Outcomes of the Šefčovič-Wang Meeting
Late Qing-style Europe's Only Chance for Survival Is Compromise
OUTCOMES OF THE SEFCOVIC-WANG MEETING
On the outcome of the meeting that took place end of June between China’s Commerce Minister Wang Wentao and European Commissioner for Trade, The Observer (1 July) interviewed Ding Chun, the director of the Center for European Studies at Shanghai’s Fudan University and President of the Shanghai Society for European Studies.
Avoidance of all out conflict: Ding sees the establishment of the Trade and Investment Consultation mechanism as a choice that is aimed at “avoiding an all-out showdown that would harm both sides”.
The EU’s agreement to establish a systematic and structured consultation mechanism is in itself a proactive “de-escalation” signal, with its core intention being to ease external tensions and expectations of a “comprehensive China-EU trade war” through bilateral consultation channels, and to prevent the situation from escalating uncontrollably.
The purpose of the deadline: He believes that although the EU is serious about the mechanism and does not regard it as a formality, the setting of the October deadline is seen as an “attempt to pressure China, demanding that tangible results be achieved within the prescribed time frame in order to alleviate the concerns of the European side.” Ding also thinks that this time-window will allow the EU to unify internal divergences and better coordinate among EU member states.
Less fragmentation on trade issues: For Ding, this new mechanism signals an attempt to systematically handle bilateral economic and trade issues, instead dealing with problems on a fragmented, case-by-case logic. Therefore, this upgrade towards, what he calls, “comprehensive institutionalization” is an elevation of the bilateral economic and trade relations to a “new strategic height”.
Professor Ding was also interviewed on the same topic by the Shanghai Observer, a media outlet of the Liberation Daily, the daily newspaper of the Shanghai Municipal Committee of the CCP.
Causes for EU’s trade actions: Ding describes the root causes of the EU’s assertive actions, or “combination of punches” as he describes it, as fundamentally an external projection of serious domestic structural stagnation combined with geopolitical uncertainty, rather than a simple dispute over trade (im)balances.
The internal troubles lie in Europe’s lack of innovation, manufacturing hollow-out, heavy pressure on industrial transformation, prominent fiscal and employment pressures, and sluggish growth; coupled with the continuous rise of far-right and populist forces, the leadership of the EU and its member states is under immense pressure, making them rely more on trade remedies and industrial protection narratives to build consensus. The external anxieties stem from the prolonged Russia-Ukraine conflict, external shocks like Trump’s “reciprocal tariffs,” and rising risks in Middle East energy and shipping lanes. At the same time, China’s increasingly complete industrial and supply chains, enhanced manufacturing capabilities, and especially its rapid development in emerging fields have exacerbated Europe’s anxiety over its own declining industrial competitiveness.
Leveraging trade figures to manufacture internal cohesion: It seems that for Ding, the trade numbers themselves are not the problem. The problem is rather that the Europeans are leveraging these numbers as a political tool to manufacture domestic unity against external competition
Europe is now repeatedly emphasizing the daily trade deficit of about 1 billion euros with China because it wants to intensify the perception of China’s trade and industrial pressure on Europe, and attribute it to a narrative of Chinese ‘overcapacity’ and ‘subsidies,’ thereby rallying internal cohesion and finding justification for its protective measures
Use of trade tools will lead to political confrontation: He points out that “simply characterizing the huge bilateral deficit as “unfair competition” and primarily dealing with it through tariffs and trade defense tools will push structural issues toward political confrontation.”
No consensus on China trade and European competitiveness: He points at a lack of consensus between the EU member states regarding the question of how to tackle trade problems with China, for instance “some of the countries making the loudest noise, such as France, traditionally place more emphasis on trade remedies and industrial protection, which is related to their own relatively weaker industrial and economic capabilities”. Other countries, such as Germany, that “hold manufacturing interests in China” and which are “more confident in their industrial foundations” are reluctant to use “completely confrontational measures”. He then makes the classic Europe-is-not-competitive argument that completely blends out long-standing European concerns about a level-playing field and industrial subsidies. Ding:
… Europeans also understand that relying on protectionism cannot truly make an industry win; to alleviate pressure, they must “practice their internal skills” in terms of energy costs, industrial investment, technology transfer, and green manufacturing capabilities.
Contradictory European attitude: For Ding there is a contradiction in the EU’s current handling of trade frictions with China, as it on the one hand “elevates the trade imbalance to the level of supposedly threatening the survival of European industries and social stability, and is systematically building a framework for trade and industrial protection”, while on the other hand, the EU “knows that the cost of a ‘trade war’ is very high, and is still signaling a desire to find solutions through dialogue.”
A suboptimal solution would be fine: The author highlights that despite China’s “rational and restrained attitude”, the country will not blindly seek accommodation, since it “is also improving its own legal tools for countermeasures.” Somewhat less optimistic, he proposed a less than optimal compromise that would avert global economic crisis.
