May 1, 2024
5 mins read

Xi on six-day visit to Europe amid trade tensions with EU

Over the last week, the EU also increased scrutiny over several Chinese companies, toughening safety rules against Chinese fashion retailer Shein and opening formal proceedings against Tiktok under its Digital Services Act…reports Asian Lite News

Chinese President Xi Jinping has kicked off his six-day trip to Europe amid rising tensions over trade with the European Union and concerns over Beijing’s support for Russia, as reported by Voice of America (VOA).

Xi’s visit, which started on Sunday, is his first to the continent since 2019, which will include stops in France, Serbia, and Hungary.

According to Taiwanese analysts, during the trip, Russia’s war in Ukraine and the Israel-Hamas conflict are likely to be picked up by the leaders.

Moreover, the Chinese president will also be looking first to address trade tensions during the trip and to double down on Beijing’s close relationship with Budapest and Belgrade, VOA reported.

Zsuzsa Anna Ferenczy, an expert on EU-China relations at National Dong Hwa University in Taiwan, said, “In light of Europe’s growing appetite to investigate what they view as China’s unfair trade practices, (Xi’s European tour) is a trip to disrupt the EU’s efforts to adopt tougher trade measures against China.”

Highlighting his stops in Serbia and Hungary, Ferenczy said that Xi hopes to show that China remains influential in Central and Eastern Europe despite the growing number of countries withdrawing from the Beijing-led initiative known as “Cooperation between China and Central and Eastern Europe.”

“For Beijing, the symbolism of the trip to Serbia and Hungary is important, as the stop in Budapest serves as an opportunity to amplify divisions within the EU,” she said.

Since last month, the EU has launched investigations against several Chinese products, including green energy products and security devices, and initiated a probe into China’s public procurement of medical devices, according to VOA.

Over the last week, the EU also increased scrutiny over several Chinese companies, toughening safety rules against Chinese fashion retailer Shein and opening formal proceedings against Tiktok under its Digital Services Act.

Beijing has repeatedly characterised Western countries’ concerns about Chinese excess capacity in some sectors as “baseless hype” and urged the EU to “stop wantonly going after and restraining Chinese companies under various pretexts.”

In order to rebalance trade, France has reiterated the need for European countries to rebalance trade relations with China during recent bilateral meetings between Chinese and French officials.

French Foreign Minister Stephane Sejourne, on his visit to China last month, said, “The European Union is a very open market, the most open in the world. But the current deficits with a certain number of countries, including China, are not sustainable for us.”

Last week, during a phone call with French President’s Diplomatic Counsellor Emmanuel Bonne, Chinese Foreign Minister Wang Yi said that Beijing hopes “the French side will push the EU to continue to pursue a positive and pragmatic policy towards China.”

While France supports the EU’s efforts to rebalance trade relations with China, some experts say that French President Emmanuel Macron will try to maintain a cooperative relationship with China.

“France wants to demonstrate that it is one of the major countries that can maintain channels of communication at all levels with China,” Sari Arho Havren, an associate fellow at the Royal United Services Institute in Brussels, said.

Chinese and French armed forces agreed to establish a mechanism for maritime and aerial cooperation and dialogue on April 25, which Beijing noted as a “vital step” to implement the consensus reached by Xi and Macron, reported VOA.

Trade issues will likely dominate the Chinese president’s meeting with Macron, meanwhile, some analysts said that the French president will try to address the issue of China’s ongoing support for Russia.

“Macron will try to convince Xi to agree [to reduce] China’s support to Russia, but in Europe, hopes that Sino-Russian collaboration will diminish are fading away,” Philippe Le Corre, a Senior Fellow at the Asia Society Policy Institute’s Center for China Analysis, said.

During Xi’s visit to Hungary and Serbia, Ferency said that the Chinese president will focus on deepening bilateral cooperation in different sectors, especially infrastructure projects, and Beijing’s role as “a strategic investor” in both countries.

“We need to see his trip to Hungary and Serbia in the context of the Belt and Road initiative since Beijing is trying to revitalise the infrastructure project in Europe,” Ferency said.

She added that the Belgrade-Budapest Railway will be an important part of China’s attempt to expand its flagship infrastructure project in Central and Eastern Europe, reported VOA.

In recent months, the Hungarian government under PM Viktor Orban has tried to attract large amounts of Chinese investment, especially in the electric vehicle sector, while deepening security cooperation with Beijing.

