Can China and the EU put aside their differences and find common ground?

Wendy Wu

There was no shortage of geopolitical events in 2019. While sprawling US-China tensions occupied most of the year’s headlines, the European Union also adjusted its strategic stance on China, in a move which is expected to shape the narrative of relationships across the Asian and European continents in 2020.

For the first time, on March 12, the EU labelled Beijing as “an economic competitor in pursuit of technological leadership and a systemic rival promoting alternative models of governance” in a document which mapped out a 10-point action plan to establish a more balanced relationship with China.

The harsh tone was a surprise to Beijing, which took a while to figure out a precise translation of “systemic rival” which properly reflected the shift in relations, according to a Chinese government adviser.

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The term represented a rift between the two sides in their development models, ideology and governance and indicated a growing wariness by the EU of an increasingly influential China, the adviser said.

“The European Union has not grown accustomed to changes in the balance of power and is increasingly alert on the rise of China. For China, we would continue the policy of shelving disputes and exploring the potential for joint interests with Europe,” the adviser said.

Since then, China has strengthened its engagement with the EU, offering olive branches to Brussels and messages that cooperation outweighed conflict, delivered personally by Chinese President Ji Xinping on visits to Italy, Monaco and France in March, and reinforced at the annual China-EU summit in April.

In November, Beijing and Brussels signed a landmark deal to step up intellectual property protection for 100 branded products from both sides and China also appointed its first special enjoy for European affairs – veteran diplomat Wu Hongbo – despite already having an ambassador to the European Union.

Observers have predicted that 2020 will be the Year of Europe for China, with an intensive agenda of visits between Brussels and Beijing planned and a playing up of the prospects for bilateral cooperation in the months ahead. However, diplomatic sources have warned that EU wariness and a lack of trust may cast a cloud over any substantial progress.

Chinese President Xi Jinping meets Italian Prime Minister Giuseppe Conte in Rome in March. Photo: EPA-EFE

Investment treaty talks

The two sides are aiming to conclude an ambitious investment deal by September, when Xi is expected to attend a summit in Leipzig, Germany, with the leaders of the EU member states. Key to an agreement will be whether China can sufficiently reduce market barriers for EU firms.

The last round of talks, in Brussels in December, saw an exchange of revised offers of market access. China’s commerce ministry said the talks “achieved positive progress” while the EU was more cautious in its assessment.

Chinese foreign minister says EU investment pact is a top priority

In a statement sent via its embassy in Beijing, a spokesman for the EU described the timeline for negotiations as “ambitious” and said China needed to start showing the necessary level of ambition “now”.

The statement – which listed the EU’s key interests as financial services, information, communication technologies, telecommunications, manufacturing, health, biotechnology and maritime transport – called on China to deliver discipline for its state-owned enterprises and increased transparency for their subsidiaries to offer fairness and reciprocity to European firms.

“For the EU, substance will, of course, always prevail over speed,” it said.

US-China trade war

For most of 2019, China’s engagement with the EU was overshadowed by the trade war with the US. European diplomatic sources said Beijing had sidestepped the EU for most of the year because of its trade talks with Washington, only really turning its attention back towards Brussels in November.

But they said the EU would not sit idly by while European companies were squeezed out of the market if the so-called phase one of the US-China deal – expected to be signed on January 15, according to US President Donald Trump – included favourable treatment for Washington in violation of World Trade Organisation rules.

Another adviser to the Chinese government said Beijing was treading carefully as it tried to make sure the text of the deal with Washington was in line with global trading rules to avoid damaging ties with its other key trading partners, including the EU.

Phil Hogan, the European commissioner for trade, said at a press interview in December that the US-China trade talks would not affect the investment dialogue between Beijing and Brussels. The EU had independent policies and would not choose a side, he said.

“We are not going to be treated as second-class citizens,” Hogan said. “The European Union is the most open internal trading bloc in the world, and we want everybody else to be the same.

“It’s up to the Chinese government to put forward their best market access proposals and to engage in a spirit of reciprocity with the European Union,” he said.

Building trust

Renewed pressure from the EU on China’s human rights record in 2019 intensified with the newly installed executive wasting no time in raising Beijing’s policies in Xinjiang and Hong Kong.

In his first meeting with Chinese Foreign Minister Wang Yi in Madrid in December, the EU’s new foreign policy chief Josep Borrell said he had brought up Beijing’s response to the ongoing anti-government protests in Hong Kong, as well as the internment camps in Xinjiang where an estimated 1 million Uygurs are detained.

China has been firm that it sees any overseas commentary on both these issues as an interference in its domestic affairs.

Nevertheless, European diplomats in Beijing have pointed to several areas in which the two sides could expand their cooperation, despite the rift on human rights issues. These include immigration and economic recovery in the Middle East, economic development in Africa, as well as the fight against climate change and the world’s shrinking biodiversity.

Wang Yiwei, head of EU studies with Renmin University in Beijing, said the EU’s new leadership was “torn between its hopes and worries” about China but there were areas in which Brussels and Beijing could explore pragmatic cooperation.

“Both have been hurt by the US-China trade war. European and US companies are strong competitors in the Chinese market. European firms are looking to benefit from an ambitious investment treaty with China,” he said.

“Meanwhile the European Parliament, with its increasing influence amid rising populism, is pointing fingers at China on many issues, such as complaints about the coal-fuelled projects in the Belt and Road Initiative.”

China’s belt and road network may put Paris climate targets at risk

In April, for the first time, Xi will host the annual gathering of the Cooperation between China and Central and Eastern European Countries, better known as the “17+1” – which Greece joined last year – when it meets in Beijing.

Previously, the role was left to Chinese Premier Li Keqiang. Diplomatic sources said Xi’s involvement was a sign of the greater significance to Beijing of its links with Europe.

At last year’s summit in Dubrovnic, Li said the platform – which comprises 12 EU member states and five Balkan nations, plus China – was an important supplement to Beijing’s relationship with the EU, while pledging to respect the EU’s rules and standards.

The EU has been critical of the 17+1 group, saying it threatens to undermine European unity and accusing Beijing of using the belt and road plan to gain influence by building infrastructure projects in poorer EU states like Greece and Hungary.

Risking friendships

China’s increasingly assertive response to overseas criticism on human rights and freedom of speech led to the cancellation of a trade visit to Stockholm in December, along with threats of “bad consequences” for Sweden from Chinese ambassador Gui Congyou, when a free speech literary prize was awarded to bookseller Gui Minhai, currently detained in China.

A diplomatic source said Beijing was also making operations difficult for Swedish companies in China, with tactics which have included a prolonged regulatory review and the blocking of communications between a Swedish-owned business in China and its headquarters by cutting VPN access.

It was “not a wise move” and by playing tough on European countries China was “risking losing friends”, the person said.

China launches PR blitz to combat ‘foreign interference’ in Hong Kong

China also took exception to the European Parliament’s award of its 2019 Sakharov Human Rights Prize to Uygur economist and activist Ilham Tohti, who is serving a life sentence on charges of separatism.

The Chinese government adviser said the deep rift between China and the EU on human rights issues had existed for years, recalling the protests China encountered in 2008 in London and Paris that forced the Summer Olympics torch relay to be cut short.

“It’s unlikely that Beijing and Brussels can solve their human rights differences. Neither of us can change each other. But we should have a broad picture – shelve disputes and eye cooperation,” the adviser said.

“Do not be overly optimistic, nor too pessimistic on China-EU relations.”

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