EU leaders to have strategic discussion on China in October

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!

Speech Shadowed by War

The European Commission President, von der Leyen, on Wednesday delivered her annual State of the Union address in Strasbourg, which hosted the European Parliament's plenary gathering of the bloc's some 700 lawmakers.

In the presence of Ukraine's first lady, Mrs. Zelenskyy, President von der Leyen made a speech that was all but about the ongoing war in Ukraine and the crisis Europe is faced with. 

The sky-rocketing price of energy has long become unbearable for European manufacturers and every single household. The current gas price is ten times higher than the pre-pandamic level, so said President von der Leyen. 

The jaw-dropping price hikes are forcing many energy-intensive factories in Europe to suspend operations. The chill is contagious. As warned by politicians, many people may have to choose between eating or heating in the winter that is approaching since the cost of living is increasing dramatically.

The EU, according to Ms. von der Leyen, plans to push member states to reduce their overall electricity consumption on one hand, and on the other hand, impose a revenue cap on companies "that produce electricity at a low cost," expecting to raise more than 140 billion euros to cushion the blow. 

The EU's executive chief also proposes to reform the EU's electricity market, urging the EU to speed up the EU's prioritised green transition and citing the importance of securing supplies. 

She, however, cautioned about China's dominance in processing critical metals. "Today, China controls the global processing industry. Almost 90% of rare earths and 60% of lithium are processed in China. "

In this regard, the European Commission announced a European Critical Raw Materials Act, hoping to leverage public and private investments to build up the resilience of the EU's own supply chain.

For Mr. Breton, the EU's commissioner for the internal market, this fresh ambition should be aided by legislative objectives. "For example, a target could be set that at least 30% of the EU's demand for refined lithium should originate from the EU by 2030, or to recover at least 20% of the rare earth elements present in relevant waste streams by 2030."

Shortly after President von der Leyen's address, the commission unveiled a proposal to ban products made of forced labour in the EU's single market. The move was closely followed by China watchers and the business community.

In the commission's opinion, the proposal remains WTO-compatible and non-discriminatory since it is not targeting any specific country or region, unlike Washington's Uyghur act. 

Under the proposal, the EU member states, rather than importers, will have to bear the burden of proof of forced labour in products. Calling the commission's proposal "weak", several influential MEPs voiced their determination to overhaul the future legislation.

For companies, the proposal is no doubt set to increase uncertainties about operating in the EU. In the guise of "WTO-compatibility," the proposed regulation may inevitably target products from Xinjiang. The "concentration of allegations involving Xinjiang" could trigger alarms for related imports, as an EU official told the media. 

The debates on the forced labour product ban are highly anticipated, as is the EU's discussion on China. Next month, the EU's 27 leaders are scheduled for a summit, during which they will prepare for December's EU-ASEAM summit as well as relations with China. 

Though Brussels tries hard to reduce the bloc's dependency on Beijing, Eurostat's data shows how intertwined their economies are. Take trade in high-tech goods, including electronics and telecommunications. China was the EU's main import partner. The country accounted for 38% of the bloc's non-EU imports of high-tech products in 2021.

Parliament approves €5 billion loan to Ukraine

According to the European Parliament, on Thursday, MEPs gave the green light to a €5 billion macro-financial loan to help Ukraine cover its acute financing needs caused by Russia's invasion.

This is the second, and largest, tranche of a €9 billion EU support package, of which €1 billion has already been disbursed. The Commission is extending the loan to the government in Kyiv on highly favourable terms.

EU promises 'emergency intervention' to rein in energy prices

According to European Commission, the Commission is proposing an emergency intervention in Europe's energy markets to tackle recent dramatic price rises.

To ease the increased pressure this puts on European households and businesses, the Commission is now taking a next step in tackling this issue by proposing exceptional electricity demand reduction measures, which will help reduce the cost of electricity for consumers, and measures to redistribute the energy sector's surplus revenues to final customers.

Swedish PM announces resignation

According to Xinhua, Sweden's Prime Minister Magdalena Andersson announced her resignation on Wednesday after losing the election.

Andersson, also leader of the ruling Social Democratic Party, conceded defeat at a press conference following the election on Sunday. 

Industrial production down by 2.3% in the euroarea and by 1.6% in the EU 

According to CGTN, the 10,000th freight train connecting China to Europe this year arrived in Hamburg on 9th, marking an increase in rail cargo being transported between the two economic hubs.

What are experts talking about?

"Von der Leyen makes big promises, but will they be enough?" is a round-up by EPC, the round-up points out that in her State of the Union (SOTEU) speech, President von der Leyen reaffirmed the EU's continued strong support for Ukraine and its people. She pledged money and resources to rebuild the country, not to back down on sanctions, find concrete ways to lower people's energy bills, invest more in renewables and hydrogen and help small and medium businesses weather the coming storm. She even called for a European Convention to potentially change EU decision-making.

This EPC Round-up assesses pivotal EU policies from different angles. It collects contributions from EPC analysts and experts in the field, bringing together various points of view for a more comprehensive and nuanced picture.

"Decoupling of Europe's Economic and Trade Relations with China: Situation and Prospects." Released by the Center for China-Europe Relations of Fudan University (CCER Fudan). The authors of the report, Jian Junbo and Chen Tenghan, focus on the EU's perspective, comprehensively and systematically expounding the trial of the EU to reduce economic and trade dependence on China and to prevent the risk from China's investment in the context of geopolitical events such as the Sino-US game, Russia-Ukraine military conflict and other geopolitical events since the release of its latest "China Strategy" policy document in 2016.

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.