EU won’t follow Trump into a trade war over Hong Kong

While the US president is threatening action against China, the EU wants an investment deal this year.

European leaders are in no mood to follow the U.S. in threatening trade sanctions against Beijing as it moves to tighten its grip on Hong Kong…

EU foreign policy chief Josep Borrell said he had “deep concern” about Thursday’s move. He has previously insisted Brussels “attaches great importance to the preservation of Hong Kong’s high degree of autonomy,” but said this week he didn’t think “sanctions against China are going to be a solution for our problems.” Merkel also said the EU, the world’s biggest trade bloc, needs to maintain a “critical and constructive” dialogue.

European foreign ministers will meet on Friday to try to hack out a common position on China, but trade retaliation is not on the agenda. “Sanctions are not on the table, our relations with the Chinese are simply too important,” one senior EU diplomat said.

All eyes on investment deal

The key issue is whether China’s power grab in Hong Kong will weigh on the EU’s investment agreement with China, which Germany wants to conclude this year. The senior diplomat said that Hong Kong could be “a game-changer” as questions increase about rule of law in a city of 7 million people that is the base for many European investors in the region.

Germany wants the deal to be concluded at an EU-China summit in the city of Leipzig in September.