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China's Xi makes first visit to Europe in five years

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EU states differ on China strategy, weakening bloc's

leverage

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EU threatens tariffs on China EV vehicles, green tech

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Paris, Brussels readier than Berlin to push back on

subsidies

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Xi's Serbia, Hungary trips seen as move to deepen EU rifts

By Laurie Chen and Michel Rose

BEIJING/PARIS, May 2 (Reuters) - Chinese President Xi

Jinping heads to Europe for the first time in five years next

week in a visit that may lay bare European divisions over trade

with Beijing and how the continent positions itself as a pole

between the United States and China.

Xi travels to France, Serbia and Hungary at a time when the

European Union is threatening to hammer China's electric vehicle

and green energy industries with tariffs over huge subsidies the

bloc says gives manufacturers in China an unfair edge.

With China's economy facing headwinds and the U.S. closing

itself off to Chinese firms, the European Union could have some

leverage over Beijing. But the bloc's 27 members are not neatly

aligned, undermining their ability to shape Chinese thinking,

analysts say.

Overshadowing the visit are European concerns over Chinese

support for Russia's wartime economy two years into its military

campaign in Ukraine.

Lin Jian, a spokesman for China's foreign ministry, said

Xi's visit would "inject stability into the development of

China-Europe relations and make new contributions to peace and

stability in the world".

Xi's goal would be neutralising the EU's economic security

agenda, including its tariff threats, by exploiting internal

differences, said Mathieu Duchatel, senior fellow at the

Institut Montaigne.

"There's a very strong divide and rule element," Duchatel

said of China's strategy towards Europe. "That's not hidden but

in plain sight."

European companies and governments have long complained of

restricted access to the Chinese market and unfair competition.

A Kiel Institute study estimated China's subsidies for its firms

range between three to nine times other major economies.

The European Commission has the exclusive right to run trade

policy for the whole collective EU, but within the bloc member

states have struggled to agree how to fix the trade imbalance.

Macron seeks a more aggressive EU stance on subsidies and

warned that the bloc risked falling behind if it did not permit

exemptions to its own competition rules in the face of

'oversubsidies' by China and the U.S.

'WE DON'T PROTECT ENOUGH'

"We regulate too much, we don't invest enough, we don't

protect enough," Macron told The Economist in an interview

published on Thursday.

German Chancellor Olaf Scholz in April pressed Xi for better

market access for German firms. But on the EU anti-subsidy

investigations, apparently anxious to avoid antagonising

Beijing, he said the bloc should not act out of protectionist

self-interest although competition should be fair.

Some French government officials say privately that they are

concerned Berlin will try to undermine the electric vehicle

probe, which has zeroed in on Chinese carmakers BYD,

Geely and SAIC. China is a key market for

Germany's export-led economy and its carmakers such as BMW

and Mercedez-Benz.

Scholz is due to dine with Macron and the two leaders' wives

in Paris on Thursday, two sources involved in the planning said.

Noah Barkin, a senior adviser at the Rhodium Group and close

follower of EU-China relations, said Macron would encourage

Scholz to join him and European Commission President Ursula von

der Leyen, for four-way talks with Xi in the French capital, as

Paris seeks to present a united front. The Elysee Palace

declined to comment.

"A worrying gap has opened up between the German position on

China, on the one hand, and the position of the French and the

European Commission, on the other. There is simply a greater

readiness in Paris and Brussels to push back against Beijing on

the trade front than there is in Berlin," Barkin said.

RUSSIA CONCERNS

"Europe has quite a bit of leverage, but that leverage flies

out the window if European lenders are sending different

messages to Xi," Barkin added.

Xi will be in Europe from May 5-10.

A Macron aide said the French leader would add his voice to

calls from Washington, Brussels, Berlin and elsewhere for China

to stop exports to Russia of "dual-use" and other technologies

propping up Russia's war effort.

In Serbia and Hungary, any public comments by Xi on Russia

will face close scrutiny. Xi is due to host Russian President

Vladimir Putin in China later in May.

Observers said Xi's choice of Serbia and Hungary was

designed to pull closer two European countries that are

pro-Russia and large recipients of Chinese investment, including

financial aid for a delayed rail project linking their capitals.

Serbian President Aleksandar Vucic said he was honoured by

Xi's visit, and he expected a free trade agreement between the

two countries signed last October to come into force on July 1.

Chinese analysts said Xi could use his stopover in Belgrade,

which coincides with the 20th anniversary of NATO's bombing of

the Chinese embassy there, to play up China's anti-NATO agenda.

China has amplified Russian efforts to blame the U.S. and

NATO for escalating the Ukraine war by supplying arms to Kyiv.

Hungary has also in the past blocked EU statements

criticising China on human rights.

Shen Dingli, a Shanghai-based international relations

scholar, described the outreach to Serbia and Hungary as part of

China's efforts to deepen divisions within the West.