The European Council president met Chinese Premier Li Qiang on the margins of a Southeast Asian summit in Laos as Beijing and the European Union impose tit-for-tat penalties on each other’s imports in a row about subsidies and protectionism.

Michel said in an interview with AFP that after his “frank and candid” talks with Li, he hoped a deal could be struck in the coming days or weeks – but he warned that getting there would be tough.

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“We count on China to adapt its behaviour and to understand that we have to rebalance the economic relationships for more fairness, for fair competition, for a more level playing field.”

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A furious Beijing has responded with new tariffs on EU-made brandy, alarming French producers, while Brussels is also investigating Chinese subsidies for solar panels and wind turbines.

China is also tangled in a bitter, wide-ranging trade dispute with the United States, with Washington announcing sharp tariff hikes targeting $18 billion of Chinese goods including electric vehicles, EV batteries and solar cells.

Beijing reacted angrily to Michel’s remarks Friday, condemning what it called the EU’s “lose-lose” approach to the dispute.

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With the global economy rattled by conflict in Ukraine and fresh turmoil in the Middle East, Michel said it was better for all to avoid a trade war.

But he insisted the EU would no longer be “naive” about massive government subsidies, though he offered some hope the two sides would find a way out of the row.

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