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News 13 May 2024

Top story of the week: Xi Jinping visit to France, Hungary and Serbia ripe with geostrategic implications amidst no easing in China-EU trade relations

Chinese President Xi Jinping made his first official visit to Europe in five years, from 5 to 10 May 2024, stopping in France, Serbia, and Hungary. The visit carried significant political and geopolitical implications, igniting discussions within both the EU and NATO on a variety of issues and providing President Xi with a platform to advocate for a vision of a multipolar world order in which China plays a prominent role.

Regarding energy and clean technology matters, during the initial leg of the trip in France, the President of the country Emmanuel Macron faced challenges in addressing key concerns shared across the EU regarding China’s alleged extensive subsidy schemes and overcapacity in industries, which is currently leading to an influx of electric vehicles, solar panels, and other green technologies into the European market with direct negative effects on domestic production. In this regard, President Xi dismissed allegations of overcapacity, asserting instead that China's comparative advantage stems from innovation and economies of scale.

On the background of these trade talks, which included a trilateral meeting with European Commission President von der Leyen, several investigations have recently been opened by the EU against Chinese firms for supposedly securing public contracts in Europe through unfair subsidies, as well as concerns raised by European firms regarding restricted access to the Chinese market. Despite intense diplomatic talks, these issues remained unresolved, with both parties maintaining their positions.

Conversely, state visits to Serbia and Hungary, key allies of Xi Jinping in Europe, yielded more concrete results. Against the backdrop of both Serbia and Hungary receiving substantial funding from China’s Belt and Road initiative in recent years, President Xi and Serbian President Aleksandar Vučić signed a joint statement on the establishment of a "China-Serbia community with a shared future" while in Hungary, President Xi hailed the relationship as the strongest it has ever been, marking the beginning of a new era. Trilateral cooperation is expected to encompass economic, trade, and financial elements, including infrastructure projects such as the Belgrade-Budapest railway and the construction of an oil pipeline between Hungary and Serbia. In Budapest, President Xi pledged further investments in transportation and energy, including, according to Hungarian officials, a high-speed railway connecting the city centre to its airport and cooperation in the nuclear sector.

The visit of Chinese President Xi Jinping clearly demonstrated that Beijing is not ready to make any concessions in the current trade disputes between China and the EU. While they view the European Union as an indispensable counterpart, they are willing to explore and leverage other options on the European continent to increase their margin of manoeuvre both economically and politically—a move that leaves the European Union leadership particularly pondering the consequences, especially in the context of the upcoming European Parliament elections.