Europe keen to avoid trade war with China, EU’s Michel says

Europe is not spoiling for a trade war with China over electric—vehicle subsidies and is instead focusing on a “rebalancing” to avoid excessive reliance on one country, according to the head of the body that represents European Union heads of state and government.

“We don’t want any trade war, on the contrary,” Charles Michel, the president of the European Council, said Thursday in an interview with Bloomberg Television on the sidelines of the Berlin Global Dialogue.

“We’d like to rebalance our relationship with China to address critical vulnerabilities,” Michel added. “It’s never good when you’re so dependent on one country.”

China initially reacted aggressively to the European Commission’s announcement this month that it will investigate subsidies paid to EV manufacturers, calling it “a naked act of protectionism” and stoking concerns about a potential tariff war.

Those fears eased after a subsequent visit to Beijing by EU Trade Commissioner Valdis Dombrovskis. President Xi Jinping’s government eschewed any rhetoric that could endanger an economic relationship worth $900 billion and Vice Premier He Lifeng agreed to set up several working groups, including on financial services and trade curbs.

Michel said that following the invasion of Ukraine by Kremlin forces last year, Europe had learned its lesson from becoming over-reliant on Russia for fossil fuels and was now applying that to its relationship with China.

“Within the EU there’s a common view, common vision that we need to rebalance our economic relationship, address our vulnerabilities,” he added. “We are engaging a lot with China and I’m confident that we can protect the European interest.”