TMTPOST -- The relationship between EU and China is the one characterized by partnership, competition, and systemic rivalry, Jorge Toledo Albiñana, the European Union's Ambassador to China has told the audience of the 2024 T-EDGE Conference.
Albinana pointed out the growing fragmentation in global markets, specifically between China and the West, last Friday, the first day of the two-day conference. This divergence, which has been escalating in sectors like semiconductors, the internet, and artificial intelligence, is having profound implications on the future of globalization, he added.
However, regardless of how global dynamics unfold, he said the importance of China-Europe relations are not dependent on U.S. decisions. He stressed that Europe does not approve of certain measures taken by the United States, including U.S. tariffs on EU products.
In his address, the ambassador mentioned China’s recent move to curb the export of critical materials for semiconductor production to the United States, an action seen as a counter measure to rising tensions in international trade. This, he noted, is part of a broader trend of fragmentation across industries, with China and the West diverging in terms of ecosystems. The ambassador warned that this divergence would continue to disrupt trade flows and economic cooperation on a global scale.
Regarding the rapidly evolving AI landscape, the ambassador pointed to the emergence of two competing AI ecosystems: one in China and one outside of it. He noted that large language models and AI technologies used in the West may not be adopted in China due to regulatory restrictions and geopolitical tensions.
Despite these challenges, the ambassador emphasized the EU’s ongoing commitment to its relationship with China. He reaffirmed that the EU-China trade ties remain the largest and most significant in the world, with the EU being China's largest single market for goods. However, this relationship is not without its complexities, as evidenced by the EU’s substantial trade deficit with China.
"We are the largest single market for Chinese goods. We have also the largest trade deficit in the history of mankind, the trade deficit of the EU with China. So we have independently of what happens in the US, we have a very important relationship and we are two geopolitical powers," the ambassador noted. "The relationship we share with China is one of partnership, competition, and systemic rivalry."
He elaborated on the areas for the bilateral cooperation, including climate change and biodiversity, particularly through international forums like COP29 and COP16. The EU also collaborates with China within the World Trade Organization (WTO), using it as a platform to resolve trade disputes, such as the ongoing electric vehicle tariff dispute, which has drawn considerable attention.
However, the ambassador did not shy away from discussing the competitive aspects of the EU-China dynamic. Citing statistics from the European Union Chamber of Commerce, he pointed out that market access barriers in China have increased, with the number rising from 947 in 2022 to 1,058 in 2023.
"The Chinese economy has grown by 40% from 2,017 to 2,024—40% GDP growth. You know how much are exports have grown to China in the same period? Well, they have decreased by 30%," he said. "The situation is not improving, and if we don't make progress, things will only get worse."
Despite the uncertainties created by the incoming U.S. administration and potential changes in global dynamics, the ambassador emphasized that the EU's approach to China remains independent of U.S. politics.
The relationship between the EU and China is very important and not dependent on what happens in the White House; it depends on the actions of both the EU and China, he emphasized.
Looking forward, the ambassador cautioned that while the evolving geopolitical landscape presents both challenges and opportunities, these can only be fully realized through mutual cooperation and addressing the ongoing trade imbalances and market access issues.
