China envoy warns EU of ‘peril’ from following US on trade curbs

Europe should reject Washington’s demands to curb trade with Beijing, a senior Chinese diplomat said, warning any country that shredded business ties with his nation would do so “at their own peril”.

Fu Cong, China’s ambassador to the EU, claimed the US would “stop at nothing” to disrupt normal relations between the bloc and China, adding that a “protectionist tendency” was on the rise in Europe.

“Who in their right mind would abandon such a thriving market as big as China?” Fu told the Financial Times, warning European politicians not to undermine positive business sentiment towards China. “It will only be at their own peril.”

The ambassador singled out the Netherlands for having “yielded to the pressure of the US” by announcing restrictions on exports to China of its high-end semiconductor-making technology this year. He hinted Beijing could retaliate depending on the extent of the controls.

“We do hope that the European governments and the European politicians can see where their interests lie and then resist the unwarranted pressure from the US,” Fu said, urging the EU to persist in its drive for “strategic autonomy”.

Referring to the Netherlands, he added: “They need to be mindful of the fact that China cannot just sit there and see its own interests being trampled like this without taking any actions in response.” 

Fu was speaking on the same day as Ursula von der Leyen, the European Commission president, vowed to tighten scrutiny of trade and investment flows in sensitive technological areas such as quantum computing and artificial intelligence.

Brussels must develop “new defensive tools” as it updates its security policies in the face of an increasingly assertive China, von der Leyen said in a speech. “A strong European-China policy relies on strong co-ordination . . . and a willingness to avoid the divide and conquer tactics that we know we may face.”

The US has stepped up efforts to convince allies to harden their approach towards China, as relations between the two economic superpowers sour over Taiwan and Beijing’s support for Russia. Von der Leyen is seeking to steer a distinct line from the US, stressing her goal is not to “decouple” from China but rather “de-risk”. 

China’s business ties with some European countries remain strong. German companies invested a record €11.5bn in China last year, according to a paper published on Wednesday by the German think-tank Institut der deutschen Wirtschaft.

Recent EU proposals to reduce dependence on Chinese imports include improving supplies of critical raw materials and boosting domestic production of green technology. New trade defence tools also empower the EU to retaliate against economic intimidation and curb access for Chinese state-subsidised companies or producers using forced labour.

“Many of the measures are actually in violation of World Trade Organization rules,” Fu said, suggesting Beijing would complain formally to the Geneva-based body.

The US and its allies accuse China of damaging the global trading system via the use of massive industrial subsidies, restrictions on inward investment and breaches of intellectual property protections.

The ratification of an EU-China investment deal stalled in 2021 after Beijing imposed sanctions on members of the European parliament. Fu said he hoped the EU leadership would “muster enough courage and also political force” to give the deal final approval.

Asked if China would lift the sanctions to unblock the process, he said Beijing was open to “all solutions, so long as they are based on reciprocity and equality”.

The ambassador said it was a mistake for the EU to allow the Ukraine war to dictate its relations with China.

“I don’t think it is a rational approach to link the relationship with China solely to the Ukrainian crisis,” he said, adding that Russia’s “legitimate security interests” must be respected: “It is not as black and white as some people think it is.” 

But he maintained there was “room for negotiation and even for China and the EU to join our hands in promoting peace”.

He added that “no possibility is excluded” regarding a potential telephone call or meeting between Chinese president Xi Jinping and Ukrainian president Volodymyr Zelenskyy, noting that senior Chinese officials were in contact with their Ukrainian counterparts.

Additional reporting by Patricia Nilsson in Frankfurt

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