EU US Phpto: IC

Economic policies related to China could be rolled out of the US-EU summit, which kicks off on Friday (US time) at the White House, Chinese analysts said. They warned that China will definitely respond if the two produce any content that is in violation of WTO rules.

While the key focus of the summit will be on strategic security coordination between the two in the face of two crises - the Russia-Ukraine conflict and the Israeli-Palestinian conflict - a deal on steel and aluminum could be on the table, according to media reports. 

The summit, featuring US President Joe Biden, European Commission President Ursula von der Leyen and European Council President Charles Michel, is being held days after China successfully held the third Belt and Road Forum for International Cooperation.

The summit provides the "two like-minded partners an opportunity to review the transatlantic partnership and will include discussions on cooperation over clean energy, secure and resilient supply chains, digital infrastructure and artificial intelligence (AI)," according to the European Council.

However, Reuters reported on Thursday that prospects are dim for US-EU summit deals on trade. The US has suspended import tariffs on EU steel and aluminum imposed by then US president Donald Trump in 2018, but hopes both sides agree by the end of this month on measures to address overcapacity in so-called "non-market economies," which was met with objection from the EU.

Analysts said that beyond the two crises, the EU is looking at efforts to solve some of the discord in its trade and economic relations with the US, such as issues rising from the US protectionist Inflation Reduction Act.

European leaders are also keenly aware of the upcoming US election and any possible changes that come along with it, and will seek to consolidate any gains over economic issues with the US, Chinese analysts noted.

Still, if the two announce policy alignment over economic and trade issues, China is likely to be affected, even if the final statement does not name China, observers said.

"For the US, it hopes that the EU, under its pressure, will align its policies and target China in more sectors," Cui Hongjian, a professor with the Academy of Regional and Global Governance with Beijing Foreign Studies University, told the Global Times.

"Europe, for its part, will strive to find a so-called balance, making sure it is in line with the US on general terms such as ensuring supply chain security and technology security while not compromising its own flexibility on specific policies and measures, and aim for a different China approach from the US," Cui said, noting that the EU has interests with China in many technical aspects.

"If gaining alternative solutions from the US is not available, any rash move by the EU in giving up its cooperation with China will inflict great harm on Europe's interests," Cui said.

During the Trump-era, the US promised an alternative when it pressed the EU to work against Chinese telecommunication gear company Huawei, Cui said. The US failed to provide and the EU limped as a result.

The US continued its containment on China when on October 17 it announced export bans on more advanced AI chips to China.

Dutch chip equipment maker ASML Holding NV, Europe's most valuable tech firms, warned that new updates to US export curbs will undercut its sales in the Chinese market.

The US-EU summit is preceded by some European trade curb measures on China. 

In October, the European Commission formally launched an anti-subsidy investigation into the imports of battery electric vehicles from China. Brussels is also reportedly considering whether to launch an anti-subsidy investigation into China's exports of wind turbines.

Successful Belt and Road development may have stung some US and EU politicians and brought about an impulse to edge closer and join hands in containing China. Typical areas for such a coordinated measure from the US and the EU may fall to the green industry and new-energy industries, experts noted.

Wang Yiwei, director of the Institute of International Affairs at the Renmin University of China, told the Global Times that siding with the US on China will not substantially help the EU and cannot solve the EU's key problem - its declining global competitiveness.

For the EU, its key issue remains its reliance on the US for security and data in the digitalization era, Wang pointed out.

Despite launching a trade war against China and actively following a selective decoupling strategy in handling its economic and trade relationship with it, the US' trade volume with China has continued to rise. In 2022, US-China trade reached a record high of $690.6 billion.

Europe, on the other hand, ceded its position as China's largest trading partner to ASEAN since 2020.

"Europe needs to keep a clear mind and not blindly follow the US in its China policy, or risk ultimately becoming the biggest loser among the three major economies," Cui said.

Analysts said if any announcement that comes out from the summit targets China, it is bound to react to these measures that go against the WTO's non-discrimination principle.

The Reuters report said the two sides may have reached an agreement to offer tax breaks for EVs with EU-sourced critical materials such as cobalt, graphite and lithium, in the US.

"If any anti-China economic alliance is born out of the summit, China should review the impacts of such alliances on its economic safety, and make changes accordingly to protect its industries, raw materials and technology," Cui said.