The EU has reneged on talks with China ahead of a leaders’ summit to be held next month, citing ongoing trade disputes.

According to exclusive reporting by the FT, four sources said that the parties were due to meet for the EU-China High-Level Economic and Trade Dialogue, a regular precursor to July’s EU-China leaders’ summit.

However, an ongoing series of tit-for-tat trade investigations, exacerbated by the China’s recent clamp down on critical mineral exports, have soured relations.

Communication breakdown

The publication reports that the dialogue typically lays the foundation for next month’s summit – reportedly scheduled for 24-25 July – and that a lack of discourse beforehand doesn’t bode well for any concrete announcements.

Speaking at the start of the month (5 June), the EU’s top China trade official Maria Martin-Prat said that progress was needed on trade relations, as there’s “a huge amount of work that needs to be done between now and the summit” on “issues which we have been discussing with them for a long time”.

She cited “data regulation” and “espionage laws” as particular sticking points that Brussels needs to raise with Beijing.

China has expressed a willingness to proceed with talks, issuing a Chinese foreign ministry statement stating that it is committed to “deepening dialogue and cooperation between China and the EU” amid “rising unilateralism and economic bullying”.

However, its decision to send second-in-command Li Qiang to the leaders’ summit, rather than president Xi Jinping, was perceived as a snub.

Trade tensions

Despite a potential thaw in trade tensions over electric vehicles (EVs), export curbs introduced by China in response to US tariffs have also hit the EU in recent months.

Last week, Bloomberg reported that progress has been made on alleviating EU tariffs on Chinese EVs, introduced last year following EU investigations which found Chinese manufacturers were heavily subsidised in contravention of world trade rules.

Having met with EU trade chief Maroš Šefčovič, Chinese commerce minister Wang Wentao said that discussions were “a big step forward in the right direction of a proper resolution”.

However, that resolution has been undermined by Chinese export curbs on rare earth minerals and magnets, used in the manufacture of electronics, electric vehicles and defence parts.

German auto-manufacturing chiefs reported closing production lines in response to shortages of critical minerals, while several European firms suggested they’d received inappropriate information requests as part of Chinese export licence applications.

Tit-for-tat

Prior to the new wave of trade tensions created by US tariffs, Beijing and Brussels had been engaged in a ratcheting series of trade disputes, instigated by EU action over alleged unfair subsidies provided to Chinese manufacturers.

Most recently, the EU voted to block Chinese firms from fulfilling medical procurement contracts worth over US$5m, citing discrimination through a Chinese policy setting an 85% domestic fulfilment target for comparable contracts.

In October, the bloc unveiled tariffs on Chinese EV manufacturers, with China retaliating by launching an anti-dumping probe into EU brandy – an investigation that is ongoing.