'Tale of two Europes' told by Von der Leyen not right approach for candid consultations: China Daily Editorial

European Commission President Ursula von der Leyen started her State of the Union address on Wednesday with Charles Dickens' famous opening of A Tale of Two Cities: "It was the best of times, it was the worst of times". Her remarks on China offered a similarly bifurcated picture: a European Union wanting to cooperate with its major trading partner and an EU inclined to misread that relationship as the source of its challenges.

Von der Leyen called for dialogue to rebalance trade, arguing that domestic demand in China made access to the EU market mutually valuable. That seems a practical starting point. Then came the warning: "We will use all the tools at our disposal." "Words are good," she added, "but deeds are better." The message being that negotiation is welcome, provided it produces the results Brussels has already defined.

Negotiation becomes harder when one side presents its preferred outcome as the only acceptable evidence of goodwill. The headline figure — an EU goods-trade deficit with China of roughly €1 billion ($1.15 billion) a day — is certainly large. But a deficit is a description of trade flows, not a diagnosis of unfairness.

EU companies manufacture in China and export from there to the rest of the world. Their output is recorded as Chinese exports, even when EU enterprises retain substantial profits. The EU's export restrictions on advanced technology limit the goods China can buy. A significant share of the EU's trade deficit with China is a consequence of Brussels' own policy choice.

Chinese companies seeking to build factories in Europe could, in principle, produce locally, employ European workers and export from the EU to third markets. That would help address some of the statistical imbalance while strengthening local supply chains. Yet Chinese investment proposals have repeatedly encountered unfair political scrutiny and customized regulatory obstacles. If the EU wants more production on its soil, it should stop such political stunts that hurt EU interests as well.

The EU telecom lobby Connect Europe issued an open letter this week, saying that the revised Cybersecurity Act risks draining the sector of the very capital needed for 5G and 6G. The blanket equipment removal requirements foreseen by the CSA would impose up to €40 billion in replacement costs on the sector. And it is estimated that the China-targeted act will possibly cause losses of more than €360 billion in the EU over the next five years.

Nor is the goods trade the whole trade relationship. The EU sells China more than manufactured objects. It sells transport, professional expertise, financial and business services. Chinese statistics put China's services deficit with the EU at $48.3 billion last year. A serious assessment of "trade balance" should include these flows.

The same caution applies to critical minerals. Von der Leyen warned that the EU depends on China for more than 80 percent of many critical raw materials and 90 percent of some rare earths. But she offered no short-term substitute for China.

The EU should not overlook the fact that China's management of critical-mineral exports is consistent with international practice and is not directed at the bloc. As the world's manufacturing hub, China is among the economies with the greatest stake in stable, predictable supply chains. It would be odd to mistake a measure intended to regulate trade for a strategy designed to sabotage it.

"A tale of two Europes" is emerging. It is hardly wise for the EU to keep piling restrictions on China — or to threaten to do whatever it takes to extract concessions from Beijing — ahead of October's economic and trade talks. Any restrictive measure designed to strengthen the EU's negotiating position may end up shrinking the space for reciprocal compromise. Openness, dialogue and practical cooperation are more productive than double-dealing.

China has never needed to invent "Europe Shock 1.0" or "2.0" to generate headlines. It has consistently welcomed leading European companies to invest and compete in its market. EU policymakers would do better not to act as peddlers of the so-called "China Shock 2.0", but to focus on the mutually beneficial nature of the China-EU economic ties. They might then discover what has been called "China Opportunity 2.0".

A trade deficit is not a verdict on the EU's future. How the EU responds to it may be.