China woos rattled Europe after Trump-Zelenskyy row, hails ties free of third-party influence

BEIJING: China has made a friendly overture to Europe as the continent smarts from US President Donald Trump’s latest actions over Ukraine, while criticising America for unilaterally imposing tariffs amid a fresh salvo.

Speaking at a news conference on Tuesday (Mar 4), National People’s Congress (NPC) spokesperson Lou Qinjian described China and Europe as “two major forces of peace and construction”, adding that developing bilateral relations was in line with their long-term interests.

“I wish to stress that China-Europe relations are not targeted at any third party, nor is it subjugated or controlled by any third party,” said Lou, who made the remarks on the eve of the legislature’s opening session.

He was addressing a question by a reporter from Spanish news wire agency Agencia EFE, who asked about China’s views of a Trump presidency on its diplomatic and trade relations with Europe.

Analysts CNA spoke to see the move as a calculated, strategic pivot by China as Europe deals with the fallout from the recent high-profile clash between Trump and Ukrainian President Volodymyr Zelenskyy at the White House.

The heated exchange on Feb 28 scuppered a minerals deal between Kyiv and Washington and has now led to a pause on all US military aid to Ukraine.

European leaders have closed ranks in support of Kyiv. At a London summit on Mar 2, they pledged to spend more on security and assemble a coalition to defend any truce in Ukraine.

“China’s statement reflects its diplomatic finesse, capitalising on the Zelenskyy-Trump clash and US aid pauses to bolster EU (European Union) ties,” Andy Mok, a senior research fellow at the Beijing-based think tank the Center for China and Globalization (CCG), told CNA.

In the Tuesday news conference, NPC spokesperson Lou highlighted that this year marks the 50th anniversary of diplomatic relations between China and the EU.

“(The past 50 years) demonstrate time and again that between China and Europe, there is no conflict of fundamental interests or geopolitical conflict,” Lou said.

“To develop China-Europe relations, the key lies in having confidence and composure and not be swayed by temporary events.” 

Guo Shan, partner at Hutong Research, believes that Beijing’s renewed emphasis on Europe is a “strategic and timely pivot”.

She said that Beijing “has been trying to repair its relationship” with the EU for almost a year - beginning with President Xi Jinping’s visit to France last May - but progress has been limited due to the ongoing situation in Ukraine.

“The relationship (between China and the EU) mostly cooled in 2022 because of China's refusal to distance itself from Russia,” added Guo.

Disagreements over trade have also been a factor, with the EU accusing China of overcapacity. Beijing has consistently denied the claims.

“The Zelenskyy-Trump fallout offered China another chance, and Trump’s America First Investment Policy memo, which aims to draw investment away from China into the US, also added to Beijing’s sense of urgency,” she told CNA.

China and the EU are each other's second-largest trading partners. For instance, the EU is China's largest source of imported consumer goods, and the top export market for China's electromechanical products.

Trade between China and Europe grew by 1.6 per cent last year to hit 5.59 trillion yuan (US$762 billion).

Lin Han-Shen, senior adviser and China country director of The Asia Group, a US strategic advisory firm, believes Lou’s comments signal that China is positioning itself as a “legitimate - even if weaker - alternative to the US as a critical trade partner”.

“But it doesn't have a very strong hand either. China is not likely to become a major importer and its Russia relationship continues to elicit suspicion in the European community,” said Lin.

EU trade chief Maros Sefcovic is reportedly planning to visit China at the end of the month, the South China Morning Post reported on Feb 27, citing people “familiar with the plan”. He will meet with Chinese Commerce Minister Wang Wentao, the report stated.

Trump has taken a markedly different approach to US allies compared to the Biden administration, and this shift offers China a strategic window to recalibrate and strengthen its ties with European nations, said Alejandro Reyes, a senior fellow at the University of Hong Kong’s (HKU) Centre on Contemporary China and the World.

“We now have a US administration that is antagonising and beating up on its own partners and allies and applying tariffs on their products,” he said. 

“From the EU perspective, it would seem that if they want to diversify away from the US, there aren't many other options in terms of trading partners (apart from) China.”

TUSSLING OVER TARIFFS

Even as Lou extended China’s cordial hand to Europe, he concurrently took aim at the US over its tariff moves.

The NPC news conference on Tuesday coincided with extra 10 per cent blanket US tariffs on Chinese goods taking effect, resulting in cumulative 20 per cent American duties over what the White House considers Chinese inaction over drug flows.

China announced retaliatory measures soon after the levies went live - announcing 10 per cent to 15 per cent tariff hikes covering US agricultural and food products such as chicken, wheat, corn and dairy.

NPC spokesperson Lou denounced Washington’s decision to impose unilateral tariffs as a violation of international trade rules, after a reporter from US news outlet NBC News asked if tariffs would be a key issue at this year's Two Sessions.

“The unilateral imposition of tariffs by the United States violates the rules of the World Trade Organization (WTO) and interferes with the security and stability of the global industrial chain and supply chain,” Lou said.

Lou called for a balanced approach, and voiced hopes that “the United States and China will meet each other halfway and find a solution to the problem through equal consultation.”

As global trade tensions and shifting geopolitical dynamics continue to test international relationships, Lou underscored Beijing’s commitment to multilateral cooperation and a rules-based global trading system. 

“China is also willing to strengthen cooperation with all countries in the world to jointly safeguard the hard-won multilateral trading system, oppose unilateralism and protectionism, and work together to promote inclusive economic globalisation,” he said.

DEALING WITH ECONOMIC PRESSURES

Against this backdrop, China’s legislature acknowledged on Tuesday that external pressures have negatively impacted the country’s economy, which is already contending with domestic challenges.

“Internationally, rising economic and political uncertainties make it harder to stabilise external demand,” noted Lou, the NPC spokesperson.

He added that “domestically, demand is insufficient, and some enterprises are experiencing operational difficulties.”

Yet, even as these challenges persist, Lou underscored the resilience of China’s economic foundations.

“We must also see that China’s economic foundation is stable, has many advantages, strong resilience, and great potential, and the long-term support conditions and basic trends have not changed,” he asserted, singling out the country’s “super-large market” and “complete industrial system” as examples.

Lou highlighted the raft of measures announced in September last year as among the steps taken to bolster the Chinese economy. He also brought up the national push to harness “new productive forces”, or “xin zhi sheng chan li” in Mandarin.

“China's economy has always grown through ups and downs and grown stronger through trials. We are confident in the prospects of China's economy,” Lou said.

China is expected to lay out its economic priorities and pledges for the year on Wednesday, when Premier Li Qiang delivers the government work report at the NPC opening. These include targets for key indicators such as GDP growth and fiscal deficit.

Analysts have told CNA they expect Chinese policymakers to unveil new measures centred on a more aggressive, household-focused fiscal approach, as authorities increasingly look to spending from their own citizens to uplift the economy.

The Asia Group’s Lin noted that policymakers have “little option” but to concentrate on the domestic economy, particularly on consumption growth, given that China's strategy to export its way to GDP growth is facing “a wall of tariffs”.

“While implementation still falls short of expectations, President Xi's public support for consumption - unheard of last year - and his recent meeting with private sector leaders all signal a positive pendulum swing back toward the economy vis-a-vis national security.”

Hutong Research’s Guo believes Chinese exports are likely to stay resilient as US importers take advance orders from China to avoid potentially higher tariffs further down the line.

Still, she thinks Beijing will take added measures on the home front to buttress its economy.

“Beijing will likely step up support to expand domestic demand and keep foreign investment stable,” she said.

Additional reporting by Lee Gim Siong