Source: Ministry of Foreign Affairs, the People's Republic of China

Brussels walks a fine line with Beijing, balancing partnership and rivalry

China-EU high level dialogue in full swing, as were EU's trade tools against Chinese goods 

Editor 's Note : Welcome to the CCCEU Weekly Update! Please participate in our annual survey to tell us more about your story and assessment! In this edition, we share observations about the China-EU dynamic. Enjoy reading and have a lovely weekend! 

Shinzo Abe, the former Japanese prime minister who was shot and taken to the hospital during a speech, died earlier today. The news shocked the entire world, including Chinese and Europeans who sent condolences. Mr. Abe, rest in peace. 

In terms of China-EU relations, the week has seen both sweetness and bitterness. 

On the bright side, the two sides have held back-to-back high-level talks over the last two days. Brussels and Beijing held their long-awaited green talks on Friday, the third version since the mechanism was established in 2020. China and the EU's foreign ministers met on the sidelines of the G20 Foreign Ministers' Meeting on Bali Island the day before. It was also reported that high-level economic and trade talks between China and the EU will take place in mid-July. 

Meanwhile, we made an equally intriguing observations. 

First, this week is likely to be the busiest week for the commission's trade department in terms of using tools against Chinese imports. 

Remember how Chinese tyre manufacturers won their lawsuit against the commission in May? The commission had two months to decide whether to appeal the decision. On Friday, it adopted a "smart" strategy: accept reality for the time being while resuming the investigation into the cases. Market observers and experts were widely anticipating the move. On Wednesday, the same strategy was used in another dispute: the Giant China Company’s anti-dumping tariffs. 

But it's a long list: The suspension of the final anti-dumping duties imposed on imports of Chinese-made flat-rolled aluminium products was decided upon by the Commission on Thursday. It also amended the relevant provisions on Wednesday in order to impose a final anti-dumping duty on Monosodium Glutamate imported from China and Indonesia. On the same day, the EU General Court ruled that two enterprises from China's eastern cities of Zhejiang and Ningbo had failed in their anti-dumping duty case against the commission. 

Second, all eyes are on Berlin’s decisions on 5G and harbour takeover.

The German government will make its first decisions regarding which suppliers to accept into Germany's 5G networks "in the coming weeks," according to Noah Barkin, author of the monthly "China Watch in Europe" report for July from the German Marshall Fund of the United States (GMF).

The report said Germany’s IT Security Law of April 2021 establishes a complicated two-step evaluation process that will allow the government to determine which crucial missing suppliers are reliable without explicitly banning Chinese businesses. According to those who are familiar with the Scholz government's thinking, it is extremely unlikely that Chinese suppliers will be admitted. 

Plus, Mr. Barkin said, the German government has until September to decide whether to approve a Chinese company's acquisition of a 35% stake in a major terminal in the German port of Hamburg. Whether Scholz’ government will approve it "is a decision that will be watched closely in Germany, Europe, and beyond." 

Rationalism or business politicisation, it is a question. 

Third, the act of "technology decoupling." 

As Bloomberg reported, the US is pushing the Netherlands to ban ASML Holding NV from selling to China mainstream technology essential in making a large chunk of the world’s chips, expanding its campaign to curb the country’s rise. 

The Dutch government has yet to agree to any additional restrictions on ASML’s exports to Chinese chipmakers. 

In response, Chinese Foreign Ministry spokesperson Zhao Lijian commented on Wednesday: the U.S. is practicing "technological terrorism." 

"Those who seek to block others' way will only end up blocking their own way," he said, calling on the parties concerned to adopt an objective and impartial stance on the matter and make independent decisions based on their own long-term interests and the market principles of equity and fairness.  

Our take is simply as follows: 

To begin with, it might look like Brussels is playing the tit-for-tat since Beijing just renewed its five-year anti-dumping duty on imports of carbon steel fasteners from the EU last week. 

However, the EU’s flex of muscle could as well be a coincidence of timing: trade friction is predictable given the massive volume of trade exchanges between the two sides. However, the EU's "substitute country" or "substitute cost" approach, which is used in many Chinese anti-dumping investigations, has turned a blind eye to the market-oriented supply and demand relationship that underpins the reasonableness of the price system. 

Second, politicising business is toxic and, no doubt, detrimental to bilateral relations. Many knowledgeable people in China and Europe are calling for a return to a "partnership" orientation in bilateral relations. The current high level of institutional dialogue between China and the EU will undoubtedly help to improve mutual trust and understanding as well as boost business confidence.  

