By Laurie Chen and Michel Rose
BEIJING/PARIS (Reuters) -Chinese President Xi Jinping is heading to Europe next week for the first time in five years on a visit that could expose Europe’s divisions over trade with Beijing and how the continent is positioning itself as a pole between the United States and China. China.
Xi is traveling to France, Serbia and Hungary at a time when the European Union is threatening to slap China’s electric car and green energy industries with tariffs over huge subsidies that the bloc says give manufacturers in China an unfair advantage.
With the Chinese economy facing headwinds and the US closing itself off to Chinese companies, the European Union could have some leverage over Beijing. But the bloc’s 27 members are not neatly aligned, undermining their ability to shape Chinese thinking, analysts say.
The visit is overshadowed by European concerns about Chinese support for Russia’s war economy, two years after the military campaign in Ukraine.
Lin Jian, a spokesman for China’s Foreign Ministry, said Xi’s visit would “inject stability into the development of China-Europe relations and make new contributions to peace and stability in the world.”
Xi’s aim would be to neutralize the EU’s economic security agenda, including tariff threats, by exploiting internal disagreements, said Mathieu Duchatel, a senior fellow at the Institut Montaigne.
“There is a very strong divide and rule element,” Duchatel said of China’s strategy towards Europe. “That is not hidden, but clearly visible.”
European companies and governments have long complained about limited access to the Chinese market and unfair competition. A study by the Kiel Institute shows that Chinese subsidies for its companies are three to nine times higher than those of other major economies.
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The European Commission has the exclusive right to set trade policy for the entire collective EU, but within the bloc, member states are struggling to agree on how to resolve the trade imbalance.
Macron is pushing for a more aggressive EU stance on subsidies, warning that the bloc risks falling behind if it does not allow exceptions to its own competition rules in the face of “over-subsidies” by China and the US.
‘WE DO NOT PROTECT ENOUGH’
“We regulate too much, we don’t invest enough, we don’t protect enough,” Macron said in an interview with The Economist on Thursday.
German Chancellor Olaf Scholz urged Xi in April to give German companies better market access. But on the EU’s anti-subsidy probe, apparently keen not to antagonize Beijing, he said the bloc should not act out of protectionist self-interest, even if competition must be fair.
Some French government officials say privately that they are concerned that Berlin will try to undermine the electric vehicle investigation, which is targeting Chinese carmakers BYD (SZ:), Geely and SAIC. China is an important market for Germany’s export-led economy and car manufacturers such as BMW (ETR:) and Mercedez-Benz.
Scholz will dine with Macron and the two leaders’ wives in Paris on Thursday, two sources involved in the planning said.
Noah Barkin, a senior adviser at the Rhodium Group and close follower of EU-China relations, said Macron would encourage Scholz to join him and European Commission President Ursula von der Leyen in favor of quadrilateral talks with Xi in the French capital as Paris tries to present a united front. The Elysee Palace declined to comment.
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“A worrying gap has emerged between the German position towards China on the one hand and the position of the French and European Commission on the other. There is simply a greater willingness in Paris and Brussels to push back against Beijing. trade front than there is in Berlin,” Barkin said.
RUSSIA CARES
“Europe has quite a bit of power, but that power disappears if European lenders send different messages to Xi,” Barkin added.
Xi will be in Europe from May 5 to 10.
A Macron aide said the French leader would add his voice to calls from Washington, Brussels, Berlin and elsewhere for China to halt exports to Russia of “dual-use” and other technologies that support Russia’s war effort.
In Serbia and Hungary, any public comments from Xi on Russia will be closely watched. Xi will host Russian President Vladimir Putin in China later in May.
Observers said Xi’s choice of Serbia and Hungary was aimed at bringing closer together two European countries that are pro-Russia and major recipients of Chinese investments, including financial support for a delayed railway project linking their capitals.
Serbian President Aleksandar Vucic said he was honored by Xi’s visit and expected a free trade agreement between the two countries signed last October to come into force on July 1.
Chinese analysts said Xi could use his stop in Belgrade, which coincides with the 20th anniversary of the NATO bombing of the Chinese embassy there, to play up China’s anti-NATO agenda.
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China has stepped up Russian efforts to blame the US and NATO for escalating the war in Ukraine by supplying weapons to Kiev.
Hungary has also blocked EU statements in the past criticizing China on human rights.
Shen Dingli, a Shanghai-based international relations scholar, described the aid to Serbia and Hungary as part of China’s efforts to deepen divisions within the West.
