The EU is ramping up its rhetoric on China, with a potential trade backlash for Ireland

EU-China relations are “decisively unbalanced” and “will look different going forward,” said the European Commission’s trade chief.

In a tart speech to EU and Chinese businessmen in Brussels, Valdis Dombrovskis accused the Chinese leadership of becoming “less pragmatic and more inward-looking”, saying the business environment was “less predictable, less reliable and less efficient”.

He also called out the regime in Beijing for its “ambiguity” over Russia’s war against Ukraine.

“Every political decision we make, every action we take is driven by our commitment to support Ukraine and isolate Russia,” he said Monday.

“China’s ambiguity about Russia’s aggression has been noticed in Brussels and in all EU capitals. This continues to influence debates on how our relationship should develop, both at EU and Member State level.”

The EU’s tougher stance could impact Chinese investment in Ireland and Irish exports to the country.

The EU is pursuing a policy of what it calls “strategic autonomy” during Donald Trump’s presidency in the face of growing Chinese aggression and as a result of the fractured post-Brexit relationship with the UK and the US.

But the policy – which includes measures to screen foreign investments and retaliate when foreign subsidies distort competition with EU firms – will hit Ireland harder than any other EU country, according to a recent study.

The European Center for International Political Economy said that a “strategic autonomy policy” could reduce gross domestic product across the bloc by up to 0.15 percent in the short term and 0.75 percent in the long term.

The impact on Ireland could be up to four times greater, says the ECIPE report, particularly if foreign countries retaliate by blocking market access for EU companies.

The EU is currently considering its response to the US Inflation Reduction Act, which includes subsidies and a call to “Buy American”.

Mr Dombrovskis said on Monday that Chinese procurement contracts are not as open to European companies and that the business environment has deteriorated as a result of China’s zero-Covid policy.

“It remains to be seen how China’s radical departure from this strategy will affect the business climate,” he said.

The speech comes two weeks after the EU took China to the World Trade Organization over its block on Lithuanian exports and injunctions against European patent holders.

A December 2020 economic pact with China is still on hold following Chinese sanctions on EU parliamentarians and diplomats, a backlash to EU sanctions on Chinese officials over their treatment of Muslim Uyghurs.

Earlier this year, China blocked exports from Lithuania over Vilnius’ support for Taiwan, which China considers part of its own territory.

China is the EU’s largest supplier of goods – with a total of 22% of the EU import market – and the third largest export market for EU goods. The investment flows amount to around €10 billion per year in both directions.

China was Ireland’s fifth largest goods export partner in 2021, with €11.2 billion worth of goods exported that year. China was Ireland’s fourth largest import partner, sending 8.5 billion euros to Ireland in 2021.

Two months ago, the government here ordered the closure of a Chinese “overseas police station” on Capel Street, saying it had never been approved by the State Department. The EU is ramping up its rhetoric on China, with a potential trade backlash for Ireland

Fry Electronics Team

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