German Chancellor Angela Merkel has warned that Europe will start limiting Chinese companies’ access to the single market if China does not agree to a major opening up by the end of this year.
The European Union on Friday formally agreed to restrict “high-risk” vendors from building next-generation 5G mobile technology, a move that brings the bloc closer to the US, which has been lobbying its allies to exclude Huawei.
The EU has toughened its stance on China in recent months as the coronavirus outbreak, the situation in Hong Kong, and the continuing stalemate over a proposed investment agreement that would give European businesses greater access to China have all weighed on relations.
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“If there is no market access from the Chinese side for certain areas, this will of course also be reflected in the fact that market access to the European market will be narrower,” Merkel said in a press conference in Brussels after a two-day special EU summit.
“We naturally expect reciprocity for the investment agreement with China,” Merkel said. “We find that the barriers to entry with regard to China are still too high. This will now be discussed further.”
Market access is currently the major stumbling stock for the negotiators, who hope to complete the deal by the end of the year. The EU wants China to promise to remove barriers for EU businesses – essentially a demand to overhaul the way its state-managed economic model has run for decades.
Merkel’s latest comments were a step up from her earlier position, a diplomatic source said, since it was the first time she laid open the possibility of the EU taking countermeasures against China – a major shift from her preference of portraying the EU as an open market for outside players.
The German leader is expected to chair a mid-November meeting in Berlin of all 27 EU leaders to discuss China, according to the European Council.
The meeting was called after the 27 EU leaders were left with little time to discuss China this week as they were preoccupied with other regional issues – most notably Turkey’s alleged infringement of EU maritime rights in the Eastern Mediterranean and its role in the conflict between Armenia and Azerbaijan over the Nagorno-Karabakh area.
However, the EU leaders did agree to a joint position on 5G, which would potentially have a major impact on Huawei.
According to an official statement, the EU Council called on member states to “make full use” of a 5G cybersecurity toolbox adopted in January and “in particular to apply the relevant restrictions on high-risk suppliers for key assets defined as critical and sensitive”.
“The European Council underlines that potential 5G suppliers need to be assessed on the basis of common objective criteria,” it added.
Unlike France and former EU member Britain, Germany has not made any moves to phase out Huawei from its current infrastructure. However, Merkel is also facing more calls to impose tighter restrictions through a new set of IT security law.
In the press conference, Merkel would only say that Germany would “move within the framework” of the EU toolbox.
Earlier this week, the EU for the first time lent its support to the “Clean Network” initiative launched by the US to restrict Chinese tech companies and mobile apps, such as video-sharing app TikTok and WeChat, China’s most popular social media platform.
China has urged the EU not to participate, but on Tuesday – the same day that US undersecretary of state Keith Krach met EU internal markets commissioner Thierry Breton – the bloc said its 5G policy shared similarities with the US initiative.
“They highlighted their commitment to shared principles on 5G security and the synergies between the EU 5G cybersecurity toolbox and the Clean Network, which is rooted in internationally accepted digital trust standards,” the EU’s statement read.
Beijing has previously lambasted the Clean Network initiative, which was launched in August by Secretary of State Mike Pompeo, with Chinese foreign minister Wang Yi saying the US is “not qualified” to build a coalition of clean countries “because it is dirty all over itself”.
On Friday, the 27-member bloc also “reaffirmed” its policy of classifying China as a partner, strategic competitor and systemic rival – even though Beijing has repeatedly asked the EU to stop using the latter designation.
The European Council also “underlined its serious concerns about the human rights situation in China, including developments in Hong Kong and the treatment of people belonging to minorities”.
It also welcomed President Xi Jinping’s pledge to achieve carbon neutrality by 2060, but added that China should make some “meaningful” achievements on sustainable development.
This article Angela Merkel warns China to do more to open up or risk more restrictions on EU market access first appeared on South China Morning Post