Macron, von der Leyen press China's Xi on trade in Paris talks

By Elizabeth Pineau, John Irish and Ingrid Melander

PARIS (Reuters) -French President Emmanuel Macron and EU Commission chief Ursula von der Leyen urged Chinese President Xi Jinping on Monday to ensure more balanced trade with Europe, but the Chinese leader showed little sign of being ready to offer major concessions.

In meetings in Paris, Macron also pressed the Chinese leader to use his influence on Russia to end the war in Ukraine.

Xi arrived in Europe for the first time in five years, at a time of growing business tensions that include the European Union investigating Chinese industries such as electric vehicle exports, while Beijing probes mostly French-made brandy imports.

The European Union "cannot absorb massive over-production of Chinese industrial goods flooding its market," von der Leyen said after the three held talks under the gilded ceilings of the Elysee Palace.

"Europe will not waver from making tough decisions needed to protect its market," she said, in reference to the trade probes and the sanctions that could follow. The relationship between Europe and China is hurt by unequal market access and by Chinese state subsidies, she said.

Speaking later alongside Xi after the two met several times during the day, reviewed troops together and repeatedly shook hands for the cameras, Macron told reporters: "The EU today has the world's most open market ... but we want to be able to protect it."

The EU's more assertive stance on trade with China dovetails with Washington's approach. U.S. Treasury Secretary Janet Yellen has warned Beijing that Washington will not accept new industries being "decimated" by Chinese imports.

During their talks, held behind closed doors, Xi agreed that economic and trade frictions should be addressed through dialogue, Chinese state media said.

But he also told Macron and von der Leyen that the problem of China's over-capacity "does not exist either from the perspective of comparative advantage or in light of global demand", Chinese media said.

He later said China and France would work on rebalancing trade from the top, but gave few details.

Macron's official gifts for Xi included cognac by LVMH-owned Hennessey and Remy Cointreau, which are among the French companies affected by China's retaliatory anti-dumping brandy investigation.

Macron thanked Xi for what he described as his "open attitude" in the cognac probe.

While the French president gave little details and Xi did not mention it, a French diplomatic source said this meant no taxes or custom duties until the probe was over, but did not preclude measures once it is wrapped up.

"I thank the President for his open attitude regarding provisional measures on cognac and for his wish not to implement them," Macron said.

'COLD WAR'

French diplomatic sources said Xi seemed receptive to concerns about trade imbalances, adding that the objective of the visit was to get messages across. Whether any action would follow remained to be seen, the sources said.

In brief comments televised before one of his meetings with Macron, Xi urged his counterpart to join him in showing "independence" and "prevent a 'new Cold War'" between blocs.

"We need to be forward-looking and work together for an equal and orderly multi-polar world," Xi said, calling on Macron to joining him in opposing "decoupling" China's supply chains and other economies.

The EU's 27 members - in particular France and Germany - are not unified in their attitude towards China. While Paris advocates a tougher line on the EV probe, Berlin wants to proceed with more caution, sources say.

Some French government officials privately expressed concern that 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.

France is also pushing China to open its market to French agricultural exports and resolve issues around the French cosmetic industry's concerns about intellectual property rights.

"Among ourselves, French and Chinese companies and authorities, we talk to each other continuously," Jean-Paul Agon, the chairman of French cosmetics giant L'Oreal, told a Franco-Chinese business forum. "What matters is our common, shared desire to find solutions and move forward together."

China, meanwhile, may announce an order for around 50 Airbus aircraft during Xi's visit.

After a dinner at the Elysee Palace, Macron will take Xi to the Pyrenees on Tuesday, a mountainous region dear to the French president as the birthplace of his maternal grandmother.

(Reporting by Elizabeth Pineau, Tassilo Hummel, Geert de Clercq, Leigh Thomas, John Irish, Ingrid Melander, Dominique Patton, Mimosa Spencer and Gabriel Stargardter in Paris, Sudip Kar-Gupta in Brussels, Ryan Woo, Laurie Chen and Ethan Wang in Beijing; additional reporting by Andrew Gray in Brussels; Writing by Ingrid Melander; Editing by Stephen Coates, William Maclean, Nick Macfie and Tomasz Janowski)