Wang Yi Meets with High Representative of the EU for Foreign Affairs and Security Policy Josep Borrell Fontelles  

According to Ministry of Foreign Affairs of China, on July 7, 2022, State Councilor and Foreign Minister Wang Yi met with High Representative of the EU for Foreign Affairs and Security Policy Josep Borrell Fontelles on the sidelines of the G20 Foreign Ministers' Meeting on the Bali Island. 

Borrell said, the EU is committed to strategic autonomy and always holds that common interests between the EU and China far outweigh differences. The EU is ready to firmly pursue the one-China principle and conduct more strategic coordination and cooperation with China. 

Wang Yi said, as two major important forces for a multi-polar world, China and the EU should stick to the fundamental position of comprehensive strategic partnership and maintain the positive momentum of dialogue and communication. In the face of severe and complex challenges, China and the EU need to seek common ground while shelving differences, expand common ground while resolving differences, and pursue mutual benefit and win-win cooperation. The two sides need to uphold true multilateralism, and reject attempts to decouple from or cut off supply chains and acts that violate objective economic laws. The two sides need to oppose the attempts of zero-sum games, inciting bloc confrontation and provoking a "new Cold War". China is ready to work with the EU to jointly uphold the UN-centered international system and the international order underpinned by international law.   

Czech Presidency of the EU Council: July 1 – December 31, 2022 

According to Radio Prague International, the Czech Republic took over the rotating presidency of the Council of the EU from France on July 1. The main focus of the presidency is the war in Ukraine and its impact on Europe. 

The top priorities outlined by the government are managing the refugee crisis and Ukraine’s post-war recovery, cutting Europe’s reliance on Russian fuels, strengthening Europe’s defense capabilities and cyberspace security and boosting the resilience of the European economy and democratic institutions.  

EU lawmakers back green tag on gas, nuclear energy 

According to China Daily, the European Parliament voted on Wednesday to back the proposal to label natural gas and nuclear energy as "green" despite strong opposition from many lawmakers and environmentalists decrying the plan as "greenwashing". 

The European Commission welcomed the results of the vote. In a statement, it said gas and nuclear will now be included in the EU Taxonomy as transitional activities in a limited number of circumstances and under strict conditions.  

UK Prime Minister Boris Johnson resigns 

According to CNBC, U.K. Prime Minister Boris Johnson resigned Thursday. Speaking outside Downing Street, Johnson said the process for choosing the new leader of the Conservative Party should begin now, with a timetable to be announced next week. He said he intends to remain in place until a new Tory leader is elected.  

UN calls for harnessing partnerships to achieve SDGs, champions optimism against odds  

According to Xinhua, The United Nations on Tuesday called for partnerships in order to achieve the Sustainable Development Goals (SDGs), and champions optimism against all odds.

The HLPF opened Tuesday to determine the best way forward to revive the SDGs. The eight-day forum, convened under the ECOSOC, "takes place as multiple crises around the world are putting the very viability of achieving the SDGs by 2030 at risk," according to a UN press release. 

The deputy UN chief noted "a stark illustration of the setbacks" wrought by the pandemic, conflicts, and the triple environmental crisis of climate change, biodiversity loss and pollution, which have impacted education, health care, gender equality, and the economy. However, she said that they also "offer hope" -- drawing attention to cash transfer programs, debt moratoriums for businesses, national resilience plans and government stimulus packages, which have brought "critical relief." 

"They signal countries' unwavering commitment to sustainable development in the face of ongoing and new crises," said Mohammed.    

What are experts talking about?  

"Three camps highlight Europe's complex mentality", written by John Zhao was published by the Institute of European Studies of Chinese Academy of Social Sciences. According to the article, a special survey conducted by the European Council on Foreign Relations on people in 10 EU countries recently showed that European governments and people have three attitudes and three choices on how the Russia-Ukraine conflict will end and the cost of war: The "peace camp" roughly includes Romania, Greece, Italy and Hungary; the "justice camp" includes Poland, Germany, France and the three Baltic states; other countries and the governments of Spain and Finland are in relative neutrality. 

The article points out at the end that, as the conflict between Russia and Ukraine continues, European society faces two major problems: the high cost of living and the escalation of the conflict, and anti-war calls are growing, and pacifist thinking has re-emerged. 

“Is Macron’s ‘European Political Community’ a realistic prospect?” by Tom WHEELDON was published by IFRI. France’s presidency of the EU ends on June 30 with Emmanuel Macron’s new big idea, a “European Political Community”, hanging in the balance. This community would encompass EU membership candidates like Ukraine and possibly ex-member Britain. For some observers, the French president’s idea offers a way to bring countries into the European project while the long accession process takes its course. Others argue that Macron’s plan offers few clear objectives.  

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.