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For nearly two decades, Europe has been facing trade and investment issues with China. These issues remain unresolved, and their impact is now far more serious for the EU’s economy and industry, as well as for social and political stability, considering the tens of thousands of jobs in the European car industry that are now at risk in the face of China’s highly competitive electric vehicle (EV) companies.

Yes, Europe faces a vital security threat with Vladimir Putin’s war of aggression against Ukraine; it also faces America’s Trump-era tariff war and a profound questioning of the sustainability of the transatlantic alliance and Europe’s security. However, these two threats do not, and should not, overshadow the existing and growing challenges we face with China.

As I write these lines, and since Donald Trump’s election in November, Beijing has shown no sign of making any compromise with the EU, despite the olive branch offered by President of the European Commission Ursula von der Leyen at the World Economic Forum in Davos last January when she said, “I see it as an opportunity to engage and deepen our relationship with China, and where possible, even to expand our trade and investment ties.”

At a time when EU-China trade negotiations are unprecedentedly consequential, there seems to be a dialogue of the deaf between the EU and China. Brussels wants to address the trade deficit, Chinese overcapacity, and inward technology transfer, while Beijing continues to push for the revival of the Comprehensive Agreement on Investment (CAI). The European Parliament put the CAI on hold in 2021 after Beijing sanctioned Members of the European Parliament (MEPs) over their criticism of China’s Xinjiang policies, as well as national MPs, think tanks, and individual researchers. In late April, Beijing lifted the sanctions on MEPs (only), seemingly hoping that the CAI ratification process could now resume. However, not only MPs, think tanks, and individuals remain sanctioned, but this gesture still falls short of addressing the real issue at stake: trade. What’s more, on the European side, there is little belief that the CAI—negotiated between 2012 and 2020—could be revived, as it is now anachronistic in the current context.

Likewise, Europeans persist in urging China to play a more constructive role in helping make peace in Ukraine, or at the very least to stop supporting Russia. In response, leaders in Beijing merely claim China has nothing to do with the “crisis” and look away—when they do not outright blame the Europeans for bearing responsibility for the conflict and for lacking the will to resolve it.

The current Trump-initiated tariff war has put Europe and China in a dire economic situation, and this should force both sides to sit at the negotiating table and make compromises. So far, Beijing does not seem ready.

> Read the full article on China File's website.