Last week, Hungarian Foreign Minister Peter Szijjarto, in an interview, expressed his opposition to the EU’s anti-subsidy investigation against Chinese EVs and said he “looks forward to the potential impact of the Belt and Road Initiative on Hungary’s electric vehicle and battery manufacturing industry.”

Havren further emphasised that since Hungary is a member of the EU, the relationship with Budapest is particularly important to China.

“Hungary could impact possible sanctions or anything that is of importance to Beijing in the EU,” she said.

While the trip is unlikely to change the current dynamics between the EU and China, Xi will try to use China’s relationship with middle powers like France and its “iron-clad friendship” with countries like Hungary to make itself “more visible and relevant” in Europe, Havren said.

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Pakistan Risks Overstretching Itself in Yemen War

Pakistan’s expanding military role in Saudi Arabia amid the Yemen conflict could strain its defence resources and fragile finances…reports Asian Lite News Desk Pakistan’s military involvement in the war in Yemen may prove unsustainable because of mounting financial pressures and competing security demands, according to a new report. Islamabad’s growing military presence in Saudi Arabia risks stretching its defence resources while exposing the country to greater strategic and economic challenges. An article by Andrew Wilson in One World Outlook describes Pakistan’s involvement as a case of “fiscal and strategic overreach”, arguing that the country lacks the financial flexibility to sustain an expanded military commitment. Pakistan’s external finances depend heavily on an International Monetary Fund (IMF) programme, financial support from Gulf countries and remittances from Pakistani workers in the region. The report argues that deeper military involvement in the conflict could place additional pressure on these sources of financial stability. It also warns that deploying troops and military equipment abroad could weaken Pakistan’s capacity to address security challenges along its eastern border and deal with two domestic insurgencies. The move could also draw Islamabad into a conflict it has sought to approach cautiously. A Reuters report in May, citing Pakistani security and government sources, said Islamabad had deployed around 8,000 troops, a squadron of approximately 16 aircraft, mostly JF-17 fighter jets, two drone squadrons and a Chinese HQ-9 air-defence battery to Saudi Arabia. According to those sources, Riyadh was financing the deployment, with Pakistani personnel operating the equipment. The sources also said a confidential agreement contemplated the possibility of deploying up to 80,000 troops. Islamabad has not confirmed those figures, although it has acknowledged its military presence in Saudi Arabia, including the deployment of fighter jets at King Abdulaziz Air Base from April. The One World Outlook article argues that Saudi financial support can cover allowances and operating expenses but cannot easily replace military equipment needed elsewhere or resolve the political and strategic challenges of participating in the Yemen conflict. Pakistan’s defence budget is another concern. For the 2026-27 financial year, the federal government allocated PKR 3 trillion, or approximately $10.8 billion, to defence services. The allocation represents an 18 per cent increase from the original PKR 2.55 trillion provision and amounts to around 2.1 per cent of projected gross domestic product (GDP). Defence spending accounts for approximately 16 per cent of the federal government’s PKR 18.8 trillion expenditure. Military pensions are budgeted separately at PKR 822 billion, while debt servicing costs stand at approximately PKR 8 trillion, more than two-and-a-half times the defence allocation. The report argues that these competing financial obligations leave little room for additional military expenditure without placing further pressure on public finances. Pakistan’s reliance on IMF assistance also limits its fiscal flexibility. The country must meet the conditions attached to the programme, including a primary budget surplus target of 2 per cent of GDP and continued restraint on development spending. According to the article, these requirements make it difficult for Islamabad to finance an additional military commitment without compromising other budgetary priorities. Pakistan’s economic indicators offer limited reassurance. Economic growth for the 2025-26 financial year is estimated at between 3.6 and 3.7 per cent, while inflation reached approximately 10.3 per cent in September following an energy price shock. Foreign exchange reserves stood at around $21.5 billion at the end of September. Although this marks an improvement from the low levels recorded in 2023, the report notes that the reserves cover only a few months of imports. Financial assistance from Gulf partners remains central to Pakistan’s external stability. The article says Islamabad holds approximately $8 billion in Saudi deposits at its central bank. In July, the State Bank of Pakistan said Riyadh had extended the maturity of $5 billion in deposits to December 2028, easing the country’s immediate external financing requirements. A further $3 billion deposit was also extended in the spring. However, the article argues that these arrangements provide temporary relief rather than long-term financial independence, particularly as regional conflict threatens the stability of the Gulf economies on which Pakistan relies. The report concludes that Pakistan faces a difficult balance between supporting Saudi Arabia militarily and preserving the financial and military resources needed to address its domestic and regional challenges.
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