Chinese President Xi Jinping’s two-day state visit to France starting Monday, coupled with stops in Serbia and Hungary, is garnering significant attention from global investors amid escalating trade tensions between China and the European Union (EU).
With ongoing EU probes into alleged market-distorting practices by Beijing and its electric vehicle operations, and a parallel Chinese anti-dumping investigation targeting European liquor and agricultural products, investors are closely monitoring Xi’s trip, with many hoping for signs of de-escalation and cooperation.
The economic stakes involved are substantial. China and the EU are both key global economic powerhouses, with extensive bilateral trade and investment ties.
Any disruptions or exacerbations to their trade relations will reverberate across global markets, impacting various industries and investor portfolios.
As such, global investors are eagerly awaiting Xi’s visit, as positive developments could potentially mitigate market uncertainties and restore confidence. Negative developments could have the opposite effects.
A reduction in trade barriers and the resolution of disputes can facilitate smoother trade flows, thereby enhancing market predictability and reducing investment risks.
For example, European investors eyeing the Chinese market may find increased clarity and certainty in their business operations following a potential resolution of trade tensions.
Likewise, Chinese investors seeking opportunities in Europe may encounter fewer regulatory hurdles and trade barriers, promoting a conducive trade and investment environment.
To be sure, Xi’s diplomatic tour holds significance beyond trade considerations, as it underscores China’s broader strategic objectives and geopolitical leanings.
China’s Belt and Road Initiative (BRI), aimed at enhancing connectivity and fostering economic cooperation across Eurasia and beyond, intersects with its engagement with Europe.
By cultivating closer ties with European countries, China seeks to advance its geopolitical interests, expand its influence and access new markets. For global investors, Xi’s visit signifies possible opportunities for participation in BRI-related projects and infrastructure development.
At a time when protectionism and unilateralism are on the rise, concerted efforts to address trade disputes through dialogue and negotiation are crucial.
Beijing’s top-level engagement with European leaders provides an opportunity to reaffirm the importance of multilateralism, uphold international trade norms and promote a rules-based trading system.
For investors, a commitment to resolving trade tensions through diplomatic channels would signify a more stable and predictable investment environment, conducive to long-term planning and risk management.
The upshots of Xi’s visit will thus undoubtedly help shape investor perceptions and market sentiments at a time of rising global polarization and market fragmentation.
If the EU could find ways to accommodate the US market distortion practices (IRA) why would’nt it try to be flexible with China?