How and why the EU haggles with China

How and why the EU haggles with China

What is happening between the EU and China? An in-depth study by Federico Punzi, editorial director of Atlantico newspaper

The EU-China summit held in recent days by videoconference did not go well. EU-China relations are cooling down. And while Beijing struggled to give its spin to the summit narrative – with President Xi Jinping, via the Xinhua agency, talking about a non-existent "acceleration" of the investment treaty talks, with the aim of concluding by 2020, and called for "cooperation" and "multilateralism" – a cold shower came from the press conference of the EU summits.

In fact, the statements of the German Chancellor Angela Merkel, current EU president until the end of the year, of the President of the European Commission Ursula Von der Leyen, and of the President of the European Council, Charles Michel, were cold. "We must recognize that we do not share the same values, political systems, nor the same approach to multilateralism," the latter said.

Cooperation with Beijing "must be based on certain principles" and there must be "rules" for multilateralism, the Chancellor warned – who has nevertheless taken great care not to sink into the issue of human rights, which is already costing him more than one headache with Putin.

On the other hand, how can the head of the regime who lied to the world about the Wuhan virus ask for cooperation and multilateralism?

But it is on the partnership that Berlin seems increasingly skeptical in recent days. He would like, indeed, a strategic partnership with Beijing ("it is positive and important to try to have strategic relations with China"), "but we must also look at reality and we cannot have any illusions", Merkel acknowledged.

Because in the last two decades at least, we have gone too far with illusions about Beijing in the West, and in Europe in particular …

Stuart Lau, the European correspondent of the South China Morning Post asked yesterday a direct question to the chancellor, who led the dances with China for her country but to a large extent for the European Union: did anything different in the last 15 years of politics with China? The answer is emblematic: "Political action is always when it takes place". It seems the manifesto of a day-to-day, short-term policy, certainly not the far-sighted vision of a "statesman", as the sole correspondent tends enthusiastically to present it to us.

When Michel states that the EU is "a player and not a playing field", he is implicitly admitting that until now it has been a playing field, indeed a land of conquest. Four years behind Trump's America, the EU seems to have reached the same conclusions: now it is enough to be exploited. At least they could have spared us the sermons to the American president and the praises of Xi Jinping in 2017-2018 …

Even yesterday the differences on human rights and climate remained in the background, with the usual declarations of circumstance. The real game is all about the economy, in particular the mutual investment treaty that Brussels and Beijing have been negotiating for about six years and twenty negotiating rounds. "Economically China has become much stronger" than in the past, Merkel noted, "therefore the calls for reciprocity and rules for fair competition are more than justified." “It can no longer be treated as a developing country,” with all the advantages that this brings.

If a few years ago in Germany one could turn a blind eye to Chinese unfair competition, today, Francesco Galietti suggests, the German industrial world even before the political one seems to have opened both of them: Beijing aims at overtaking, aims at industrial and technological supremacy. And in Berlin they experience it as a sacrilege.

The aggressive propaganda with which Beijing has tried to turn the narrative of the pandemic and the repression in Hong Kong to its advantage have certainly not helped to improve its image in the West, nor to "bring Europe to its side" in comparison with the USA (or not yet…). Indeed, the mission of Foreign Minister Wang Yi to the Old Continent turned out to be disastrous, where he took a public rebuke from German Foreign Minister Heiko Maas (not exactly a hawk …) for having threatened a Czech politician on Taiwan.

Chancellor Merkel hoped to end the six-month German presidency of the EU with a flourish, and her long political career, bequeathing the EU and her country the investment agreement with Beijing, as a solid anchor for Europe (read : Germany) "between the great powers China and the United States".

But when asked whether this agreement can still be reached by the end of the year as originally planned, he honestly replied that "an enormous amount of work must be done". "It could happen. But I can't give a guarantee today, ”he added. “There must be political will to close the deal. And this political will is on both sides ”.

In particular, Von der Leyen fell: "There is still a long, long way to go if China wants to close the investment agreement within the year". But at this point "it is not a question of timing, but of substance". In particular, it needs to move on two aspects. “There are restrictions on market access for telecommunications and computers that need to be removed, and the same goes for the automotive sector, to name just two. The same is true for sustainable development. We want progress. It is time for China to show that there is a real interest in strengthening and improving things. In other words – it is the final jab – China must convince us that it is worth having an investment agreement ”.

