Disagreements over giving “market economy” status to China have prevented a common statement on climate change after an EU-China summit. The issues of dumping and access to investment clouded the talks.

Brüssel China-EU-Gipfel | Tusk & Li Keqiang (Reuters/V. Mayo)

The 19th EU-China Summit ended without a joint statement due to an ongoing row about China’s status before the World Trade Organization (WTO).

Officials described the meeting as warm, but China and the EU could not agree on a broader final communique meant to focus on a range of other issues discussed at the talks, including a commitment to free trade and measures needed to reduce a global steel glut.

The two sides failed to reach agreement on the problem of steel overcapacity and the EU’s stance towards Chinese dumping.

Speaking after the meeting, the president of the European Commission, Jean-Claude Juncker, said they had discussed with Chinese Premier Li Keqiang (photo) both the steel issue and China’s demand that after its 15-year-membership of the World Trade Organization (WTO), it should no longer be treated as a special case.

‘Not there yet’

“We were able to narrow the positions but we are not yet there,” Juncker said.

China believes it should receive Market Economy Status (MES), which would allow it to enjoy the same market status as the United States and the European Union when it comes to anti-dumping investigations before the WTO.

As the world’s leading producer of steel, aluminum, cement and other industrial materials, many of China’s state-linked companies are able to export and offer products more cheaply to many of its trading partners. This has spurred allegations of dumping for several decades.

China | Illegale Stahlfabriken unterlaufen Chinas Emissionsgesetze (Getty Images/K. Frayer)An unauthorized steel factory in Inner Mongolia, China

Chinese Premier Li Keqiang said the EU should accept that China’s situation in the WTO had changed.

“This will send a signal to society and the market that we both abide by international rules and abide by multilateralism,” Li said.

Trade concerns

During the summit, EU officials pressed the Chinese government to tackle overcapacity in domestic industries such as steel and to ease restrictions on foreign investors.

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Li repeated a call for talks on an EU-China investment accord to be accompanied by a move toward a broader free-trade agreement.

EU Trade Commissioner Cecilia Malmstrom called for Chinese authorities to make good on a pledge by President Xi Jinping to a global audience in January to open further the market in China. She referred to a study concluding that many European companies found it harder to do business in China last year.

“As a consequence, EU investment in China is at its lowest level in years, while Chinese investment in the EU reaches record levels,” Malmstrom said. China needs to ensure “reciprocity” for European businesses in the Chinese market, the trade commissioner said.

“We are all waiting now for the remarks by the president to translate into action and make trade and investment more open, more free,” Malmstrom told the Brussels conference. “Our ongoing negotiations on an investment agreement are a constructive means to rebalance the situation and expand trade and investment.”

European Investment Bank Group and Silk Road

A memorandum of understanding was signed between the European Investment Fund (EIF) and the Silk Road Fund, outlining new strategic cooperation to support equity investment across Europe.

The EIF, set up in 1994, is an EU agency for the provision of finance to small and medium enterprises (SME), headquartered in Luxembourg. It does not lend money to SMEs directly but provides finance through private banks and funds.

The Silk Road Fund is a state-owned Chinese investment fund for increased investment in countries along the Belt and Road (B&R) in Eurasia. The B&R is a development strategy focusing on connectivity and cooperation between Eurasian countries.

China Seidenstraßen-Gipfel Silk Road and Golden Bridge (picture-alliance/Photoshot/Z. Huansong)The ‘Silk Road and Golden Bridge’ in Beijing, China

The fund is expected to provide 500 million euros ($563 million) to support equity investment and should be operational within the coming months.

Last November, China set up a 10-billion-euro investment fund to finance infrastructure, high-tech manufacturing and consumer goods projects in Central and Eastern Europe. Central and Eastern Europe are part of China’s modern Silk Road, where Beijing is hoping to carve out new export markets for its companies as the domestic economy slows.

Climate worries 

The summit had coincided with comments from the United States on President Donald Trump’s decision to withdraw from the Paris Climate Agreement, which has nations set targets to mitigate the effects of climate change.

Read more: World reacts to US withdrawal from Paris agreement

Standing alongside the Chinese premier, EU Council President Donald Tusk said Friday, “We are convinced that yesterday’s decision by the United States to leave the Paris agreement is a big mistake.”

“Today we are stepping up our cooperation on climate change with China,” Tusk said after hosting the climate and trade talks with Chinese Premier Li.

jm/sms (Reuters, AFP)

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