EU-China tensions, Rubio meets Wang Yi, and Beijing's deflation fears
Tensions continue to rise as von der Leyen urges faster derisking. Rubio confirms a likely Trump visit to China, while Beijing signals growing concern over deflation and industrial overcapacity.
Welcome back to What’s Happening in China, your weekly China brief.
Brussels and Beijing traded sharp words this week over trade and derisking policies. In a speech at the European Parliament, Ursula von der Leyen, president of the European Commission, said that while “Europe is fully committed to results-oriented engagement with China,” it needs to “speed up with derisking,” as Beijing plays “outside the rules.” Beijing fired back, saying that what Europe needs is to “rebalance its own mindset, not the China-EU economic and trade relations.”
With the EU-China summit in Beijing now less than two weeks away, some are questioning why it should happen at all.
In their first in-person talks, U.S. Secretary of State Marco Rubio and Chinese Foreign Minister Wang Yi met Friday on the sidelines of the ASEAN forum in Kuala Lumpur. According to the U.S. readout, they “agreed to explore areas of potential cooperation, while seeking to manage differences.” The Chinese side said it “hopes that the U.S. can view China with an objective, rational, and pragmatic attitude.”
According to Reuters, Rubio also confirmed that Trump has been invited to visit China: “It’s a visit he wants to undertake, and so we’ll work on finding the right date for that, but I’m sure it’ll happen because the president – both presidents – want it to happen.”
Meanwhile, faced with persistent deflation, cutthroat price wars, and rising external pressure over industrial overcapacity, Beijing has begun to signal a shift. As the Financial Times reports, top officials, including Xi Jinping, have criticized “excessive price competition” in recent state and party media articles. The messaging suggests growing concern that weak domestic demand and surging output are entrenching deflation and fueling trade tensions with key partners.
Expect more on this in the coming weeks.
Let’s jump into it.
— PC
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