In this special edition of the Guanxi Dialogues, Head of Newsletter Francesco Palma sat down with European Union’s Ambassador to China Jorge María Toledo for a wide-ranging conversation on the state of EU-China relations. We are deeply grateful to Ambassador Toledo for his generosity with his time and his remarkably candid reflections. This conversation offers a rare window into the complexities of European diplomacy in Beijing, and we are honoured to share it with our readers.
Could you describe today’s EU-China relations in five words from your point of view?
Ambassador Toledo: China and the EU are partners when it comes to cooperation in global challenges like climate change, we are competitors when it comes to trade and investment, and we are systemic rivals when it comes to some very important geopolitical issues like the Russian aggression in Ukraine.
About the systemic rivalry, do you believe there is a way to nurture a positive bilateral relation when these knots get untied or, rather, the differences in the foundation of our two systems are too deep to solve this rivalry?
Ambassador Toledo: I would say that the Russian aggression on Ukraine and the Chinese position supporting politically, diplomatically, and even materially Russia in this aggression is the most serious and negative part of our systemic rivalry. But we also have other issues in our systemic rivalry. I would mention one, which is a different concept we have of human rights.
In the context of today’s relationship, the last EU-China Summit showed some clear tension alongside some selective cooperation. What did not work at the time and what actions were successful?
Ambassador Toledo: Firstly, the good news was that the Summit was held and celebrated, and it is always good when we speak. Unfortunately, I cannot say there was much progress on specific issues like Russia and Ukraine, or some important issues in our trade relationship like the unsustainable trade balance and market access problems we have in China. So I cannot say that there were any good outcomes there. We signed a common declaration on climate – and that was something good – and we agreed to follow up on something that was also very negative last year, which is rare earth export controls and permanent magnet export controls; issues that are causing very serious damages to our companies because they are hard to get and they are taking a long time. So, we agreed to intensify our dialogue, and that is what we are trying to do.
Now we would like to move on to your personal role. We have a lot of people who are looking forward to a career in the European External Action Service (EEAS), maybe one day to reach a position like yours, Mr. Ambassador. So, what is the real added value of the European Delegation to China today, even behind formal diplomacy?
Ambassador Toledo: Well, I am a special case in the EEAS because I come from a Member State. The EEAS is formed by people coming from the European Commission, people coming from the Council, and people coming from the Member States. So, I am a temporary agent, as I am part of a Spanish foreign service, but I have been seconded – let’s call it like this – for this posting. The added value of the European Union Delegation lies in the fact we have a double hat as representatives of the EEAS and the Council, and also of the Commission. Therefore, we have an especially important role coordinating the action of all Member States’ embassies here to the largest extent possible, giving an image of European unity and acting in the spirit of Team Europe.
Is there a policy area where you feel the EU could be more assertive in China but currently it is not? And why are we not acting in that sense now?
Ambassador Toledo: Well, I would say we are more or less increasingly acting in that sense. We do not have a particular problem about not being united on China; we are mostly united when it comes to China. One thing that made us unite a lot was precisely the Russian aggression in Ukraine. We are pretty united on that front with some exceptions, but I think we can offer a good image of unity also when we talk about areas of partnership like climate, biodiversity, environment, or even trade and economic issues. Though with some exceptions, we can say we have a united front.
What would you say is the most striking point where we are divided as a Union?
Ambassador Toledo: I would not point out any particular aspect. It happens from time to time that there are one or two Member States that do not join us in some of our common marches, but this is the exception rather than the rule.
About the economic relations, they are a bit like the backbone of the EU’s ties with China. Are we moving toward derisking in practice – as we announced – with a concrete plan of action already taking place? And how central is the automotive and the EV sector in this context?
Ambassador Toledo: First of all, let’s start by saying that the EU-China trade relationship is one of the most important in the world, if not the most important. The European Union is the largest single market for Chinese exports. It is not the other way around. For our export, China is not our largest market and we blame that also on Chinese barriers and Chinese market access. In this sense, the main cause for derisking lies in what happened in the last few years. First of all, derisking was adopted because of what happened during the pandemic, when we realised that we were too dependent on things that are basic, like certain medicines or certain materials. We noticed that we need to be able to produce them in Europe and not to be too dependent on a single supplier. But then, we saw China adopting export controls on very important materials, critical minerals and other products that have been hurting our companies. So, it was not only the European Commission – which is trying to reduce these dependencies – but also the European companies who realised that they cannot depend too much on Chinese supplies, especially when it comes to supply chains that China dominates. So, what is in place now is a whole operation that will take time. Also, it will take money to de-risk, not necessarily from China, but certainly from products that are mainly produced in China. And that could and has already been weaponised by China against other countries, including the European ones.
