EU and France push Xi to achieve more balanced trade relations with China

Emmanuel Macron, Ursula von der Leyen and others warned Xi Jinping that in order to rebalance the trade relationship with China, the EU must protect itself against cheap Chinese imports. They also urged China’s President to reduce support for Russia during its war in Ukraine.

In a day-long meeting in Paris, French president Macron praised some progress in commercial negotiations with China. This included Xi’s “open attitude” towards France’s cognac sector, which was temporarily exempted from Chinese tariffs.

Xi joined the calls for a global truce at the Olympic Games held in Paris in the summer of this year and urged Russia to engage Ukraine in dialogue. He also stressed that Beijing was not involved in the war.

However, European leaders have not changed their approach to trade. Von der Leyen warned about market distortions due to China’s “surplus” production, as the EU leads a series anti-subsidy investigation into Chinese companies.

After meeting Xi at the beginning of his first visit to Europe in 5 years, the European Commission President said: “We will defend both our companies and our economies.”

“Europe has the largest market in the world today.” . . We want to protect our interests,” Macron later said in a joint interview with Xi.

France’s support for homegrown and European manufacturers has helped to safeguard the electric vehicle industry, which has attracted much attention from the EU.

Beijing launched a anti-dumping inquiry against brandy in what was widely perceived as a form of retaliation. Macron, who welcomed Xi to the Elysee Palace by giving him high-end brandy made by French luxury powerhouse LVMH as well as producer Remy Martin, thanked Xi’s “provisional measure” against cognac.

According to a French diplomat, this would mean that tariffs should be held off at least until China’s investigation is concluded.

Chinese officials have said that Xi’s main goal on a six-day trip to Europe, which will include Serbia and Hungary, is to minimize the damage caused by trade tensions.

The Chinese president described the talks as “fruitful”, and spoke about a deeper co-operation between France and China , in fields such as agriculture and finance, and nuclear power programmes, and aerospace. French and Chinese firms signed several agreements of co-operation, including contracts for metro construction by France’s Alstom. However, there were no large orders.

Macron also said that he welcomed a commitment made by Xi, who pledged to “refrain (from) selling any weapons to Russia”, to stop all aid to Moscow, and to control the exports of dual use goods which can be used to military purposes.

Xi’s public remarks were limited to urging Russia and Ukraine to talk and saying Beijing is not the cause of the crisis.

“We are against this crisis being used as an excuse to incite a new Cold War and to shift responsibility to a third party country,” Xi said to reporters through an interpreter.

He added, “the world is far from calm today,” as he joined Macron in calling for a global ceasefire during the Olympic Games. Both he and Macron called for a Gaza ceasefire.

Xi and Macron dined under the chandeliers at the Elysee Palace Monday night. Business leaders were also in attendance, including Carlos Tavares, the CEO of Stellantis.

The Chinese President will be visiting the Pyrenees on Tuesday, where the French President used to vacation as a kid, for more one-on-one discussions with Macron.

Olaf Scholz, the German chancellor, returned last month from Beijing where he called for fair competition. Berlin was less aggressive on protectionist measures because its companies are well-established in China. Scholz, who had dinner with Macron last week in Paris, did not accompany his French counterpart Monday.

Xi appeared to be making overtures towards other French exporters who are eager to promote their products in China, including cosmetics. Cosmetics producers, including large French companies, are worried that new vague or ineffective regulations on everything from labelling to animal testing are slowing down their ability to sell into the Chinese market.

EU investigations into Chinese products were triggered because of fears that overcapacity could result in electric vehicles, solar panels, and other green energy related goods flooding the EU’s market.

Jean Lemierre said that the investment and trade relations [with China] are only balanced if they’re balanced, he told a Franco Chinese economic conference held on Monday, on the sidelines the visit of the Chinese state.

“We have shared the government’s concerns for a long time.” . . We need to be honest.”

The Chinese authorities have denied that their industries were in a “oversupply”. They also called the western accusations “hype”, which was meant to justify protectionism.

Economists say that China must attract more foreign investments to boost its economy. The country is currently suffering from a slowdown in its property sector, and low consumer demand.