China must “adjust its behaviour” to resolve an escalating tariff row with Europe, EU chief Charles Michel said on Friday, warning of the dangers of escalating the dispute into an outright trade war.
The president of the European Council met Chinese Premier Li Qiang on the sidelines of a Southeast Asia summit in Laos, as Beijing and the European Union successively imposed tit-for-tat sanctions on each other’s imports over subsidies and protectionism.
Michel said in an interview with AFP that he hoped a deal could be struck in the coming days or weeks, but warned it would be difficult to get there.
“I have the impression that the door is not closed, but it is a very difficult situation, it is very challenging,” he said.
“We count on China to adjust its behavior and understand that we need to rebalance economic relations for greater fairness, fair competition and a more level playing field.”
China and the 27-member bloc are bitterly at odds over Beijing’s generous subsidies for its industries, which Brussels says unfairly undermine European competitors.
Brussels has decided to impose new tariffs of up to 35.3 percent on the import of Chinese-made electric cars.
An angry Beijing has responded with new tariffs on EU-produced brandy, alarming French producers, while Brussels is also investigating Chinese subsidies for solar panels and wind turbines.
Michel said the EU would no longer be “naive” when it comes to huge government subsidies, but he hoped continued dialogue between the two sides would find a way out of the row.
“I still hope that in the coming days and weeks it will be possible to reach an agreement to find solutions,” he said.
“But we have very strong and legitimate interests and it is the responsibility of the European Union to defend our people, to defend our citizens.”
Beijing’s new cognac tariffs of up to 38.1 percent – officially an anti-dumping measure to protect domestic spirits makers – were due to come into effect on Friday.
China imported more cognac than any other spirit in 2022, most of it from France, and French cognac makers called for an end to the row earlier this week.
The EU has said it will challenge the World Trade Organization’s “unwarranted” measures.
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