The following is the transcript of Albinana’s speech, edited by AsianFin for clarity and brevity:
Nihao. Thank you, Jany, for inviting me today. It is very early time in the morning. Well, it looks to me like a deja vu because a couple of days ago, I was speaking after my very good friend Siddharth, the UN Resident Coordinator, and about the same things. So if I, please don't be surprised if somebody says the same things that I said a couple of days ago because nothing much has changed. But if we're talking about your theme today, all in on globalization, things are changing almost every day and things changed yesterday.When we see more deglobalization, we see more fragmentation. Yesterday we saw countermeasures to some other deglobalization and fragmentation measures by the US. On the semiconductor sector, China decided to ban export of extremely important materials for semiconductor weapon and other productions in the U.S., so we are seeing deglobalization, we're seeing fragmentation. We already have not a parallel but two diverging ecosystems in internet, in the web. We have China and the West. We have had this for a long time already. It's not getting better, it's getting worse.Now we are facing a world where not only the web, but the semiconductor industry, the software industry, the equipment, IT equipment industry is diverging. Let's see who belongs where, but it's definitely China and the West, or China and some countries of the global south and the West will see, but not very good news for globalization, bad news for globalization and fragmentation is coming.But I'm not here to talk about that. I'm not an expert on AI. By the way, also, we will have very soon, if we don't have it already, two diverging different ecosystems for AI. Because large language models that will be used outside China probably will not be used in China for reasons that we all know. But everybody is talking this. The talk of all towns in China and everywhere in the world, in the U.S., in Europe. What is going to happen with the new U.S. administration?Well, I'm not going to talk about the new U.S. administration. I'm not the U.S. ambassador here. I'm the EU ambassador to China. So what everybody is asking me, what is going to happen between the EU and China? Some say, well, you know, Mr. Trump is likely to hit the EU with tariffs also, is likely to go to Russia, speak to Putin and reach an agreement on Ukraine that we don't like. I don't know. We don't know. Nobody knows at this stage. So it's better not to speculate on that. But what I said a couple of days ago, and that hasn't changed, is that the European Union and China have a very important, extremely important relationship. The largest trade relationship in the world. Because we are, the European Union is the largest single market for Chinese goods. ASEAN is larger, but ASEAN is not a single market. We are the largest single market for Chinese goods. We have also the largest trade deficit in the history of mankind, the trade deficit of the EU with China. So we have independently of what happens in the US, we have a very important relationship and we are two geopolitical powers. Some say the EU is not yet a geopolitical power, but I believe that we are more and more a geopolitical power. And one consequence of the new US administration could be, should be probably that the EU gains some self confidence and needs to reinforce its geopolitical power. In any case, what consequences can there be for EU-China relationship? As I said, some say that as the US may take some measures that we don't like, we won't like in the EU, that creates an opportunity for China and the EU to get close. Well, I say we have a relationship which is very important and to the greatest extent is not dependent on they, what happens in the White House. As you know, we describe our relationship with China and our Chinese friends don't like it, but I think it's a fair description as one of partnership, one of competition and one of systemic rivalry. And I explain very briefly, partnership and it has been recently proved in COP29 and COP16, we have a very good partnership for the fight against climate change, protection of the environment and biodiversity. It could be improved. But it's an active and positive partnership and we intend to continue. We may have a possibility of another partnership, which is in WTO because the US doesn't seem to go back or to start supporting again a new appellate body, and we have a partnership with China, whereby we can use WTO in our trade disputes.
In fact, in our most recent trade dispute, which is causing too many headlines in my view, the EV tariff dispute, it's now in WTO and there it has to be sold. We are competitors. And when we mean, when we say competition, we don't mean it in the same way as the Americans. Competition is more like a fight. Competition for us is what you do in trade, what you do in investment. And I must say it, our competition is not fair. We have been talking to our Chinese friends for years, but the competition is not fair. I give you an example. The Chinese economy has grown by 40% from 2,017 to 2,024—40% GDP growth. You know how much are exports have grown to China in the same period? Well, they have decreased by 30%. Something is wrong. We know that China does more and more better quality and good prices. That's okay. But that doesn't explain what's happening. It doesn't explain it because as the EUCC, the European Union Chamber of Commerce has said, in 2022, there were 947 market access barriers that were described at the EUCC. The number has gone up to 1,058 last year. So things are not improving, and even getting worse. And we are taking measures in the European Union. And if things won’t change, we will continue taking trade defensive measures because the situation is not sustainable. So the competition between EU and China doesn't depend on what the US does. It does depend on what China does. If we don't make progress, things will not improve. Things will get worse no matter what happens in the White House. And then I go to our last facet of our relationship, which is the systemic rivalry. Chinese government hates this description, but it's true. It's fair. Irrespective of who is in the White House will have an immense effect on our relation. So it's clear that, you know, with big changes like the one in the White House come challenges and opportunities. But the opportunities can only be grasped if we make progress in these issues that I just mentioned. Thank you very much. Thank you.
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