China retaliates against Ursula von der Leyen's "unfounded, prejudiced" remarks at the G7 summit

China retaliates against Ursula von der Leyen's "unfounded, prejudiced" remarks at the G7 summit

The EU-China reset, long speculated and seemingly gaining momentum, is now facing turbulence after both sides hurled sharp accusations at each other recently.

China reacted strongly to remarks by Ursula von der Leyen at the G7 summit, where she accused China of perpetrating a "pattern of dominance, dependency, and blackmail." During a press briefing, Chinese Foreign Affairs Ministry spokesperson Guo Jiakun expressed "strong dissatisfaction and firm opposition" to these allegations, characterizing them as "baseless and biased."

The exchange of accusations marks a sudden setback in the perceived progress in EU-China relations, which had been triggered by US President Donald Trump's sweeping tariffs that have disrupted global business. With its 1.4 billion citizens, China appears to many as an appealing alternative market to help mitigate the impact of Trump's disruptive policies.

In response, China has made several overtures to win over the EU, lifting controversial sanctions on members of the European Parliament and re-entering discussions to resolve the dispute over China-made electric vehicles. Chinese President Xi Jinping had earlier hailed the 50th anniversary of EU-China relations as an opportunity to "open up a brighter future."

Addressing the EU-China relationship during the G7 summit in Canada, von der Leyen, however, adopted a surprisingly hawkish tone to denounce China's state-led economy and the "distortions" caused by its industrial overcapacity and aggressive use of subsidies. She also criticized the source of "the biggest collective problem" in the global trading system as being China's entry into the World Trade Organization in 2001.

The issue of China's admission to the WTO has been contentious, as it led to unprecedented access for mass production of low-cost exports, which Europe and the US have struggled to compete with. Von der Leyen warned of a "new China shock" currently underway and urged the G7 to stand united to put pressure on China.

Beijing's response was to accuse the EU of dishing out "massive subsidies" and pursuing a "European preference." The EU has similarly accused China of implementing a "buy-China clause." Guo, the Chinese Foreign Ministry spokesperson, dismissed the objections, insisting China was acting responsibly and would speed up the approval of export licenses for sought-after materials.

At the core of von der Leyen's intervention was China's decision to restrict the sales of seven rare earth materials, which the Commission had described as "alarming." China maintains a near-monopoly over rare earths, essential for building advanced technologies, controlling approximately 60% of the world's supply and 90% of the processing and refining capacity.

The EU-China summit is slated for late July. Despite the heated rhetoric, the Chinese Foreign Ministry extended its hand to deepen ties with the EU, indicating that China remains hopeful for a diplomatic reset.

Additional Insights

1. Trade Tensions: Recent days have seen an escalation in trade tensions, with both sides engaging in reciprocal retaliatory measures, such as an extended anti-dumping investigation into EU pork imports by China, impacting €1.75 billion in exports from Spain, the Netherlands, and Denmark[5].
2. Human Rights Concerns: Despite efforts to reset the EU-China relationship, ongoing concerns about China's human rights record have contributed to mistrust[3].
3. Cooperation on Global Issues: Both sides acknowledge the importance of maintaining a fair trading system and have agreed to cooperate in tackling global overcapacity[1]. This shared goal is seen as a foundation for broader cooperation.

Sources[1] [2] [3] [4] [5]

1. The EU-China reset, a long-speculated development, now faces turbulence due to recent sharp accusations exchanged between both sides.
2. China responded strongly to remarks by Ursula von der Leyen at the G7 summit, characterizing her accusations as baseless and biased.
3. The European Parliament has been subjected to controversial sanctions by China, but these have since been lifted.
4. China and the EU are seeking to resolve disputes, including the one over China-made electric vehicles.
5. Von der Leyen criticized China's state-led economy and the distortions caused by its industrial overcapacity and aggressive use of subsidies.
6. The entry of China into the World Trade Organization in 2001 has been a contentious issue, leading to unprecedented access for mass production of low-cost exports.
7. Von der Leyen warned of a "new China shock" currently underway and urged the G7 to stand united to put pressure on China.
8. Beijing accused the EU of dishing out massive subsidies and pursuing a "European preference."
9. China maintains a near-monopoly over rare earths, essential for building advanced technologies.
10. The EU-China summit is scheduled for late July.
11. Despite heated rhetoric, China remains hopeful for a diplomatic reset with the EU.
12. Recent days have seen an escalation in trade tensions, with both sides engaging in reciprocal retaliatory measures.
13. Ongoing concerns about China's human rights record have contributed to mistrust between the EU and China.
14. Both sides acknowledge the importance of maintaining a fair trading system and have agreed to cooperate in tackling global overcapacity.
15. The Commission has described China's restriction on the sales of seven rare earth materials as alarming.
16. Despite efforts to reset the EU-China relationship, these trade tensions and human rights concerns continue to pose challenges.
17. The global trading system has been affected by China's entry into the World Trade Organization, leading to struggles for Europe and the US to compete.
18. The EU has similarly accused China of implementing a "buy-China clause."
19. China's control over approximately 60% of the world's supply and 90% of the processing and refining capacity of rare earths is a cause for concern.
20. China's decision to restrict the sales of these rare earth materials has raised concerns about its ability to controlling advanced technologies.
21. Von der Leyen's hawkish tone towards China during the G7 summit has caused alarm and confusion.
22. Cooperation between the EU and China on global issues, such as tackling overcapacity, could form a foundation for broader cooperation.

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