The two sides do not necessarily need to pursue their own optimal outcomes, but rather should seek mutually acceptable suboptimal solutions, so as to avoid a lose-lose scenario, or even a “three-way lose” situation that would harm world trade and global investment.
LATE QING EUROPE AND ITS ONLY CHANCE FOR SURVIVAL
On 30 June, the Thinker’s Point, a publication under the The Observer website, published an interview transcript that features Li Bo, President of the Shanghai Chunqiu Institute for Development and Strategic Studies, a “people-run non-enterprise unit” that is closely linked to the The Observer website, and Huang Jing, a professor at Shanghai International Studies University.
Europe’s only chance for survival is compromise with US, Russia, and China: They both discuss the current geopolitical changes, which they see as primarily driven by the United States’ strategic retreat. As a consequence, both believe that due to the loss of its “three major dividends”, which are US security protection, cheap Russian energy, and China’s massive market, and its structural economic and geopolitical decline, the EU’s only chance for survival is strategic compromise with all three big international powers. According to Huang Jing
I predict that Europe’s way out consists of only two words—compromise. It must certainly compromise toward the United States; it must also compromise toward Russia and sign a Russia-Ukraine ceasefire treaty—originally Europe’s stance was “never talk to Putin, go find Zelensky,” but now it has dropped its stance and is willing to talk to Putin. This is also the reason why Zelensky is currently desperate, fearing Europe will abandon him, which is why he is fighting back desperately. During Putin’s visit to China, he said he “hopes China will play a constructive role in peace talks”—if talking only to Zelensky, China cannot play a role; if Russia and Europe talk directly, China’s room for mediation becomes much larger. Finally, it must compromise even more with China; if you are willing to cooperate, China will wholeheartedly cooperate with you; if you want to fight a trade war, China is not afraid at all and can hold you in a tight grip.
Externalization of contradictions: Throughout the text, the authors describe the EU as politically fragmented and failing to take care of their own security. They are particularly critical of European leaders, who “failing at domestic governance while still maintaining an extremely tough, Russia-phobic stance on the Russia-Ukraine issue”. According to Li Bo,
Some of them even harbor this notion: since domestic demand is weak and they can’t outcompete China, they might as well shift the contradictions outward and adopt ‘defense Keynesianism’—using war to stimulate employment and drive the economy. Take the German defense contractor Rheinmetall, for example; after the Russia-Ukraine conflict broke out, its stock price soared many times over, and its market capitalization once exceeded Volkswagen’s by 50%. Is it not possible that Europe might use a state of war to save itself?
Weak European leaders: Huang Jing summarizes his opinions on Merz, Macron, and von der Leyen. He has no hope for Merz in particular.
Germany is deeply divided—the east supports the far-right Alternative for Germany (AfD), while Merz’s approval ratings remain low. I said at the time that Merz reminds me of the Yuan Shao, Yuan brothers—grandiose in ambition but short on wisdom, fierce in appearance but faint-hearted within. In a few years’ time, Merz may well go down as Germany’s worst leader since the Cold War. Macron is also mired in crises, and von der Leyen’s days are numbered. CP: Yuan Shao, a warlord during the Eastern Han period (25-220 AD), whose spectacular political and military failures were blamed on his indecisiveness and resistance to take advise.
Time is running out on the European political establishment: Although he does not believe that the rise of the European hard right is necessarily a good thing, “given its xenophobia and protectionism”, but for him the “white left” (woke left) is out of options.
Their political lives have long been tied to “anti-Russia.” They’ve spent their entire careers fighting the “Russian tiger,” and now to say the tiger is a friend—how embarrassing would that be? The moment they stop being anti-Russia, they’re finished. So their tough stance is merely self-protection, but their time is indeed running out.
India is no solution for late Qing-style Europe: Although the Europeans “even pulled India into signing a big EU-India deal which seemed quite impressive”, but in reality it did go nowhere since “India is a mess, Europe is a mess”, Europe is really out of options. Li Bo then uses numbers from French historian Luis Vassy, whose comparison of Europe to the late Qing Dynasty shows that China's global GDP share took 50 years to decline from 30% to 16%. The EU achieved this in just 17 years - “even worse than the late Qing Dynasty”! Huang Jin concludes
Right now, Europe has no resources to speak of, its market is being fiercely squeezed by China, and worst of all, it lacks strong leadership. Should Germany take the lead? Germany carries its historical baggage, and Merz is simply not up to the job. Should France take the lead? Many would not accept that. It is truly a heap of loose sand—economically fragmented, politically stagnant, with governance in complete disarray, Christianity, Protestantism, and Islam all tangled together, while at the same time standing in total opposition to the three great powers—China, the United States, and Russia. How could things possibly go well under these circumstances?
Cross Purposes translates and contextualizes Chinese experts’ views on EU-China relations. Opinions other than those referred to are my own and do not reflect those of any other individual or institution. Content is edited with the help of AI. Mistakes are my own.