Three changes occur in Sino-EU relations

Editor's Note: The CCCEU invites you to participate in our fresh 2022 Survey of the Development of Chinese Enterprises in the EU, as well as a key webinar on the China-EU investment agreement on June 8th! This edition of the CCCEU Weekly Update will keep you informed of the China-EU dynamics. Enjoy reading and have a lovely holiday break!

The war in Ukraine, which entered its 100th day on June 3, has dominated almost all of the EU's agendas. This new geopolitical situation has profoundly changed the European security landscape and has also put new pressure on China-EU relations. This new geopolitical situation has profoundly altered the European security landscape, putting new strains on China-EU relations. Many media outlets, think tanks, and observers have noted recent changes in the way the EU and its member states approach China.

To begin with, this week, European opinion has focused on what appears to be a hardening of the German government's attitude toward China. The German Marshall Fund (U.S.) released a monthly report this week citing two signs of a recent shift in German attitudes, one of which was German Economy Minister Robert Habeck's decision to reject Volkswagen's application for a government investment guarantee in relation to a Chinese project because the company did not want to close its plant in Xinjiang.

One more sign was that German Chancellor Scholz accused German companies of putting all of their eggs in the China basket, urging them to diversify their supply chains and export markets, after previously criticising China's Xinjiang policy in Davos. The German government's shift in attitudes was also captured by the country's media, highlighting that the traditionally mercantilist German government is now focusing more on the political front.

Second, Europe and the United States have further aligned their approach toward China, "upgrading" their economic and trade relations with China's Taiwan this week.

On Wednesday, a virtual meeting was held between deputy U.S. trade representative and Taiwan representative to launch the so-called U.S.-Taiwan Initiative on 21st-Century Trade. This was immediately followed by the annual EU-Taiwan Trade and Investment Dialogue on Thursday.

According to an EC press release, the areas of discussion between the EU and Taiwan include semiconductors and plans for "other trade and investment matters were also discussed, "with a focus on improving market access for EU agricultural products and the investment environment for EU companies in the offshore wind power sector."

On Friday, the Chinese Mission to the EU's spokesperson reiterated that the One-China principle serves as the political foundation for establishing and developing diplomatic relations between China and the EU.

The spokesperson said: "China firmly opposes all forms of official interaction with Taiwan by countries or organisations having diplomatic ties with China. We urge the EU side to abide by the One-China principle and not to have official interaction with Taiwan in any form. "

Third, as many observers have noted since the beginning of the year, Brussels has accelerated the development of unilateral trade and economic instruments, such as the anti-coercion instrument, new rules on foreign subsidies, and the international procurement instrument (IPI), on which Parliament will vote next Monday.

The South China Morning Post well summarised the change in a report titled "Europe beefs up trade arsenal for long-term fight with China."

In the joint policy paper “Rebooting Europe’s China strategy,” published by Institut Montaigne in partnership with the German Institute for International and Security Affairs (SWP) and the Centre for European Reform (CER), European experts argued that "systemic rivalry" is at the core of the EU-China relationship.

It concluded that Europe needs to reduce and manage its vulnerabilities as well as enhance its leverage vis-à-vis China, and to engage more forcefully with the UN and other international institutions to ensure their integrity against Chinese efforts to redefine and re-purpose them.

It also noted that the EU should maintain its engagement with China but on the basis of reciprocity and respect for agreed principles, norms, rules and procedures.
 

China-EU dialogues

This week witnessed a flurry of Sino-EU dialogues.

For instance, the two sides held a video conference on "China-EU Marine Data Network Partnership (CEMDnet)", where both sides exchanged cooperation achievements, discussed opportunities and challenges, and discussed the future of marine data cooperation.

On Tuesday, China and the EU held their 10th EU-China Labour Dialogue via video link. On Wednesday, Assistant Foreign Minister Wu Jianghao held a China-EU consultation on Asian affairs with Managing Director for Asia and the Pacific Gunnar Wiegand of the European External Action Service via video link.

Also on Tuesday and Wednesday, China, the EU and Canada co-convened the 6th Ministerial on Climate Action (MoCA) in Stockholm. Discussions are focusing on key political issues on the agenda ahead of COP27 in November, including climate change mitigation, adaptation, loss and damage, climate finance, and how we can deliver on the Glasgow mandates and collectively respond to the demands for global climate ambition. 

Grand reopen in Shanghai 

On Wednesday, Shanghai was reported to largely return to normal production and life after two months of closed-off management to contain the COVID-19 resurgence. 

According to CNBC, European stocks closed higher Monday as traders took comfort from loosening Covid restrictions in China while also keeping a wary eye on new inflation figures in the region. Overall market sentiment was boosted over the weekend by a relaxation of Covid controls in the major Chinese cities of Beijing and Shanghai.

China 'firmly' opposes U.S.-Taiwan trade initiative

 According to China News, in response to the announcement by the United States and Taiwan to launch the "U.S.-Taiwan 21st Century Trade Initiative", Chinese Ministry of Commerce spokesman Gao Feng said on Thursday that China is firmly opposed to this, and Washington should prevent it from making the "Taiwan independence" separatist forces send the wrong signal.
 

What are experts talking about?

“India’s economic framework and suspected multilateralism” published in China-US Focus, the author is Zhang Yun. In his first visit to Asia since taking office, President Joe Biden announced the launch of the Indo-Pacific Economic Framework (IPEF) in Japan, giving the highly military-oriented U.S. Indo-Pacific strategy an economic backbone at last. However, according to the author, the current IPEF seems to embody a "suspected multilateralism", and its durability and success rate remain to be tested.

The joint policy paper “Rebooting Europe’s China Strategy” is published by Institut Montaigne in partnership with the German Institute for International and Security Affairs (SWP) and the Centre for European Reform (CER). To deal with the debate raised from EU’s strategy to China, four European China and international relations figures from France, Germany and the UK joined forces to provide a wide-angle assessment of China’s current trajectory and of what is at stake for Europe.

Please note: the English version of this issue is slightly different from our Chinese one. The views and opinions expressed in this article do not necessarily reflect the official position of the CCCEU.