Beijing, Brussels cosy up?

China and the EU are enjoying an eventful week as the Mid-Autumn Festival draws near 

Editor's Note: Dear readers, the CCCEU sincerely wishes you a happy Mid-Autumn Day on Saturday! In the days leading up to China's most significant holiday, other than lunar New Year, a number of dialogues, forums, and events on green, sustainable cooperation as well as cultural exchanges were held between China and the EU, adding to the festive mood. This edition will keep you up to date to this and other China-EU dynamics. Enjoy your reading and mooncakes!

It is surprising to find so many bilateral dialogues have taken place between China and the EU over the past few days. On Monday, a high-level bilateral forum on sustainable development was held in Beijing; on Wednesday, the 8th Europe Forum linked Brussels and Shanghai; and on Thursday, a China-Europe-Africa forum on green energy kicked off in the coastal city and e-commerce hub of Hangzhou in eastern China. A day later, the 8th Europe Forum threw a twin event between Paris and Shang. In addition, the EU's Delegation to China this week launched the 7th EU-China International Literary Festival, gathering leading science fiction and fantasy writers from all across Europe and China.

Probably we are wrong, but your editors have not seen such frequent China-EU dialogues in months. The bilateral ties have spiralled downward since March 2021, when Brussels announced sanctions against Chinese individuals and entities and thus provoked tough countermeasures from Beijing. It was not until April 1 that Beijing and Brussels held their delayed 23rd China-EU summit. Later in July, the two sides continued to have two of their high-level talks in green and economic areas, respectively.

If viewed through the lens of trade, China and the EU have grown much closer in recent years. Since 2020, China has become and stayed as the EU's largest trading partner in goods. Currently, the two sides trade goods worth more than 2 billion euros per day on average. In 2021, China's FDI in the EU totalled 9 billion euros, more than the 6.5 billion euros in the previous year.

In the EU bubble, political debates on China have always been framed in the context of the Russia-Ukraine situation. As politicians and experts vow to reduce the EU's strategic reliance on China, many European industries are faced with a harsh reality check.  For instance, Euraciv reported that many of the EU's aluminium factories were, or will be, painfully shut down due to unaffordable electricity bills.  As a result, they might have to turn to the world's biggest aluminium producer—China—to meet the strategic metal's supply shortage.

For households in the EU, the upcoming winter will be a grave challenge. As per the data from the European Energy Exchange, the average price of the European electric system was 462.1 euros ($460.6) per megawatt hour, a six-fold increase since the start of the year, China Daily reported.

Data from the China Household Electrical Appliances Association showed that China's export volume of electric heaters, electric blankets, and other heating appliances has sharply risen so far this year.

In the first seven months, China's export of electric blankets to the EU rose 97 percent year-on-year. In the first half of the year, China's export of air source heat pumps to Bulgaria, Poland, Italy, and Spain rose by 614 percent, 373 percent, 198 percent, and 71 percent, respectively.

The China Household Electrical Appliances Association said all products enjoying sharp increases have temperature-adjustment functions, reflecting that European consumers are expending their purchasing of heating products for the coming winter.

It is evident that China is a reliable partner for the EU to cope with multiple crises. However, it remains to be seen how top EU officials and experts evaluate the bloc's approach toward China. In this regard, we identify three major events to follow concerning the China-EU dynamic for next week.

First, on Monday, the EU's Environment Commissioner, Virginijus Sinkevicius, is set to have a video conference with Chinese Minister of Ecology and Environment Huang Runqiu. Though climate and environment have remained frequent topics between Beijing and Brussels, the upcoming bilateral talks might be an occasion for the two sides to iron out differences on climate promises, following the reported failure of the G20's climate talks a few days earlier. China was accused of rolling back its commitment, a claim denied by China's foreign ministry spokesperson.

Second, the proposal of the EU's forced labour product ban, which the European Commission is scheduled to put on the table on Tuesday, China's businesses closely follow the proposed ban as it may mirror Washington's Uyghur act that largely disrupts global supply chains.

Third, President von der Leyen's annual State of the Union address. It will be very intriguing to see how she will articulate the EU's relations with China and the bloc's future approach toward Beijing.

Britain's Queen Elizabeth II dies at 96

LONDON, Sept. 8 (Xinhua) -- Queen Elizabeth II, Britain's longest-reigning monarch in history, has died aged 96, Buckingham Palace announced on Thursday.

"The Queen died peacefully at Balmoral this afternoon," Buckingham Palace said in a statement.

"The King and The Queen Consort will remain at Balmoral this evening and will return to London tomorrow," it added, indicating her son, Prince Charles, has now become Britain's new King.

GDP up by 0.8% and employment up by 0.4% in the euro area  In the EU, GDP up by 0.7% and employment up by 0.4%

In the second quarter of 2022, seasonally adjusted GDP increased by 0.8% in the euro area and by 0.7% in the EU compared with the previous quarter, according to an estimate published by Eurostat, the statistical office of the European Union. In the first quarter of 2022, GDP had grown by 0.7% in the euro area and 0.8% in the EU.

The number of employed persons increased by 0.4% both in the euro area and in the EU in the second quarter of 2022, compared with the previous quarter. In the first quarter of 2022, employment had increased by 0.7% in the euro area and by 0.5% the EU. 

ECB raises interest rates by 75 basis points 

According to Xinhua, the European Central Bank (ECB) on Thursday raised key interest rates by 75 basis points (bp), the second such hike after a 50 bp increase in July.

Effective Sept. 14, the interest rates on the main refinancing operations, the marginal lending facility and the deposit facility will be 1.25 percent, 1.5 percent and 0.75 percent, respectively, the ECB said at the conclusion of a Governing Council meeting here on Thursday.

The larger-than-expected rate increase reflects the bank's growing concern about surging inflation in the eurozone. 

Hungary's inflation rate soars to 15.6 pct in August

According to Xinhua, driven mostly by soaring food prices, Hungary's annual inflation rate climbed from 13.7 percent in July to 15.6 percent in August, a level not seen since May 1998, the country's Central Statistical Office (KSH) said here on Thursday.

What are experts talking about?

"The 'Americanization' of Perceptions of China is Driving Europe Away from Rationality", published by the Institute of European Studies of the Chinese Academy of Social Sciences (CASS) and written by Liu Zuokui. The article points out that in recent years, as China's economic growth, national strength, and the depth and breadth of its foreign trade and economic cooperation have increased significantly, Europe has felt the opportunities of cooperation from China while seeing the so-called "threats from China" more than ever before. The author concludes by emphasizing that both sides should be frank and honest in the development of China-Europe relations and establish a correct and reasonable perception, which is a prerequisite for the development of China-Europe relations.

"Tackling the energy crisis: 8 considerations on how Europe can get through this winter" published by EPC. The authors are Georg Riekeles, Philipp Lausberg. They propose 8 political and economic considerations to help frame the ongoing discussions: 1. Short-term alternatives to diversify supply have been largely exhausted; 2. Europe needs coordinated demand reduction and pandemic-style measures; 3. An EU-level fiscal instrument could help deliver efficient burden-sharing; 4. Emergency market reform should not decouple electricity prices from fossil fuels; 5. A levy on excess profits should be structured as a permanent market correction instrument; 6. The EU should act on the gas price but steer clear of the Iberian model; 7. A price cap on Russian gas should be combined with the EU's Energy Purchase Platform; 8. A gas deal with Norway can deliver more energy security and lower prices.

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.