Today’s Summit was already my second visit to China this year. This is certainly testimony to the importance of the EU-China relationship. We have a complex relationship with China which deserves frank and open discussions, to deepen mutual understanding, and we had that today. This was certainly a ‘summit of choices’. It was an opportunity to explain clearly our concerns and our expectations to the Chinese leadership and of course to also seek progress in key areas of our bilateral relationship.
Let me start with trade and investment in the economy. This is particularly necessary when it comes to rebalancing our trade relationship. President Xi explained his view on the current Chinese economy. We trade EUR 2.3 billion of goods every single day. This shows that our trade relationship with China is important. But we explained why we see that our trade is critically imbalanced. Our trade deficit has reached almost EUR 400 billion. 20 years ago, it was ten times smaller – EUR 40 billion. So this shows the trajectory and enormous increase of the trade deficit. If you just look at the last two years, the trade deficit has doubled. This is a matter of great concern for a lot of Europeans. Such imbalances are just unsustainable. The root causes are well known, and we discussed them. They range from a lack of market access for European companies to the Chinese market, to preferential treatment of domestic Chinese companies and overcapacities in the Chinese production. This overcapacity is then spilling over onto global markets. And here, we see that different regions are already closing their markets to Chinese products. This of course diverts even more overcapacity towards Europe. Politically, European leaders will not be able to tolerate that our industrial base is undermined by unfair competition. We like competition. It makes us better; it lowers prices; it is good for the consumers. But competition needs to be fair. We insist on fair competition within the Single Market. Therefore, we also insist on fair competition from companies that come to our Single Market. And I am glad that we agreed with President Xi that trade should be balanced between the two of us.
Of course, we also discussed the approach of de-risk, not decouple. China, by the way, has a long-standing similar approach. China called it self-reliance and it was partially included in the dual-circulatory approach. I want to be very clear here too: Europe does not want to decouple from China. We have seen a decoupling of Europe from Russia, for good reasons. We do not want a decoupling from China. What we want is de-risking. De-risking is about managing the risks we see, addressing excessive dependencies through diversification of our supply chains – so strengthening our supply chain, have a more robust supply chain from several suppliers – and thus increasing our resilience. And this is not exclusive to China. It is about learning the lessons from both the global COVID-19 pandemic and Russia’s energy blackmail. There, we have felt – first in the pandemic, but then also when Russia started its war – how painful it can be when the single supplier does not deliver anymore. In light of increased geopolitical frictions, it is important for us to strengthen and diversify our supply chains.
We also discussed the digital topic in general, and specifically artificial intelligence. We see both the big opportunities but of course also the big risks of AI. The challenge is to ensure both safety on the one hand but also to open the door for innovation on the other hand. Market forces alone will not fix it. Voluntary guardrails are certainly good to move quickly, but ultimately, we need binding rules. China has started its Global AI Governance Initiative. The European Union is right now finalising its first AI Act, to ensure that artificial intelligence complies with our fundamental rights and our values. So, even if our governance models are different, we agreed that we should seek to cooperate on artificial intelligence at the global level. We also discussed cross-border industrial data flows. It was also discussed in the high-level dialogue we have resumed since my last visit. As you know, EU businesses have since long expressed concerns about China’s rule in this area and the lack of clarity for them. So I very much welcome now China’s willingness to establish a mechanism to clarify the rules. This will be a big improvement for European companies. After having heard the words, what is now important is that we see progress on this file.
We also discussed the big topic of climate change and cooperation in fighting climate change. As you know, COP28 is ongoing. And I think it would also be a strong message by China if it joined the Global Renewables Pledge. As you know, we have proposed to triple global renewable energy by 2030 and to double energy efficiency also by 2030. So I encourage China to join us in this ambition. This Pledge is a big success because already in the first week of COP28, 125 countries have joined this Global Pledge for Renewable Energy. China is outstanding in deploying renewable energy. It is probably the region where most renewables come online currently. This is a big success. But on the other hand, and we discussed that openly and frankly, we are very worried about the increased deployment of coal power plants in China. We know that one of the most difficult issues in fighting climate change that we face right now is the phase-out of fossil fuels. This is the discussion that is ongoing at COP28 in Dubai right now. And of course, we want China to take a very strong position on the question of phasing out unabated fossil fuels by mid-century.
Finally, we also discussed the big topic of carbon markets. Actually, the European Union and China have together the biggest emissions trading system worldwide. We have a long-standing cooperation in this area. The European Union started already in 2005 to establish an Emissions Trading System. Now we are moving towards covering 75% of our emissions with a carbon price. And since quite some years, China has joined. We are working closely together, also sharing advice on what mistakes to avoid and what positive steps to take forward. Therefore, I am very happy that we are renewing our Memorandum of Understanding on ETS cooperation. The Emissions Trading System is market-driven; it is well tested; it has proven its cost efficiency; and it creates revenues that can be reinvested in innovation and reinvested in the developing countries. So, all in all, climate change is an area where China and the European Union are cooperating very constructively.
Let me turn to Ukraine. Russia’s war of aggression is a blatant violation of international law and the UN Charter. And it is a serious threat to European security. That is why we recalled the need for China to use all its influence on Russia to stop this war of aggression and to engage in Ukraine’s Peace Formula. We also reiterated to refrain from supplying lethal equipment to Russia and to prevent any attempts by Russia to undermine the impact of sanctions.
Lastly, we expressed our concerns to China about tensions in the region, particularly in the Strait of Taiwan. Heightened instability in the East and South China Seas put at risk global prosperity and regional security. We stand strongly against any kind of unilateral change of the status quo of Taiwan, in particular by the use of force. We acknowledge the ‘One-China policy’. Regional security will also be increased if differences on the South China Sea are resolved through dialogue and in line with international law.
To conclude, a lot of choices are on the table. And today, we had a candid and open discussion. And we agreed to make further progress, in the high-level dialogues.
