Who is the world’s powerful woman? According to a list this week from Forbes it is Ursula von der Leyen, President of the European Commission.
So not Kamala Harris, a heartbeat from the presidency? Or Giorgia Meloni, who has a real country to run? Or even Taylor Swift, who has just been named Time “Person of the Year”?
Well, we’re about to find out just how powerful von der Leyen is, because this week she’s in China for a showdown with Xi Jinping — the most powerful man in the world. As Politico reports, this is the first in-person EU-China summit since 2019, and trade-related issues are high on the agenda.
Most importantly, there’s the general problem of the EU’s growing trade deficit with China, which doubled between 2020 and 2022. Then there’s the specific problem of China helping to circumvent the EU’s sanctions against Russia. So with von der Leyen making demands, dare Xi say no? Quite easily, as it happens.
For instance, when it comes to sanctions, consider these charts from trade expert Robin Brooks. They show the level of exports from Germany to the ex-Soviet states of Kyrgyzstan, Armenia, Georgia and Kazakhstan — all of them part of Russia’s “near-abroad”.
One can see how export levels suddenly spike upwards following Russia’s invasion of Ukraine and the imposition of Western sanctions. Could it be that German goods are finding their way from these four nations into another country in the neighbourhood? Perhaps Europe needs to put its own house in order before pressuring China.
Much the same applies to the imbalance of trade. Yes, China’s massive trade surplus does cause problems for other countries. However, Germany has played the same mercantilist game within the European Union — exploiting the distortions of the single currency while imposing austerity on other member states. It’s a selfish national strategy that has destabilised Germany’s neighbours — and yet the EU continues to tolerate it. European politicians are therefore in a poor position to complain about China’s unfair trade advantages.
Of course, the EU doesn’t have to persuade Xi Jinping of anything — it could just protect its interests by limiting access to European markets. For instance, green tariffs could be imposed on goods produced by pollution-spewing Chinese factories. However, while cutting off a source of imports is easy, finding alternatives to China-based supply chains is much more difficult. For that you need the support of industrial, economic, and foreign policy — all of which remain under national control.
And that brings us to von der Leyen’s essential powerlessness. While trade policy in the EU is federalised, the supporting policies are not. It’s no use for the EU’s representatives to play hardball with China on imports — not when national governments are doing things like selling a strategic interest in a major EU port to a state-owned Chinese company.
During the Brexit wars, an awful lot was made of the EU’s status as the world’s largest trading bloc. But the reality is less impressive. Control over trade policy matters most when it is coupled with control over the other essential functions of government. As von der Leyen and Xi face one another over the negotiating table, only one of them is truly in charge.