EU Does Not Want to Decouple from China but Must Protect Itself, Says EU Trade Chief

 In this photograph taken on August 25, 2023, Valdis Dombrovskis, Executive Vice President & European Commissioner for Trade of The European Union, addresses the gathering on the first day of the three-day B20 Summit in New Delhi. (AFP)
In this photograph taken on August 25, 2023, Valdis Dombrovskis, Executive Vice President & European Commissioner for Trade of The European Union, addresses the gathering on the first day of the three-day B20 Summit in New Delhi. (AFP)
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EU Does Not Want to Decouple from China but Must Protect Itself, Says EU Trade Chief

 In this photograph taken on August 25, 2023, Valdis Dombrovskis, Executive Vice President & European Commissioner for Trade of The European Union, addresses the gathering on the first day of the three-day B20 Summit in New Delhi. (AFP)
In this photograph taken on August 25, 2023, Valdis Dombrovskis, Executive Vice President & European Commissioner for Trade of The European Union, addresses the gathering on the first day of the three-day B20 Summit in New Delhi. (AFP)

The European Union has no intention to decouple from China but needs to protect itself when its openness is abused, the bloc's Executive Vice President Valdis Dombrovskis said, as both sides look to cool rising tensions over geopolitics and trade.

Relations have become tense due to Beijing's ties with Moscow after Russian forces swept into Ukraine, and the EU's push to rely less on the world's second-largest economy.

The bloc posted record bilateral trade with China last year, but it is "very unbalanced", Dombrovskis said on Saturday in a speech at the annual Bund Summit conference in Shanghai, citing a trade deficit of almost 400 billion euros ($426.08 billion).

Dombrovskis, who is also the bloc's trade commissioner, is on a four-day visit to China seeking more balanced economic ties with the EU.

He arrived just over a week after the European Commission said it would investigate whether to impose punitive tariffs to protect European producers from cheaper Chinese electric vehicle imports it says are benefiting from state subsidies.

The trip is designed to renew dialogue with China after the COVID-19 pandemic with both sides looking to cool tensions over issues ranging from foreign investment, trade and geopolitics as well as Western criticism of Beijing's closer ties with Moscow following Russia's 2022 invasion of Ukraine.

"Creating an open market among its members was one of the EU's founding principles. We are also committed to free and fair global trade. And ‘fair’ is the key word here," he said.

Citing the bloc's trade deficit as an example, he added "the EU also needs to protect itself in situations when its openness is abused."

"This means minimizing our strategic dependencies for a select number of strategic products," but the EU's economic strategy was focused on de-risking, not decoupling, he said.

"The EU has no intention of decoupling from China."

Litmus test

The EU blames its 400-billion-euro trade deficit partly on Chinese restrictions on European companies.

A "thousand" barriers to market access have propelled the trade deficit to its "highest in the history of mankind", EU Ambassador to China Jorge Toledo lamented at a forum in Beijing on Thursday.

The economic and trade dialogue on Monday between Dombrovskis and Chinese Vice Premier He Lifeng, the 10th such discussion since 2008, will be a "litmus test" for the two sides, Chinese nationalist tabloid Global Times said on Thursday.

Dombrovskis told Reuters on the sidelines of the summit that "substantial technical work" preceded the EU probe into Chinese-made EVs and that they would look to engage both Chinese authorities and industry in the investigation.

"We are open for competition including for competition in the electric vehicles sector but competition has to be fair," he said. China has blasted the probe as protectionist and the Chinese Chamber of Commerce to the EU said the sector's advantage was not due to subsidies.

Asked if the EU was looking at other sectors, he added: "there are several areas where we are looking at possible trade irritants and barriers, and actually this is one of the topics I'm going to raise also with my Chinese counterparts... On one hand we must discuss how we advance our relationship, but also we need to be able to discuss if there are some issues or trade barriers to be addressed."

He declined to provide further details.

In his speech, Dombrovskis also said he believed that China faced a "challenging process of macroeconomic adjustment" but stressed that Beijing must broaden access for foreign businesses and maintain a stable business environment for fair trade relations.

He also urged China to take a stance against Russia's "tactic of weaponizing food" and use its influence in reviving the Black Sea Grain Initiative which expired in July after Moscow quit.



Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).

Harvard University economics professor Pol Antràs said Saudi Arabia represents an exceptional model in the shifting global trade landscape, differing fundamentally from traditional emerging-market frameworks. He also stressed that globalization has not ended but has instead re-formed into what he describes as fragmented integration.

Speaking to Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Antràs said Saudi Arabia’s Vision-driven structural reforms position the Kingdom to benefit from the ongoing phase of fragmented integration, adding that the country’s strategic focus on logistics transformation and artificial intelligence constitutes a key engine for sustainable growth that extends beyond the volatility of global crises.

Antràs, the Robert G. Ory Professor of Economics at Harvard University, is one of the leading contemporary theorists of international trade. His research, which reshaped understanding of global value chains, focuses on how firms organize cross-border production and how regulation and technological change influence global trade flows and corporate decision-making.

