July 15, 2018 / 11:13 PM / 3 months ago

EU pushes China on trade, saying it could open up if it wanted

BEIJING (Reuters) - China could open its economy if it wished, European Commission President Jean-Claude Juncker said on Monday, with the European Union calling on countries to avoid a trade war even as pressure mounts on Beijing over its industrial policies.

Playing host to Juncker and European Council President Donald Tusk, Chinese Premier Li Keqiang stressed the need to uphold free trade and multilateralism as the United States and China become increasingly mired in a trade dispute, with no sign of negotiations on the horizon.

U.S. President Donald Trump has warned he may ultimately impose tariffs on more than $500 billion worth of Chinese goods - nearly the total amount of U.S. imports from China last year – to combat what the U.S says are Beijing’s trade abuses.

China has sworn to retaliate at each step.

Long accused of protectionist tactics that make it a difficult place for foreign firms, China is trying to reverse that narrative amid the escalating trade war by approving huge investments, such as a $10-billion petrochemicals project by Germany’s BASF (BASFn.DE).

At a joint news briefing with Li and Tusk in Beijing’s Great Hall of the People, Juncker said that move showed “if China wishes to open up it can do so. It knows how to open up”.

Later, at a business forum, he said, “We need just and fair multilateral rules. The EU is open but it is not naive.”

At the business event, Li invited executives from European companies operating in China to share their problems.

Airbus (AIR.PA) complained about delays in government approvals that had “caused a great loss” for the company, and BMW (BMWG.DE) sought its greater inclusion in the creation of industry standards.

“Let me say we will ensure the implementation of the signed contracts and we will cut the time for approval procedures,” Li told Airbus China president Eric Chen, a pool report said.

Li also asked companies to tell him of complaints they had about the “theft of intellectual property” so that he could take “great measures”. The pool report did not make clear if any companies came forward.

Tusk urged China, the United States and other countries to avoid trade wars and reform the World Trade Organization, equipping it to combat forced technology transfers and government subsidies, complaints underpinning Trump’s tariffs.

“It is the common duty of Europe and China, but also America and Russia, not to destroy this order but to improve it, not to start trade wars, which turned into hot conflicts so often in our history, but to bravely and responsibly reform the rules based international order,” Tusk said at a meeting with Li.

“There is still time to prevent conflict and chaos.”

Later, President Xi Jinping met the European leaders and said the two sides should “join hands to defend multilateralism and a rules-based free trade system”, Chinese state television said.

Critics of Beijing’s policies say foreign firms compete with Chinese rivals backed by massive, market-distorting subsidies and government support, issues not sufficiently addressed under WTO rules.

Both China and Europe have stressed the need for trade differences to be tackled through the WTO, but the United States has said China’s unfair policies are too urgent and too big for the trade body to handle.

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“BEST FRIENDS”

The China-EU meeting produced a communique affirming the commitment of both sides to the multilateral trading system. Leaders failed to find sufficient consensus for such a joint statement after meetings in 2016 and 2017.

The statement said Beijing and Brussels had submitted market access offers for the first time as part of investment treaty talks, adding that the exchange should open a “new phase” in the negotiations that both sides viewed as “a top priority”.

“The EU took note of China’s recent commitments to improving market access and the investment environment, strengthening intellectual property rights and expanding imports, and looks forward to their full implementation as well as further measures,” the statement said.

The two sides also agreed to establish a working group on WTO reforms.

European envoys say they have sensed a greater urgency from China since last year to find like-minded countries willing to stand up against Trump’s “America First” policies.

China’s ambassador to the EU on Sunday wrote in Chinese state media that the annual China-EU leaders’ meeting would focus on how the two sides could become a “standard of stability” amid the “din of unilateralism and protectionism”.

The EU, while sharing Trump’s concern over Chinese trade abuses if not his prescription of tariffs, has largely rebuffed efforts by China to pressure it into a strong stance against Trump.

There is deep scepticism in the EU about China’s commitment to opening its market further, besides concern that it seeks to divide the world’s largest trading bloc with its economic influence in Eastern Europe.

Nonetheless, European officials suggest that Trump, who has also targeted Europe with tariffs, has created a window of opportunity to show that EU-China relations can be a bulwark for global trade.

On the eve of his meeting with Russia’s Vladimir Putin, Trump on Sunday rattled allies once more by labeling the European Union a “foe” on trade. Tusk on Twitter called it “fake news”, saying America and the EU are “best friends”.

Reporting by Christian Shepherd and Michael Martina in Beijing; Editing by Nick Macfie

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