China's leadership has sought to draw the European Union closer as it positions itself as a more reliable partner than the United States and a bedrock of stability in a troubled world.
But the EU has made clear there are deep divisions over trade, fears that cheap, subsidised Chinese goods could overwhelm European markets and Beijing's tacit support for Russia's war against Ukraine.
Though nominally intended to celebrate 50 years of diplomatic ties, the long list of grievances set the stage for a contentious summit.
Welcoming EU Commission head Ursula von der Leyen and European Council chief Antonio Costa at Beijing's ornate Great Hall of the People, Xi said "the more severe and complex the international situation is, the more important it is for China and the EU to strengthen communication, increase mutual trust and deepen cooperation".
In the context of that turmoil, Xi said, Chinese and European leaders must "make correct strategic choices".
"The challenges facing Europe at present do not come from China," he added.
"There are no fundamental conflicts of interest or geopolitical contradictions between China and the EU," the Chinese leader said.
In response, von der Leyen said "it is vital for China and Europe to acknowledge our respective concerns and come forward with real solutions".
Ties had reached an "inflection point", she warned.
Costa also stressed to the Chinese leader that the bloc wanted to see "concrete progress on issues related to trade and the economy, and we both want our relationship to be... mutually beneficial".
In a separate meeting on Thursday, Chinese Premier Li Qiang told the two EU leaders that "close cooperation" was a "natural choice" for the two major economies.
"As long as both China and the EU earnestly uphold free trade, the international economy and trade will stay dynamic", he said.
Brussels had acknowledged the talks between its top bosses and Chinese leaders would be tense.
"We know that we don't see eye to eye with China on many issues," a senior EU official told AFP last week.
"But we believe that it is essential to have this kind of very direct and open and constructive conversation sitting at the table at the highest level."
- 'Not naive' -
Top of the agenda for the EU is the yawning trade deficit with China that stood at around $360 billion last year and which von der Leyen has described as "unsustainable".
Beijing has dismissed those concerns, insisting that Brussels must "rebalance its mentality", not its economic ties with China.
Von der Leyen has called for "important steps" such as increased market access for European firms in China and reducing Chinese export controls, such as those on strategically crucial rare earths.
If EU concerns were not addressed, "our industry and citizens will demand that we defend our interests", she said in Thursday's talks with Qiang.
The EU has imposed hefty tariffs on electric vehicles imported from China, arguing that Beijing's subsidies unfairly undercut European competitors.
China has rebuffed that claim and announced what were widely seen as retaliatory probes into imported European pork, brandy and dairy products.
A second key source of friction is the war in Ukraine -- Brussels says China's deepening political and economic relations with Russia since the 2022 invasion represent tacit support for Moscow that have helped its economy weather sweeping Western sanctions.
Meeting Xi on Thursday, Costa urged China to "use its influence" to help end Russia's "war of aggression".
Last week, the bloc adopted a new package of sanctions on Russia -- including on two Chinese banks, leading Beijing's commerce minister to issue "solemn representations" to his EU counterpart.
"This is a core issue for Europe," the senior EU official said.
"We're not naive. We're not asking China to cut relations, but to step up the customs and financial controls."
US-EU tariff talks progress as Trump announces Japan deal
Washington (AFP) July 23, 2025 - United States and European officials signaled progress in tariff talks Wednesday, after US President Donald Trump announced a pact with Japan and China said its vice premier would attend bilateral negotiations next week.
In an attempt to slash his country's trade deficits, Trump has vowed to hit dozens of countries with punitive tariff hikes if they do not hammer out a pact with Washington by August 1.
While the Trump administration earlier promised "90 deals in 90 days" as it delayed the imposition of higher duties in April, Washington has so far unveiled just five agreements including with Japan and the Philippines.
The others are with Britain, Vietnam and Indonesia, the latter of which the White House noted would ease critical mineral export restrictions.
Negotiations remain ongoing with major US trading partners China, Canada, Mexico and the European Union.
Washington and Brussels signaled negotiations were moving along, with German Chancellor Friedrich Merz voicing optimism that "decisions" may be coming soon.
Several EU diplomats added that the bloc was examining a US proposal involving a 15 percent tariff -- and sectoral carve-outs still to be decided.
EU trade chief Maros Sefcovic was expected to speak with US Commerce Secretary Howard Lutnick on Wednesday.
US Treasury Secretary Scott Bessent, meanwhile, told Bloomberg Television: "I think that we are making good progress with the EU."
Separately, representatives from China and the United States will meet next week in Swedish capital Stockholm to further negotiations before an August 12 deadline agreed in May.
Beijing and Washington imposed tit-for-tat levies on each other's exports this year, reaching triple-digit levels, before agreeing to lower these temporarily until mid-August.
As the clock ticks down, China said Wednesday it would seek to "strengthen cooperation" with Washington, and confirmed vice premier He Lifeng would attend the talks.
- 'Massive deal' -
For now, Trump was touting Washington's agreement with Japan as "a massive deal."
He said on his Truth Social platform Tuesday that under the deal, "Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits."
Bessent told Bloomberg Television that Japan received a 15 percent tariff rate, down from the 25 percent threatened, as "they were willing to provide this innovative financing mechanism."