While appearing increasingly tired in her releases, we are sure that the chancellor will not give up easily when her latest masterpiece fades.

It is still too early, and too little, to conclude that Berlin, and the EU, are abandoning the hope of a strong, strategic partnership with Beijing, even challenging Washington's ire.

The cooling we are witnessing could prove not to be the beginning of an afterthought, but a negotiating posture, favored by the events (pandemic and Hong Kong) and suggested by the need to stall while waiting for the US presidential elections. To maximize the effectiveness of any move, in fact, in one direction or another, both players should wait to find out who will be the tenant of the White House for the next four years, and in particular if Trump will have been a parenthesis or a watershed in US-China relations.

As Andrew A. Michta observed in the Wall Street Journal , that of Xi Jinping is an interesting hand: he has the opportunity to wedge himself into the divisions between the US and the EU – as Nixon did in the 1970s by distancing China from the USSR, so that the two communist powers do not join forces against the West – playing the card of access to the Chinese market, considered essential for the European economic recovery.

In fact, at the moment, as we have written several times, both in “Brexit. The Challenge ” that on Atlantico Quotidiano , Europeans do not see China as a strategic or military threat, but a series of economic and commercial problems. European leaders, Michta notes, "are increasingly worried about Chinese bullying, but they don't want to be pulled into an alliance with Washington against Beijing".

“If these conditions are maintained and China manages to insert a wedge between the United States and Europe – concludes Michta – transatlantic relations will be a thing of the past. Such a change would transform Europe from a transatlantic gateway to Eurasia at the tail end of a China-controlled Eurasian supply chain, ultimately allowing Beijing to dominate Europe and aim for global hegemony ”.

And as Jakob Hanke Vela wrote on , the real weakness of Europe with China is Germany:

“When it comes to influencing European politics, Beijing's real leverage does not come from high-profile investments in small countries like Greece or Hungary [nor medium-sized countries like Italy, ed ]. It stems from European investments in China, in particular from Germany's desire not to disturb its profitable economic relationship with one of the largest export markets in the world ”.

"The weakness of Europe is Germany, and Germany is the automotive industry, and the automotive industry is Volkswagen" he told Max Zenglein, chief economist of the Mercator Institute for China Studies (MERICS). Just look at the growth in the volume of German exports to China.

EU diplomats say that Germany's relations with China have had too much weight in determining the strategy of the blockade towards the country: "It is difficult to bring EU countries to the same position when it comes to China", explained a senior diplomat . “Germany is the one pushing for close cooperation”.

But Zenglein argues that Berlin has failed to "price" the political risks deriving from its economic involvement in China, in terms of tensions primarily with the United States, but not only.

Therefore, as we wrote in July , the German-led EU should stall: with Joe Biden, in fact, a prospect of progressive easing of US-China tensions would open and Berlin could aim for a more ambitious agreement without irritating Washington. Until then, some cooling may even prove useful in increasing the EU negotiating leverage in view of the tightening of negotiations with Beijing.

But apparently, Xi Jinping is holding on too, he decided to wait for the US presidential elections before eventually dropping his sugar to the Europeans (and the Germans), dosing it according to who will be in the White House. With Trump, in fact, China could be induced to grant more in order to distance the EU from the US. And after all, despite the recent measures adopted by Brussels – the guidelines on the security of the 5G network and the screening of new investments – the status quo still allows it to continue with its predatory approach.

The fact, observes Wolfgang Münchau, taking up an analysis by François Godement ( European Council on Foreign Relations ), is that in the eyes of the Chinese leadership the EU is "desperately divided and not sufficiently strategic" and Beijing is starting to put European countries 'against each other.

Angela Merkel is precisely the leading exponent of "European duplicity": on the one hand, "her declared support for a common EU position on China"; on the other, Berlin “acts with mercantilist unilateralism in its bilateral relations”. While what the EU should do is warn the Chinese leadership that if it refuses to grant full reciprocity in economic and trade relations, this will lead to "decoupling" . It has been talked about in recent days in some press articles, but we do not know that the EU came to threaten it at yesterday's summit.

With Beijing, the EU is harsher and colder in tone, but it doesn't seem to us in substance. There is still the courage of an either -or . Litmus tests will be, in the coming months, the agreement on investments and the decisions of Berlin on the role of Huawei in the 5G network.

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This is a machine translation from Italian language of a post published on Start Magazine at the URL on Sun, 20 Sep 2020 05:12:46 +0000.