Summer has arrived in Brussels with a new trend: the doves are out, the hawks are in.
After weeks of telegraphing signs towards a diplomatic rapprochement with China, or at least a thaw, Ursula von der Leyen made an abrupt volte face at the G7 summit with a broadside attack against Beijing’s “pattern of dominance, dependency and blackmail” vis-à-vis its trading partners, including the European Union and the United States.
“China has largely shown its unwillingness to live within the constraints of the rules-based international system,” von der Leyen said in her intervention.
“While others opened their market, China focused on undercutting intellectual property protections, massive subsidies with the aim to dominate global manufacturing and supply chains,” she went on. “This is not market competition – it is distortion with intent.”
The president of the European Commission declared, point blank, that the source of “the biggest collective problem” in the global trading system lay in China’s accession to the World Trade Organization (WTO) in 2001.
Beijing’s entry into the WTO has been highly controversial as it opened international markets to a wave of low-cost exports. The admission is linked to the so-called “China shock” and a decline in manufacturing jobs in both the EU and the US.
At the G7 summit, von der Leyen warned a “new China shock” was underway.
It was a gloves-off denunciation that laid bare the state of mind of the Commission chief, her mounting displeasure and exasperation. In many ways, it was a return to the hawkish stance of her first mandate, during which she famously promoted the concept of “de-risking” to slash vulnerable dependencies that China could exploit.
Beijing was quick to hit back at von der Leyen’s invective. Guo Jiakun, the spokesperson of the Chinese Foreign Affairs Ministry, called her remarks “baseless” and “biased”.
Guo, however, did not miss the chance to offer a new olive branch.
“China stands ready to increase communication and coordination with the EU, properly handle trade differences, and achieve win-win and shared prosperity,” he said.
“That said, we firmly oppose any attempt to hurt China’s right to development or even assert one’s own interests at China’s expense.”
The reset that never was
The conciliatory attempt fits in with Beijing’s “charm offensive”, as diplomats call it, towards the bloc in response to the disruptive policies of US President Donald Trump, who has imposed punitive tariffs on allies and adversaries alike.
Sensing an impending rupture in the Western alliance, China has made several overtures to curry favour with Brussels, including lifting controversial sanctions on lawmakers, ahead of a much-anticipated EU-China summit in late July.
Last month, Chinese President Xi Jinping hailed the 50th anniversary of bilateral relations as an opportunity to “open up a brighter future” in diplomacy.
Von der Leyen replied: “We remain committed to deepening our partnership with China. A balanced relationship, built on fairness and reciprocity, is in our common interest.”
But in her G7 intervention, delivered with Trump in the room, this commitment was conspicuous by its absence. Instead, she let the hawk fly free and wild.
At the core of her speech was Beijing’s recent decision to restrict the sales of seven rare earth materials, which she said amounted to “weaponising” trade.
China holds a quasi-monopolistic position over rare earths, the 17 metallic elements that are essential for building cutting-edge technologies. The country commands roughly 60% of the world’s supply and 90% of the processing and refining capacity.
Although the restrictions have eased in recent days, von der Leyen cautioned “the threat remains” and called on the G7 to close ranks to pile extra pressure on China.
Rare earths are just the tip of an iceberg made up of commercial disputes that have driven a stark wedge between Brussels and Beijing. The past few years have seen the bloc impose steep duties on China-made electric vehicles, exclude Chinese companies from public tenders of medical devices, label Huawei and ZTE as “high-risk suppliers” of 5G networks, and launch investigations into suspicious uses of industrial subsidies.
Brussels has also accused Beijing of engaging in large-scale campaigns of foreign information manipulations and interference (known as FIMI), hacking into state agencies, fuelling military tensions in the Taiwan Strait, violating the human rights of the Uyghur population and acting as the “key enabler” of Russia’s invasion of Ukraine.
Despite loud pleas from Europeans, Xi Jinping has doubled down on his “no-limits” partnership with Vladimir Putin, causing dismay and outrage across the continent.
By offering no significant concessions and sticking to its long-standing practices, China has missed the opportunity offered by von der Leyen after Trump’s inauguration, says Noah Barkin, a visiting senior fellow at the German Marshall Fund.
“Von der Leyen’s unvarnished criticisms of China at the G7 summit are a response to Beijing’s intransigence. Unless China shows a willingness to address Europe’s concerns, the summit in July is unlikely to produce any deliverables of substance,” Barkin said.
“The likelihood is that tensions between the EU and China will continue to grow. The closing of the US market to Chinese products will lead to a diversion of exports into Europe, increasing the threat to European industry. And the withdrawal of US support for Ukraine will turn China’s support for Russia into an even bigger problem for Europe.”
Keeping it real
Although von der Leyen has earned plaudits for her clear-eyed, matter-of-fact assessment of EU-China relations, her views have not become universally accepted by member states, the true guardians of political power.
In April, Spanish Prime Minister Pedro Sánchez flew to Beijing, held a bilateral meeting with President Xi and made a plea to turn the page on the confrontational approach.
“Spain is in favour of more balanced relations between the European Union and China, of finding negotiated solutions to our differences, which we have, and of greater cooperation in areas of common interest,” Sánchez said.
The Spaniard’s words immediately caught the attention of Brussels and sent speculation of a diplomatic reset into overdrive. But Alicja Bachulska, a policy fellow at the European Council on Foreign Relations (ECFR), says the buzzy discourse was never credible.
“Hopes of a possible reset, if any, were mostly projected by those who do not see eye-to-eye with von der Leyen’s Commission,” Bachulska told Euronews.
“This Commission seems quite consistent in explaining its approach towards China and how it sees the threats, the challenges, and the very limited opportunities for cooperation with China under current conditions.”
Politics, of course, come with economics attached.
For many countries, particularly those export-oriented, China remains an extraordinarily valuable market of 1.4 billion people, despite the multiple obstacles and hurdles that European companies face when doing business. With Trump threatening a whopping 50% tariff on the bloc if trade talks fail, having a cushion to fall onto is considered indispensable to avoid – or at least mitigate – the potential ravaging impact.
Trade will be at the very top of the agenda at the EU-China summit, with both sides looking forward to having something to announce. Brussels is keen to put an end to China’s probes into brandy, pork and dairy products, which it considers unjustified.
But as the date nears, hopes for a trade breakthrough that can make a tangible difference on the ground and relieve some of the tensions are fading, as von der Leyen’s hardened tone at the G7 demonstrated.
“It’s about being realistic: we still see China as a partner, competitor and rival,” a senior diplomat said, speaking on condition of anonymity. “We have to be perhaps more confident about our interests, what we can do to pursue them better, but also act when actions are taken that threaten the stability of our continent.”
A diplomat from another country kept a cool head to lower expectations ahead of the summit, arguing China’s alliance with Russia and campaigns of foreign interference remain “serious” and “disturbing” factors with no sign of improvement.
“If you want to really deepen ties with us, that’s impossible if, at the same time, you behave like this,” the diplomat said.
“The EU needs to stand up for its own interests, no matter who’s in the White House.”