Chinese president Xi Jinping has called for the EU and China to “actively explore” a bilateral trade agreement, arguing that such a move would make the pair “the twin engines for global economic growth”.
Mr Xi’s call, made during a speech on Tuesday, will be seen as a bid to build a rival to a mooted EU-US pact and other significant trade negotiations now under way around the world, the vast majority of which have left China on the sidelines.
Just as US President Barack Obama did during a much briefer trip to Europe last week, Mr Xi has built much of his 11-day charm offensive around promoting trade ties with the EU.
However, amid Mr Xi’s trip to a Belgian zoo to visit a pair of donated pandas, his drive has come from a much weaker position than the US president’s.
“Together we make up one-third of the global economy. We must actively explore the possibility of a free trade area and the goal of bringing [annual] bilateral trade to $1tn by 2020,” Mr Xi told an audience in Bruges. “We must work to make China and the EU the twin engines for global economic growth.”
The Chinese president’s call for a broad EU-China trade agreement echoed calls Wen Jiabao, China’s former premier, made during his final official trip to Brussels in 2012. And like Mr Wen, Mr Xi this week drew a polite rebuff from the Europeans.
Although David Cameron, the British prime minister, has supported a move towards a broader China-EU pact, most EU member states remain wary of striking a deal. While business groups have long been keen on the idea, governments typically remain mindful about the EU’s trade deficit with China and popular concerns over Beijing’s rights record.
In a carefully-worded joint statement issued after high-level meetings in Brussels on Monday, both sides committed only to the “willingness to envisage” a broader trade deal “once the conditions are right”.
That European reluctance in dealing with China is in striking contrast to the conversations taking place across the Atlantic. It also highlights again China’s exclusion from most of the major trade initiatives now under way around the world.
The US and EU last year launched talks to reach a Transatlantic Trade and Investment Partnership. Those discussions joined a series of US-led endeavours, including a 12-country Pacific Rim pact that includes Japan, as well as a move by two-dozen economies to update the global rules on trade in services.
All are part of a US – and to a lesser extent EU – push to get ahead of China in writing the rules of global trade for the 21st century and move beyond a multilateral stalemate in the World Trade Organisation. In the case of the EU-US deal, officials in Washington and Brussels have also openly framed it as part of a strategic economic response to the rise of China, and more recently Russia.
According to Hosuk Lee-Makiyama, a trade expert and China watcher at the Brussels-based European Centre for International Political Economy, Chinese officials increasingly fret about the long-term consequences for their economy of being left out. Beijing, he said, was worried about the possibility that new pacts could divert trade from China and the prospect of “getting locked into someone else’s [global] rules”.
Mr Xi left Europe with some trade victories, however.
A number of outstanding disputes with the EU were resolved in the build-up to his visit, including an anti-dumping investigation into Chinese mobile equipment companies. On Monday Mr Xi also won the endorsement of the EU for China’s bid to join the US-led negotiations towards a global Trade in Services Agreement.
The latter is a significant victory for Beijing, which has since last year been trying to join the Geneva services negotiations and met resistance from the US and other participants.
US officials insist they are open to some day having it join the services discussions.
“We are set on reaching an agreement that will open markets for business, eliminate discriminatory policies, and create legal protections for entrepreneurs around the world. We will welcome their participation in these talks if China can demonstrate that it shares this level of ambition,” said Trevor Kincaid, a spokesman for US Trade Representative Mike Froman.
But a senior US administration official said the US still had doubts about China’s intentions.
Sceptics in Washington fear that by joining the services negotiations Beijing wants either to scuttle them altogether or to curtail the ambitious liberalisation envisioned by the two-dozen participants now taking part, who already account for some 70 per cent of the global trade in services.
To make that case they point to the negotiations over a much-simpler updating of the rules governing the trade in IT products which China helped bring to a halt late last year by presenting a long list of products it wanted excluded.
“Thus far, the results of our review are far from reassuring,” the senior US official said. “Actions speak louder than words.”
Get alerts on Emerging markets when a new story is published