The expectations in advance of Thursday’s EU-China summit in Beijing on Thursday were so low that it would have been almost impossible to fall below them. A joint statement on climate change was short on detail and empty of measurable commitments but it was enough of a “deliverable” to save face on both sides.
The summit’s primary value lay in the fact that it happened at all and although it was scaled down from a planned two days to one, Ursula von der Leyen and Antonio Costa spent a few hours first with Xi Jinping and then with premier Li Qiang.
This was a rare opportunity to talk face to face about everything from their trade relationship to Russia’s war in Ukraine.
As a former Portuguese prime minister, Costas brings valuable experience of dealing with China that helped to oil the diplomatic wheels on Thursday. Speaking about Ukraine, he zoned in on areas of agreement as he urged China to help persuade Vladimir Putin to agree to a ceasefire and enter meaningful peace talks.
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The EU’s hapless foreign policy chief Kaja Kallas, who has a tin ear on China, took part in the summit but was given a low profile and did not appear at the press conference afterwards. And von der Leyen, who has been sharply critical of Beijing in recent weeks, tempered her tough approach with a willingness to seek common ground where possible.
Among the most interesting exchanges between the two sides came in a discussion of China’s industrial overcapacity; it produces too many goods for its own market and has to export them at low prices. Beijing rejects the concept of overcapacity but it is worried about involution in its domestic market – competition so fierce that it is depressing profits and wages and fuelling deflation.
If China tames competition among its manufacturers, domestic prices will rise, making the domestic market more profitable and easing pressure to export. Beijing and Brussels agreed a deal earlier this month to set minimum prices for European brandy in the Chinese market and China is hoping for a similar agreement that would spare its electric vehicles from EU tariffs in return for minimum pricing.