"They are going to provide equity credit guarantees and funding for major projects in the US," Bessent said.
Japanese exports to the United States were already subject to a 10 percent tariff, and this would have spiked to 25 percent come August 1 without a deal.
Duties of 25 percent on Japanese autos -- an industry accounting for eight percent of Japanese jobs -- were also already in place, plus 50 percent on steel and aluminum.
Japanese Prime Minister Shigeru Ishiba said the autos levy had now been cut to 15 percent, sending Japanese car stocks soaring, with Toyota and Mitsubishi up around 14 percent each. The Nikkei rose 3.5 percent.
"We are the first (country) in the world to reduce tariffs on automobiles and auto parts, with no limits on volume," he told reporters.
Japan's trade envoy Ryosei Akazawa, who secured the deal on his eighth visit to Washington, said the 50 percent tariffs on steel and aluminum would remain.
Akazawa also said increased defense spending by Japan -- something Trump has pressed for -- was not part of the agreement.
Trump added Tuesday that Japan agreed as well to "open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things."
Rice imports are a sensitive issue in Japan, and Ishiba's government -- which lost its upper house majority in elections on Sunday -- had previously ruled out any concessions.
Japan currently imports 770,000 tons of rice tariff-free under its World Trade Organization commitments, and Ishiba said it would import more US grain within this.
Ishiba said Wednesday that the deal does not "sacrifice" Japan's agricultural sector.
Tatsuo Yasunaga, the chair of the Japan Foreign Trade Council, welcomed the trade deal but said the business community needed to see details to assess its impact.
Other US trading partners are watching closely as the August 1 deadline approaches.
The Philippines' deal announced Tuesday only saw levies cut by one percentage point, to 19 percent, after Trump hosted President Ferdinand Marcos.
China on Wednesday said it supported "equal dialogue" following the announcement of the Japan-US deal.
Key sources of EU-China tensions
Beijing (AFP) July 23, 2025 -
Top leaders from the European Union will visit Beijing on Thursday for talks on touchy topics from trade to the war in Ukraine.
Here are some of the sticking points in the relationship between the economic giants:
- Ukraine war -
The EU has called China an "enabler" of the Ukraine conflict due to it refusing to criticise Moscow's invasion and selling goods with both civilian and military uses to Russia.
China rejects this claim, arguing that it is a neutral party to the war that has never sold weaponry to either side.
Their differences were on show last week when the EU included some Chinese firms and financial institutions in its latest package of sanctions designed to thwart the Russian advance.
Beijing said on Monday that the sanctions would have "a serious negative impact on China-EU economic and trade relations".
Several outlets have reported that Chinese foreign minister Wang Yi told the EU's top diplomat this month that Beijing did not wish to see Russia lose the war as it feared the United States would then turn its full focus towards China.
Those comments, reported by Hong Kong's South China Morning Post and citing unnamed EU officials, would run counter to Beijing's public stance on the hostilities.
- Trade imbalance -
Brussels bristles at its yawning trade deficit with China, which stood at around $360 billion last year, according to data from the European Commission.
Although China is the EU's third-largest trade partner, the bloc describes economic ties as "critically unbalanced".
European Commission President Ursula von der Leyen has said she will demand greater market access in talks with Chinese officials on Thursday.
Beijing says Brussels needs to change its mentality and "properly handle divergences and frictions".
- EVs, clean energy -
The EU and China are also locked in a dispute over Beijing's state support for what it deems critical industries, including electric vehicles (EVs) and renewable energy technology.
Brussels argues that Chinese companies in those sectors benefit from unfair government subsidies that allow them to undercut European competitors on prices.
In October, the EU imposed extra import taxes of up to 35 percent on Chinese EV imports. It has also begun a probe into Chinese suppliers of wind turbines.
Beijing has dismissed Brussels' claims and has announced its own investigations into alleged trade distortions by EU suppliers -- from pork to brandy sellers -- widely seen as retaliatory.
It has also lodged a complaint about the EV curbs with the World Trade Organization, which said in April that it would set up a panel to assess the EU's decision.
- Rare earths -
Von der Leyen has said she and European Council President Antonio Costa will ask China to loosen export restrictions on rare earths -- crucial commodities used to manufacture electronics and other goods.
China dominates the global industry for extracting and refining rare earths.
Since April, it has required licences to export some of the strategic materials, triggering anxiety among businesses worldwide.
The European Parliament has condemned the move as "unjustified" and "intended to be coercive", and EU officials have stressed the need to diversify the bloc's supply chain.
China says it needs to control the export of rare earths as they are "dual-use" goods with potential military applications.
Beijing has proposed a "green channel" to ease the export of rare earths to the EU.
- Climate change -
The warming planet is historically an area of convergence between Brussels and Beijing, with both sides signalling a willingness to cooperate on combating climate change.
Even here, though, all is not rosy.
A top EU climate official told the Financial Times this month that Brussels would not sign a joint climate declaration with China until Beijing adopted bolder emissions reduction goals.
An editorial in the state-backed China Daily newspaper then accused the EU of playing the "climate card" to get China to change its position on the Ukraine war.
The EU aims to become carbon neutral by 2050. China -- the world's biggest greenhouse gas emitter -- has pledged to do so by 2060.
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