EU’s Borrell warns China ‘de-risking’ may speed up if imbalances persist

By Laurie Chen and Philip Blenkinsop

BEIJING, Oct 13 (Reuters) – The European Union’s foreign policy chief, Josep Borrell, urged China on Friday to redress economic and trade imbalances or efforts by Europe to reduce its dependence on China may “accelerate far more than is good”.

Borrell is on a three-day visit to China and is expected to have discussions on thorny issues including trade, Ukraine and human rights.

“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.

“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.”

Borrell’s long-anticipated trip to Shanghai and Beijing was postponed twice and comes a week after the EU launched an anti-subsidy investigation into Chinese electric vehicle (EV) imports, which drew Beijing’s ire.

The 27-member bloc’s record $426.08 billion trade deficit with the world’s second-largest economy has become a major sticking point in the relationship, along with China’s close ties with Russia after its invasion of Ukraine.

“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.

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.

‘IRRITANTS’

The visit also aims to lay the groundwork for an EU-China Summit expected before the end of the year, and comes after a string of trips to China by top EU officials in recent months.

“It’s a complex relationship and there are irritants,” said a senior EU official. “It’s about realism and being open about what we need to do as the EU and defend our interests … It’s about honesty and engagement.”

Chinese state media tabloid Global Times said in a Thursday editorial the visit presented a “significant opportunity for candid communication” but it urged the EU to maintain strategic autonomy from the United States.

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

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, the EU official said.

China’s economic czar, He Lifeng, urged the EU to “exercise restraint” in its use of trade remedy measures during a visit by the bloc’s trade chief to Beijing last month. A Chinese auto association said this week it was helping EV manufacturers affected by the EU investigation to defend their position.

Brussels is also reportedly planning anti-subsidy investigations of steelmakers producing excess in countries such as China, as part of a pact with the United States.

Borrell will warn his Chinese counterparts against transferring lethal weapons to Russia and any escalation of tension in the Taiwan Strait ahead of self-ruled Taiwan’s presidential election in January.

“We need to be able to address everything,” said the EU official.