(Bloomberg) -- China needs to take a stand over Russia’s invasion of Ukraine and rein in its enormous trade surplus with the European Union if it is committed to improving relations, the bloc’s top diplomat in Asia said.

China’s ongoing support for Russia after it attacked Ukraine is a “big issue” in tensions between Brussels and Beijing, Niclas Kvarnstrom, managing director for Asia at the European External Action Service, said in an interview on Tuesday during a visit to Australia. 

“It’s not something that we can ignore in any of our relationships,” Kvarnstrom said. “As a geopolitical actor, we have to stand up for ourselves, and that’s what we are doing on the economic imbalances and on our own security.”

China has never condemned Russia’s invasion and instead urged the conflict be resolved through diplomacy. Meanwhile, it has regularly held high-level talks with senior Russian officials including President Vladimir Putin, who is due to visit this year, and trade has ballooned to a record high. 

Indeed, the Biden administration reckons Beijing has helped the Kremlin circumvent sanctions imposed by the US, the EU and their diplomatic allies.

Western concerns over the conflict have risen in recent months after Ukraine’s failed counteroffensive last year and recent gains Russia has made on the battlefield. US Secretary of State Antony Blinken is expected in Beijing this week, carrying a similar message. The US is also threatening to sanction Chinese banks.

China is one of Europe’s biggest trading partners and Kvarnstrom was highly critical of the huge export surplus it’s running with the EU.

“If they mean what they say in terms of having a balanced relationship, we certainly think it requires action on their side,” he said.

The EU is pushing back against Beijing’s economic dominance, including an inquiry into China’s procurement of medical devices and probes over subsidies at solar and railway firms, all of which could result in tariffs or exclusion from European markets. “Chinese over-capacities and trade imbalances, they are a major factor of course influencing our relationship,” Kvarnstrom said.

EU-Australia minerals deal 

The EU diplomat is currently on a tour of the Indo-Pacific including a stopover in Vanuatu and Australia. 

Brussels has been pushing for greater access to Australia’s critical minerals markets, including lithium and nickel, which are vital to high-tech manufacturing and green energy.

Kvarnstrom said he was hopeful a memorandum of understanding between the two sides would be signed “soon.” “We are perfectly complementary partners on this area,” he said. “It’s a clean win for everyone.”

While the EU diplomat said a free trade agreement between Australia and Europe would be “extremely beneficial to both sides,” he pointed out that the MoU could take relations to a new level in the critical minerals space.

Australia and the EU have struggled to reach a final agreement on a free trade deal, despite multiple face-to-face meetings over the past year. Australia’s Trade Minister Don Farrell ended the latest round of talks in October over what he said was a lack of progress on larger export quotas for Australian agricultural produce.

Despite that, Kvarnstrom said he didn’t believe an FTA deal was out of the question. “I think from our side, the door is open,” he said.

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