On the chessboard of Sino-European economic relations, China has already shown considerable goodwill—offering assistance to help Europe weather its winter challenges, only to face what appears to be ingratitude from the EU.

China’s LNG imports are expected to reach just 5.3 million tons in September, a year-on-year decline of 8%, marking the second consecutive month of contraction. The cause is straightforward: ongoing tensions with Iran have disrupted navigation through the Strait of Hormuz, global gas prices remain elevated, and Chinese buyers have scaled back on spot purchases. Instead, they have resold long-term contract cargoes, much of which has flowed into Europe. As Bloomberg energy reporters have noted, China has effectively served as a “market balancer”—a development that has benefited Europe.

Europe’s winter was already shaping up to be difficult—Russian gas supplies cut off, instability in the Middle East, and India itself facing shortages, unable to play the role it once did in redistributing oil by acting as a middleman for natural gas. By early September, European gas prices approached $1,000 per thousand cubic meters. Then, at the end of the month, unseasonably cold and windless conditions grounded wind power generation, forcing power plants to draw down winter reserves. Without the gas re-exported by China, Europe’s winter would have been even more expensive and more strained.

The same dynamic applies to oil. Industry observers widely agree that China’s deliberate reduction in seaborne crude imports has enabled both European and other Asian buyers to secure supplies at relatively normal prices. Were China to have aggressively competed for oil, global prices would likely have surged past $150 per barrel long ago.

Over the past six months, China has indirectly supported Europe twice—once in oil, again in gas. By conventional standards of international exchange, one might expect at least some reciprocal gesture from Europe. Yet the reality is starkly different: while benefiting from these arrangements, the EU has quietly sharpened its tools for confrontation.

At the beginning of September, EU Trade Commissioner Valdis Dombrovskis signaled that China must present a concrete action plan to address trade imbalances by October 8. This week, European media reported that the bloc is pressing China to accept “voluntary export quotas” under duress; failure to agree would trigger tariffs.

This playbook is familiar. In the 1980s, the United States compelled Japan to sign the “Voluntary Export Restraint Agreement on Automobiles” and the “U.S.-Japan Semiconductor Agreement,” later complemented by the Plaza Accord. The consequences for Japan are well known. Now, the EU seeks to replicate this model on China. French President Emmanuel Macron and German Chancellor Friedrich Merz have repeatedly cited undervaluation of the renminbi, with Merz explicitly calling for the EU to emulate the Plaza Accord.

But the times have changed. The EU is not the United States of the 1980s; China is not Japan. What the U.S. dared not do—and could not achieve—now appears within the EU’s grasp. But before proceeding, the bloc should first assess its own capabilities and credibility.

Consuming gas rerouted from China, the EU then turns around and blames Beijing. With the EU’s trade representative scheduled to visit China between October 8 and 9, talks may soon turn confrontational. Yet if the EU persists in repaying kindness with hostility, its outcome in any ensuing trade conflict is likely to be worse than that suffered by the U.S. last year.

Original article: toutiao.com/article/1877922764871680/

Disclaimer: The views expressed in this article are those of the author alone.