Moving to the values in our relations, earlier you talked about the hard point of human rights, and nowadays reconciling human rights and political interests with China remains one major point of friction. Do you think there is still room for meaningful engagement on this issue? Or do you think it is more likely that this point of friction may create a fracture in the diplomatic engagement between the two parties?
Ambassador Toledo: Well, in 2023, five or six years after having suspended human rights talks with China, we resumed the annual human rights dialogue – a structured dialogue taking place every year. This is good news. Of course, that does not mean that we agree, we actually do not agree on many things. The Chinese are very adamant on everything they say “interferes” in their internal affairs. They do not accept that universal human rights have to be respected and can be monitored by other countries. We insist that human rights are universal, have to be respected by everybody, and that there should be a common awareness or regard by other countries that human rights are indivisible. On the contrary, the Chinese narrative prioritises what they call the right to develop other social and political rights. We do not agree with that. So, speaking with them is useful, but it does not mean that we are fixing anything really.
Now, looking at the partnership of the EU with China in the next five to ten years, what would successful general relations realistically look like in your opinion?
Ambassador Toledo: On the one hand, I think that when, and if, the Russian aggression on Ukraine stops and there is peace. On the other hand, if we manage to rebalance our trade and economic relationship to some extent. We actually do not need to have strictly balanced trade with China. China produces very good quality at very good prices, but what we want is a levelled playing field, which we firmly believe has been worsening every year. So, we need to rebalance this relationship. I do not think it will be easy, but there are things that could be easily done to put us on this positive, constructive track.
What are these ‘easy’ things to do? Or at least, could you mention a couple that you believe are relatively simple and could be implemented quickly to level the playing field?
Ambassador Toledo: Well, the first thing would be to surpass the increasing discrimination that our companies are facing in China when it comes to public procurement, the localisation of components, and many other matters. Indeed, our companies are being subjected to increasing requirements that Chinese companies do not face, such as having to buy local components when they could buy foreign or European ones. Moreover, it is a bit technical, but when it comes to agricultural products – especially meat – a good improvement that could be easily implemented is what we call regionalisation. To clarify, if a problem of flu was to arise in one small region in a certain European country, the Chinese would block the exports of the whole European Union to China. Therefore, if we agreed on regionalisation and admitted that the European Union is not only one veterinary sanitary space, which we have been insisting on, only the affected region would be banned. So, these are two examples of something that could be easily done.
Moving on to the role of young people, if you had one message for young Europeans interested in relations with China, what would it be?
Ambassador Toledo: Well, it would be that China is now the second-largest economy in the world; that China is going to stay; China is going to be there in the future. It is the largest industrial powerhouse. 37% of everything that is produced in the world is produced in China. So, I suggest they come to China, because we need more young people coming to learn Chinese and to know the country. I think China-Europe relations, the development of China, and internal Europe relations must be common knowledge and understanding. It is extremely important that we resume what we used to have before the pandemic, which is thousands of European students in China, along with thousands of Chinese students in Europe. Lastly, we need to go back to this very intense relationship; not only between students, but also in tourism and in scientific exchanges. So, that is my message.
On a more personal perspective, since you took up the role as Ambassador in Beijing, what has surprised you the most?
Ambassador Toledo: Everything is surprising in China. The first time I came to China was in 1989. You were not born, but I was 24 years old going on a mission, and I have been coming to China every four years or so ever since. I was a young diplomat then, and if you compare that China with the current China, the change is impressive. The infrastructure in the country has no parallel in the world. China is becoming a very automated digital society for everyone. Every European who comes here is very impressed by that. We have gone from a country that was severely underdeveloped in 1989 to one that is now severely overdeveloped in many aspects. At the same time, it is very impressive how they have adapted to the latest technologies so quickly. They do it naturally. You see old people – nobody pays with real money now. Everybody pays through an app on their phones, and they all know how to use it. You can do almost everything with your mobile phone there, far more than in Europe. So, this is extremely well developed and people have adapted to it very quickly.
One last question: at the end of your term in China, what changes would you hope to see?
Ambassador Toledo: What I mentioned earlier. I hope the Russian aggression in Ukraine will cease so we can remove a very important political obstacle for improving our relations. And then, managing to convince the Chinese government to rebalance the unsustainable trade relationship. Otherwise, we will have to start closing our markets, since we cannot risk entire industrial sectors because of a competition that is partly subsidised. And in any case, this is a result of an overcapacity in the industrial sector in China that is flooding our markets.
Thank you again for your availability and for taking the time to speak with us. We sincerely hope there may be opportunities for future collaboration between your office and European Guanxi.
Ambassador Toledo: Excellent. Thank you and congratulations on your work. It is very important for the improvement of our relations. Thank you very much.