Von der Leyen’s State of the Union likely to tiptoe around China ahead of trade showdown

by · EUobserver

Ursula von der Leyen greets China’s president Xi Jinping in Paris along with French president Emmanuel Macron (Photo: European Union, 2024)

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By Benjamin Fox,
Nairobi
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Ursula von der Leyen faces a delicate balancing act on Wednesday (16 September). 

Two years after a ‘State of the Union’ address that was dominated by anxiety about the EU’s economic competitiveness, following reports by Italian ex-premiers Mario Draghi and Enrico Letta that exposed huge investment and innovation gaps facing European industry, progress has been decidedly mixed. 

At last Friday’s (11 September) Riga Conference, EU economy commissioner Valdis Dombrovskis told delegates that the commission’s so-called ‘Competitiveness Compass’, drawn up in early 2025, is about turning the Draghi report into policy. 

He added that these priorities are reflected in the EU’s proposed €2 trillion budget for 2028-2034, including a new Competitiveness Fund. 

Yet according to the European Policy Innovation Council, a Brussels-based think-tank, only 15.7 percent of the 383 recommendations in Draghi’s report had been fully implemented by July. 

Better – but not good enough

The Irish government, which took over the EU’s six-month rotating presidency in July, has promised that promoting competitiveness would be one of its “core priorities”. 

“We are doing better, but we are not doing good enough,” said Martin Lidegaard, the minister for business and competitiveness for Denmark, which held the EU presidency between January and June this year. 

And the bloc’s industrial base is still hurting. 

Last week, representatives of the European steel industry held a vigil for the demise of their sector, bringing 15 trucks and 10 symbolic industrial coffins to the European quarter of Brussels. 

They complained of a widening competitive imbalance between steel produced in or imported into the European Union and steel-intensive manufactured goods entering the bloc from third countries.  

That is despite the EU commission imposing a 47-percent reduction on the amount of steel that can be imported tariff-free from outside the bloc, a measure aimed primarily at what the commission complains is part of Beijing’s policy of deliberate industrial oversupply. 

Andrew Small of the European Council for Foreign Relations, a think-tank, expects von der Leyen’s criticism of China’s industrial policy, particularly over supply, to be restrained while talks between officials in Brussels and Beijing aimed at addressing their various trade disputes play out. 

After years of von der Leyen being the “pace-setter” for EU-China policy, “the consensus among member states has caught up”, says Small. 

China call

Chinese officials reported on Monday that their foreign minister Wang Yi had used a phone call with French counterpart Jean-Noel Barrot to urge the EU to engage in “constructive dialogue” rather than go for more trade defence measures. 

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Ursula von der Leyen greets China's president Xi Jinping in Paris along with French president Emmanuel Macron (Photo: European Union, 2024)

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Author Bio

Benjamin Fox is our trade and geopolitics editor. His reporting has also been published in the Guardian, the East African, Euractiv, Private Eye and Africa Confidential, among others. He is based in Nairobi, Kenya, although he often reports from London.

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