But a souring relationship with an increasingly unpredictable Beijing, regret about the price Europe has paid for getting too close to Russia, and rising geopolitical tension has some EU officials considering whether the bloc should start to reduce its exposure.
A lot has happened since the last time an EU president — appointed by the leaders of the 27 EU member states — met with Xi in person four years ago.
Michel’s spokesperson, Barend Leyts, said in a statement last week that Michel’s visit provides a “timely opportunity” for Europe and China to engage on matters of “common interest.” He did not specify which subjects would be discussed.
But some within Europe are growing wary of close relations with China. The bloc has been badly burned this year by its historic reliance on Russia as its main energy supplier, and diversification has shot up the political agenda.
The bloc is in a similar bind.
“Any problems you have from a political and strategic level [between the EU and China], they tend to spill over to the economic level,” Ricardo Borges de Castro, associate director at the European Policy Centre, told CNN Business.
‘Too big to fail’
Both sides have a lot invested in their partnership. The total value of the goods trade between China and Europe hit €696 billion ($732 billion) last year, up by nearly a quarter from 2019.
China was the third largest destination for EU goods exports, accounting for 10% of the total, according to Eurostat data. China is Europe’s biggest source of imports, accounting for 22% in 2021.
“The European market’s importance as a destination for Chinese exports is around double that of the Chinese market for Europeans,” Jörg Wuttke, president of the EU Chamber of Commerce in China (ECCC) wrote in a September report.
“I don’t see [the EU’s strategy] as a decoupling strategy. I think the EU strategy, for the moment, is a diversification strategy… the lesson [from Russia] is that you cannot have a single provider,” he said.
Machinery, vehicles, chemicals, and other manufactured goods account for the vast bulk of goods traded between the two powers, according to Eurostat.
“European companies have done extremely well here and the overall long term outlook is very positive,” ECCC Secretary General Adam Dunnett told CNN Business, adding that he expects European company revenues to keep growing in China over the next decade.
But those dependencies shouldn’t be exaggerated, Dunnett said.
“When you look at some of the broader things that China exports to the EU such as furniture and consumer goods, a lot of those things you can get elsewhere,” he said.
Economic ties between Brussels and Beijing, though mutually beneficial, have frayed in other ways in recent years.
Last year, Chinese direct investment into the European Union dropped to its second lowest level since 2013, only behind 2020, according to analysis by the Rhodium Group, a research firm. It has fallen almost 78% since 2016.
EU investment into China has also become more concentrated. Between 2018 and 2021, the top 10 European investors in China, including those from the United Kingdom, made up almost 80% of the continent’s total investment in the country, Rhodium Group data shows.
EU diplomats said in April that a “growing number of irritants” were hurting relations, including China’s tacit acceptance of Russia’s war in Ukraine. They have described China as “a partner for cooperation and negotiation, an economic competitor and a systemic rival.”
“For the last year, it’s been the Covid carousel, [the] Covid rollercoaster,” he said. “Every time you think [it was] about to open up, something pulls us back,” he added.
Beijing’s uncompromising approach is helping to further dampen foreign investment in the country, especially among smaller companies, Raffaello Pantucci, a senior associate fellow at the Royal United Services Institute, a security research group, told CNN Business.
“The general business environment in China is perceived as becoming harder to navigate, and while companies still feel they have to engage given its size and potential, increasingly small to medium sized companies are giving up,” he said.
— Laura He contributed reporting.