy about a trade deficit with China that reached 176 billion euros in 2017 and does not seem to be closing.

It accuses China of dumping of steel on its markets and European companies doing business in China complain about a lack of transparency and clear regulations.

But US President Donald Trump's imposition of tariffs on both the EU and China has given them common ground, despite their differences.

The real question is how much does China reform its own economy

Washington drives EU and China closer but problems remain 16/07/2018 - by Jan van der Made Listen

“The Trump administration is representing a clear and present danger to the EU in terms of its economic and trade relationship with the US,” says Steven Tsang, head of China studies at the School of Oriental and African Studies in London.

“So they will deal with the urgent issues first before they will deal with the more important differences between the EU and China.”

And there is scope for cooperation, he believes.

“In terms of the coordinated trade responses between the EU and China to the US, I think that the scope for them is to explore and potentially cooperate in some ways, Tsang explains.

“Because neither China nor the EU really wants a trade war with the US. [But] they want to put pressure on the Trump administration to get the Trump administration to ease off and perhaps back off."

But he points out that existing problems between the EU and Beijing will remain.

“The Chinese government has a policy which they call the 'United Front', which essentially is a very skilful way to divide and rule. And on this occasion Trump makes it very easy for China to divide the EU from the US,” he says.

But even if the US president described the EU as ‘’a foe’’ on trade issues in an interview with British tabloid the Sun when he visited the UK, Europe will not close its eyes to what it perceives as China’s unfair trade policies.

“The real question is how much does China reform its own economy,” says François Godement, head of the China Program of the European Council for Foreign Relations

“How much does it solve the subsidy issue, which is increasingly important, not only for the export of goods but equally important for investment abroad; subsidised acquisition of companies by Chinese entities that are really backed by the Chinese state, issues that have to do with high technology pilfering."

Until now China has not really moved on a lot on these issues, he adds. “In fact, it hasn’t moved at all apart from making a few statements. So we will unquestionably have a better atmosphere for this summit than was the case last year but that doesn’t mean that China is making concessions to the Europeans."

Meanwhile, China is buying up European entities, such as large parts of the Greek harbor of Piraeus and the port of Rotterdam in the Netherlands.

Chinese businesses have taken over established European companies, such as the UK's Rover car factory, bought up old companies in the former eastern bloc and invested in French vineyards, deals that lack transparency and could lead to violations of workers' rights.

So European decision makers may be loath to open up to China before Beijing fully complies with the strict rules of the World Trade Organisation.

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