The two-day trade talks in Beijing began on Thursday led by Maroš Šefčovič, the European Union's Trade Commissioner, to balance the large trade deficit between China and the EU. If no agreement is reached, this issue could test Brussels' resolve to impose stricter trade restrictions.
Efforts to Regulate Trade Relations
This meeting is the final stage of an effort that began in June to rebuild the imbalanced trade relations between China and the EU, depending on the decision of China's Commerce Minister, Wang Wentao, to offer significant concessions.
If an agreement to reduce the EU's daily trade deficit of one billion euros is not reached, Brussels and Beijing may find themselves on a collision course. EU leaders will review the results of these negotiations at their meeting in Brussels next week.
Discussions on Cars and Chemicals
Šefčovič stated upon entering China that his goal is to balance the unbearable trade deficit. The negotiations have focused more on cars, as Chinese exports increasingly reduce the market share of European automakers. In August, one in every eight cars purchased in the EU was Chinese.
European officials are seeking China's commitment to export restrictions, especially for hybrid cars. If no tangible results are achieved from Beijing, the European Commission has warned that it will resort to unilateral trade measures.
Šefčovič has traveled to China with the backing of the leaders of two major European economies, France and Germany, to adopt a tougher approach to trade. The two leaders mentioned in a letter to the President of the European Commission, Ursula von der Leyen, the lack of mention of China, but the aim of the letter was clearly stated.
The EU currently has a powerful weapon at its disposal, called the Economic Coercion Instrument, designed to counter the economic bullying of foreign powers. However, Brussels has yet to garner widespread support from member states to implement it.
Given Europe's heavy dependence on China for raw and rare materials, any reduction in relations could lead to serious consequences. One EU diplomat stated, "If we do not want to reform our model, we will soon be destroyed."
However, according to another diplomat, no agreement with China is expected this week. China also has little room for compromise due to its reliance on exports to maintain its economic growth.
