The EU and China are edging closer to a trade war, with the bloc’s commerce chief warning that its trade deficit with China is ‘unsustainable’ as he began two days of talks in Beijing aimed at averting an escalating confrontation.
asserted
he → edge → confrontation
Beijing, meanwhile, hit back by warning that Europe lacks the capacity to wage a trade war, issuing a blunt challenge: ‘Let them try.’
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them → hit → challenge
Writing on X on Thursday, European Commissioner for Trade and Economic Security Maros Sefcovic said: 'Day one in China, with one goal: begin rebalancing our... unsustainable trade deficit.'
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Sefcovic → write → deficit
'I started by hearing directly from EU businesses here.
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I → start → businesses
The message around the table was clear: the need to improve access to the Chinese market, while boosting our economic security,' he added.
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he → improve → security
Last year, every day, China exported to the EU around a billion euros more in goods and services than went the other way, according to European figures.
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China → export → figures
Many in Europe blame this on unfair trade practices by Beijing, including state subsidies and price dumping, undercutting European rivals in industries from cars to chemicals.
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Many → blame → chemicals
The Asian giant could throttle supplies of items such as rare earth minerals that are vital for the continent's industrial sector – or throw up barriers to European exports to China.
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that → throttle → China
The two days of discussions by Mr Sefcovic in Beijing come as France and Germany, the bloc's two biggest powers, threaten to up the ante.
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France → come → ante
Last year, every day, China exported to the EU around a billion euros more in goods and services than went the other way, according to European figures (pictured: Xi Jinping)
In a letter earlier this week, President Emmanuel Macron and Chancellor Friedrich Merz called for a 'credible instrument' to respond quickly to any escalation by Beijing
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Macron → export → Beijing
In a letter earlier this week, President Emmanuel Macron and Chancellor Friedrich Merz called for a 'credible instrument' to respond quickly to any escalation by Beijing.
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Macron → call → Beijing
The proposed weapon – to be discussed at an EU leaders' summit next week – would give the European Commission the power to respond to a trade aggression within days.
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weapon → propose → days
Among other actions, it proposed making it easier for the European Commission to use the bloc's so-called 'trade bazooka', the Anti-Coercion Instrument.
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Commission → propose → bazooka
This is a never-used-before raft of measures for blocking or restricting trade and investment from countries found to be putting undue pressure on EU member nations or corporations.
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This → use → nations
Yet not all EU nations agree on such tough measures.
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nations → agree → measures
Prime Minister Pedro Sanchez has visited Beijing four times in three years.
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Sanchez → visit → years
Far-Right and Left-wing lawmakers from Ireland to Bulgaria formed an unusual coalition on Wednesday to vote against resolution calling for tougher China policies.
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lawmakers → form → policies
China immediately warned Paris and Berlin on Tuesday against 'protectionist' measures.
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China → warn → measures
'They should avoid going down the wrong path in the wrong way, only to ultimately suffer the consequences themselves,' the commerce ministry said in a statement.
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ministry → avoid → statement
And an editorial in China's state run Global Times newspaper read: 'The EU does not have the capacity to wage a trade war against China.
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EU → run → China
If it is truly determined to do so, then let it try.'
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it → do → ?
China's foreign ministry said Thursday that Beijing hopes that it can work with Brussels 'in the same direction and address each other's concerns through dialogue and consultation'.
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it → say → dialogue
'As a principle, China has always believed that adhering to openness and cooperation and resolving economic and trade differences through equal dialogue and consultation is in the common interests of both China and the EU,' spokesman Mao Ning told a regular briefing.
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Ning → believe → briefing
The stakes are also high for President Xi Jinping, however, with China heavily reliant on exports in order to compensate for its stuttering domestic economy.
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China → compensate → economy
The EU parliament's trade committee chief, Bernd Lange, said ahead of Mr Sefcovic's trip that this 'economic crisis in China' gives the bloc 'bargaining power'.
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crisis → say → power
'The EU has a well-supplied toolbox to counter unfair subsidies, dumping, discriminatory procurement, and economic coercion.
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EU → have → subsidies
These instruments must be applied consistently and, where necessary, enhanced,' Mr Lange said in a statement.
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Lange → apply → statement
EU and Chinese officials have been negotiating since June, and Mr Sefcovic raised hopes earlier this year when he said that he wanted 'tangible results by October'.
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he → negotiate → October
Mr Sefcovic has identified three priorities: addressing surging imports in strategically important sectors, increasing European exports to China and improving access to critical raw materials.
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Sefcovic → identify → materials
The EU is also seeking clearer export-licensing arrangements for rare earths and other materials after China introduced restrictions last year.
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China → seek → restrictions
Brussels hopes to manage Chinese exports through voluntary limits, for example on hybrid cars shipped to the bloc.
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Brussels → hop → bloc
Beijing, though, firmly opposes import quotas.
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Beijing → oppose → quotas
Analysts are cautious about the prospects for a broad agreement being struck this week.
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Analysts → strike → agreement
Maros Sefcovic said: 'Day one in China, with one goal: begin rebalancing our... unsustainable trade deficit'
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Sefcovic → say → deficit
The EU imports sizable amounts of Chinese lithium-ion batteries and hybrid electric vehicles (Pictured: Workers produce transmissions for new energy vehicles in Wuhu)
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Workers → import → Wuhu
Workers use machinery to dig at a rare earth mine in Ganxian county in central China's Jiangxi province
'
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Workers → use → province
But if one sector could be identified in which an export-restraint agreement with China could be tested, that would be a good step,' Ignacio Garcia Bercero, from Brussels think-tank Bruegel, said.
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Bercero → identify → Bruegel
Zhu Tian, economics professor at Shanghai's China Europe International Business School, agreed, saying that the talks could yield agreements 'on some specific issues'.
Politicians and economists across the 27-nation bloc consider China's massive subsidies and exports a major threat to core industrial sectors from steel foundries to car factories.
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subsidies → agree → factories
China diverted many of its exports to the EU and other markets after the US raised tariffs.
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US → divert → tariffs
In a debate Tuesday in European Parliament in Strasbourg, lawmakers overwhelmingly expressed anxiety alongside defiance over trade with China.
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lawmakers → express → China
…and 22 more, not listed.
The Aporia
