Economy 13 October 2023, 12:45pm

EU foreign policy chief talks in China about economic decoupling from China

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European Union High Representative for Foreign Affairs and Security Policy Josep Borrell warned China on Friday that it must address economic and trade imbalances or Europe's efforts to reduce its dependence on China "could accelerate more than necessary".

"It is [...] in our interest to find common ground, to redress the imbalance in our economic and trade relations," Borrell told students at the capital's prestigious Peking University in Beijing, China.

"Otherwise, de-risking may indeed accelerate far more than is good, as the public opinion will increase its pressure on political leaders to disengage more from China."

""My question to China is how can we make this interdependency less conflictual," Borrell said, referring to economic ties, adding that the bloc and China needed to work together more than ever," Reuters cited Borrell as saying.

Brussels has dubbed China an "economic competitor and a systemic rival", but both sides are determined to resume dialogue after the COVID-19 pandemic in the face of rising geopolitical tension, even as the relationship has grown more troubled in recent years.

Later on Friday, Borrell is expected to press Foreign Minister Wang Yi on issues including market access, Ukraine, Taiwan, climate and the Middle East crisis in the first EU-China High-Level Strategic Dialogue in two years.

Chinese daily Global Times said in an editorial piece on Thursday that Borrell's visit "undoubtedly presents a significant opportunity for candid communication, mutual understanding, resolution of differences, and enhanced cooperation in the context of the currently relatively subdued China-EU relationship."

At the same time, it urged the 27-member bloc to maintain its strategic autonomy from the United States. "Although few Europeans are willing to be political vassals of the US and are wary of American political interference, Washington's actual intervention in European politics and diplomacy has clearly crossed the line and even exerted a dominant influence in many aspects."

Key to Borrell's agenda will be convincing Beijing that it does not seek to decouple from China but wants to reduce critical dependencies and achieve a more balanced relationship, a senior EU official told Reuters.

Borrell's trip was initially postponed in April after he tested positive for COVID-19, and was then cancelled in June by China without citing a reason.

The European Commission has recently announced an anti-subsidy investigation into Chinese-made electric vehicles, and they are also mulling a probe into the wind turbine sector. These investigations, which are expected to last up to a year, could lead to the imposition of tariffs, the Financial Times said. It also reported that the Commission is planning to announce anti-subsidy investigations against Chinese steelmakers at a summit with the U.S. this month as they further develop a common front against Beijing.

Data by the Organisation of Economic Cooperation and Development (OECD) show global steelmaking capacity reached record levels in 2022. Excess capacity is at record highs too, with just 75% utilised. China has accounted for a quarter of the capacity increase, and it is also opening plants elsewhere in Asia.