The EU Toughens Up on China

China canceled two high-level meetings with the European Union scheduled for later this month in Beijing, the Financial Times reported, citing unnamed European officials. The move, which comes ahead of an EU leaders’ summit next week where proposals for toughening the bloc’s approach to China are on the agenda, is the latest sign of tensions between the two global trade behemoths.

The primary source of contention  is an intractable trade imbalance. China currently exports roughly $1.15 billion more per day than it imports from the EU, with significant impacts on European manufacturers, particularly in the automobile and green tech sectors. Where those two sectors overlap, in the form of electric vehicles, cheap Chinese models have flooded the European market, squeezing out the significantly more expensive alternatives from European companies.

The current standoff is the product of three colliding trends, two external to Europe and one internal. The first is the disruption introduced to global affairs by U.S. President Donald Trump since he returned to the White House last year. From Trump’s trade war to his continued hostility to the trans-Atlantic alliance, Europe has borne the brunt of that disruption. As a result, the EU has actively sought to diversify its trade relations, while seeking to play a greater role in its own security affairs as well as in global geopolitics more broadly.