(Bloomberg) -- China is putting pressure on the European Union behind closed doors to scrap proposed trade restrictions on Chinese companies the bloc says are enabling Russia’s war machine in Ukraine, according to people familiar with the matter.
Chinese diplomats have met with their European counterparts in Brussels and Beijing in recent weeks as part of a campaign to persuade officials to drop the blacklist, the people said. The European Commission is considering measures on eight Chinese firms it says are “directly supporting Russia’s military and industrial complex,” according to documents seen by Bloomberg News last month.
After the proposals were made public, Chinese diplomats approached their European counterparts in Brussels for meetings, according to one of the people. China has since raised the issue with EU diplomats in Beijing, said one of the people based in the capital, adding that the Chinese side threatened retaliation if the export restrictions went ahead.
China’s Foreign Ministry said it “urged the EU to act prudently, refrain from harming the legitimate interest of Chinese companies and avoid affecting mutual trust and cooperation between China and the EU.” China will “firmly safeguard the right of Chinese enterprises to conduct normal trade,” the ministry said Thursday in response to a request for comment.
The proposed restrictions come as China’s ties with the EU seemed to be stabilizing, after EU sanctions on Chinese officials over alleged human rights abuses derailed a long-awaited investment treaty. Since Xi won a third term in October, the leaders of Germany and France have visited Beijing, while European Commission President Ursula von der Leyen has tried to cool tensions by suggesting nations “de-risk” rather than “decouple” from the world’s second-largest economy.
A new exchange of measures between the EU and China could complicate a planned visit by Chinese Premier Li Qiang to Germany later this month, as well as a proposed trip by EU foreign affairs chief Josep Borrell to China in July that was originally set for April but was canceled because of Covid.
When the possible action was first reported last month, Chinese Foreign Minister Spokesman Wang Wenbin said “if the reports you mentioned are true, the EU’s actions will seriously undermine China-EU mutual trust and cooperation, and deepen division and confrontation in the world.”
China is facing a growing list of sanctions, tariffs and export controls from the US and its allies as geopolitical tensions rise. Beijing has struggled to respond in a way that makes China look tough without scaring off foreign companies, or damaging the nation’s supply chains.
Any retaliation to the EU’s latest measures would likely need to target the bloc at an institutional level, one of the people familiar said.
China’s ambassador to the EU, Fu Cong, said Beijing still wanted to resolve the issue in a “cooperative way,” in an interview published last month on China’s EU embassy website. He urged the bloc to present proof Chinese companies were engaged in activities that circumvented European sanctions on Russia.
“If the European side imposes sanctions on Chinese companies without providing us with any solid evidence,” he said, “then we certainly will retaliate.”
(Updates with Chinese response in fourth paragraph.)
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