The EU-China summit, initially planned for two days in Brussels but shortened to one day in Beijing, is unlikely to resolve significant trade frictions. Chinese President Xi Jinping's absence and the summit's relocation signal Beijing's limited willingness to engage with the EU. European Commission President Ursula von der Leyen and European Council President Antonio Costa will meet Xi on Thursday to discuss a €400 billion ($467 billion) EU trade deficit with China. This deficit is fueled by restricted market access for EU producers, Chinese industrial policies favoring domestic suppliers, and the "dumping" of cheap Chinese electric vehicles (EVs) onto the EU market.

The EU has imposed tariffs on Chinese EVs and demands reciprocal market access, while China seeks alternative solutions like minimum price commitments. China's control over rare earth minerals, crucial for clean technology and other industries, is another major point of contention, with the EU relying on China for 98% of its supply. Recent EU sanctions targeting Chinese companies aiding Russia's sanctions evasion further strained relations, prompting Beijing's threats of countermeasures.

Experts express concerns about the EU's ability to effectively counter China's trade practices and suggest the need for a tougher approach, including utilizing the EU's Anti-Coercion Instrument. Despite some easing of rare earth export controls, significant challenges remain, with many EU firms experiencing ongoing supply chain disruptions. The lack of significant progress underscores a deadlock in EU-China relations.

Impact Statement: The ongoing trade dispute between the EU and China, characterized by a substantial trade imbalance and escalating tensions, poses significant risks to the EU's economy and industrial sectors, particularly the automotive industry and those reliant on rare earth minerals. Failure to reach a mutually beneficial agreement could lead to further deindustrialization and economic disruption in the EU.