EU trade chief warns China’s stance on Ukraine is hurting trade

The European Union’s chief trade negotiator warned that China’s position on the war in Ukraine is hurting its global image as an investment destination, as he completed a high-stakes trip to the Asian powerhouse.

Valdis Dombrovskis, an executive vice president at the European Commission, issued some of the bloc’s strongest attacks yet on President Xi Jinping’s foreign policy at a press briefing in Beijing on Tuesday, wrapping up a four-day trip to the country. 

Tensions between Brussels and Beijing flared this month after the EU announced a probe into China’s electric-car subsidies, a move that risked destabilizing a relationship involving more than $900 billion in bilateral commerce.

The EU official defended that decision in China saying the bloc need to be more “assertive” in protecting its interests when trading with the world’s second-largest economy. China’s Vice Premier He Lifeng expressed “strong concern and dissatisfaction” over the EV investigation on Monday, after emerging from talks with his European counterpart. 

Despite those tensions, China’s Commerce Ministry said in a statement the two sides had reached a range of agreements in other areas, including to establish a communication mechanism for export controls. That mirrored a similar group the US and China recently agreed to establish.

The two sides also agreed to improve relations in their financial industries, speed up market access for EU agricultural products and strengthen cooperation between securities and futures regulatory authorities, without providing details on the measures. Major areas of dispute such as access to government procurement for EU companies, China’s subsidies for its burgeoning EV market and the rapidly growing trade deficit were left on the table.

The bloc’s decision to push back against Beijing’s growing EV prowess comes as the Asian giant’s economy loses steam and faces increasing pressure from the US. Xi has courted the EU as a counter to US challenges, even as the bloc joins Washington’s call to de-risk from China. 

The talks took place under the the EU-China “High-Level Economic and Trade Dialogue” — a major forum for senior officials to discuss issues relating to macroeconomics, trade irritants, supply chains and financial services. It could be a stepping stone for a summit between Xi and the EU’s Ursula von der Leyen later this year.