He said conventional classifications of economies often obscure important structural differences, noting that the term emerging markets groups together countries with widely divergent industrial bases. Economies that depend heavily on manufacturing exports rely critically on market access and trade integration and therefore face stronger competitive pressures from Chinese exports that are increasingly shifting toward alternative markets.

Saudi Arabia, by contrast, exports extensively while facing limited direct competition from China in its primary export commodity, a situation that creates a strategic opportunity. The current environment allows the Kingdom to obtain imports from China at lower cost and access a broader range of goods that previously flowed largely toward the United States market.

Addressing how emerging economies should respond to dumping pressures and rising competition, Antràs said countries should minimize protectionist tendencies and instead position themselves as committed participants in the multilateral trading system, allowing foreign producers to access domestic markets while encouraging domestic firms to expand internationally.

He noted that although Chinese dumping presents concerns for countries with manufacturing sectors that compete directly with Chinese production, the risk is lower for Saudi Arabia because it does not maintain a large manufacturing base that overlaps directly with Chinese exports. Lower-cost imports could benefit Saudi consumers, while targeted policy tools such as credit programs, subsidies, and support for firms seeking to redesign and upgrade business models represent more effective responses than broad protectionist measures.

Globalization has not ended

Antràs said globalization continues but through more complex structures, with trade agreements increasingly negotiated through diverse arrangements rather than relying primarily on multilateral negotiations. Trade deals will continue to be concluded, but they are likely to become more complex, with uncertainty remaining a defining feature of the global trading environment.

Interest rates and artificial intelligence

According to Antràs, high global interest rates, combined with the additional risk premiums faced by emerging markets, are constraining investment, particularly in sectors that require export financing, capital expenditure, and continuous quality upgrading.

However, he noted that elevated interest rates partly reflect expectations of stronger long-term growth driven by artificial intelligence and broader technological transformation.

He also said if those growth expectations materialize, productivity gains could enable small and medium-sized enterprises to forecast demand more accurately and identify previously untapped markets, partially offsetting the negative effects of higher borrowing costs.

Employment concerns and the role of government

The Harvard professor warned that labor markets face a dual challenge stemming from intensified Chinese export competition and accelerating job automation driven by artificial intelligence, developments that could lead to significant disruptions, particularly among younger workers. He said governments must adopt proactive strategies requiring substantial fiscal resources to mitigate near-term labor-market shocks.

According to Antràs, productivity growth remains the central condition for success: if new technologies deliver the anticipated productivity gains, governments will gain the fiscal space needed to compensate affected groups and retrain the workforce, achieving a balance between addressing short-term disruptions and investing in long-term strategic gains.


Aljadaan: Emerging Markets Account for 70% of Global Growth

Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat
Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat
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Aljadaan: Emerging Markets Account for 70% of Global Growth

Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat
Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat

Saudi Minister of Finance Mohammed Aljadaan stressed Sunday that the world economy is going through a “profound transition,” saying emerging markets and developing economies now account for nearly 60 percent of the global Gross Domestic Product (GDP) in purchasing power terms and over 70 percent of global growth.

In his opening remarks at the AlUla Conference for Emerging Market Economies, organized by the Saudi Ministry of Finance and the IMF in AlUla, the minister said these economies have become an increasingly important driver of global growth with their share of global economy more than doubling since 2010.

“Today, the 10 emerging economies in the G20 alone account for more than half of the world growth. Yet, they face a more complex and fragmented environment, elevated debt levels, slower trade growth and increasing exposure to geopolitical shocks.”

“Unfortunately, more than half of low income countries are either in or at the risk of debt distress. At the same time global trade growth has slowed at around half of what it was pre the pandemic,” Aljadaan added.

The Finance Minister stressed that the Saudi experience over the past decade has reinforced three lessons that may be relevant to the discussions at the two-day conference, which brings together a select group of ministers and central bank governors, leaders of international organizations, leading investors and academics.

“First, macroeconomic stability is not the enemy of growth. It is actually the foundation,” he said.

“Structural reforms deliver results only when institutions deliver. So there is no point of reforming ... if the institutions are unable to deliver,” he stated.

Finally, he said that “international cooperation matters more, not less, in a fragmented world.”


Georgieva from AlUla: Growth Still Lacks Pre-pandemic Levels

Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)
Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)
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Georgieva from AlUla: Growth Still Lacks Pre-pandemic Levels

Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)
Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)

International Monetary Fund (IMF) Managing Director Kristalina Georgieva said Sunday that world growth still lacks pre-pandemic levels, expressing concern as she expected more shocks amid high spending and rising debt levels in many countries.

Georgieva spoke at the AlUla Conference for Emerging Market Economies, organized by the Saudi Ministry of Finance and the IMF in AlUla.

The two-day conference brings together a select group of ministers and central bank governors, leaders of international organizations, leading investors and academics to deliberate on policies to global stability, prosperity, and multilateral collaboration.

Georgieva said that the conference was launched last year in recognition of the growing role of emerging market economies in a world of sweeping transformations.

“I came out of this gathering .... With a sense of hope for the pragmatic attitude and determination to pursue good policies and build strong institutions,” she said.

Georgieva stressed that “good policies pay off,” and said that growth rates across emerging economies reached four percent this year, exceeding by a large margin those of advanced economies that are around 1.5 percent.