EU member states divided on approach toward China

Editor's Note: Welcome to the CCCEU Weekly Update. This edition will keep you on track of the latest China-EU dynamics, particularly Friday's strategic discussion on China at the EU summit. Enjoy your reading and have a lovely weekend!  

The two-day EU summit that gathered leaders of EU member states concluded in Brussels in the afternoon of Friday. The prioritised agenda was about energy price caps at a time when the staggering price hikes have started to weigh on European households and prompted protests over wages and inflation.

According to Reuters, at the summit on Thursday that ran late into the night, EU leaders eventually backed proposals made by the European Commission this week to launch an alternative price benchmark for liquefied natural gas and voluntary joint gas buying, although laws to make this happen will need to be negotiated over the coming weeks.

For China-EU observers, the leaders' strategic discussion on China, scheduled for Friday morning, has a lot to follow and digest. Your editor has found three things that may intrigue you:

First, security or sensitivity? "No mobile phone in the room," a spokesman for EU Council chairman Charles Michel wrote, announcing the start of Friday's session on Twitter. Michel has "proposed to start with the strategic debate on China," he noted. The precaution unseen at the summit's previous debates on Ukraine mirrored the EU's nerves about possible leaks, some have said. But the move also highlighted the sensitivity or complexity of China-EU ties with regard to certain tricky topics.

Second, the contrast between the intensity of discussion and the sketchiness of the written statement was stark. Although the leaders' discussion on China, according to some journalists, seemed to stretch into hours, their joint statement surprised many with merely one sentence of reference to China: "The European Council held a strategic discussion on the European Union's relations with China." No conclusion nor elaboration on China, a sign of the lack of consensus among EU leaders.

Third, maybe your editor is mistaken, but media outlets talked less about the EU's third label dubbing China-"a systemic rival." In comparison, headlines were more about China's role as the EU's "competitor"—technically the second aspect of the EU's multifaceted China approach apart from viewing the country as a partner or a systemic rival. This echoes media reports on the bloc's foreign ministers' meeting earlier this week in Luxembourg, during which an internal EEAS report reportedly called on EU capitals to regard Beijing more as a competitor.

Nevertheless, the remarks of the leaders after the close of the summit laid bare the division of the EU member states' China strategies.

Germany seems to be more pragmatic. The German Chancellor, Olaf Sholz, was reported to back closer German links with the country's biggest trading partner, China. At his closing press conference following the European Council summit, he was quoted as saying, "The EU prides itself on being a union interested in global trade and it does not side with those who promote deglobalization."

Responding to a question about a Chinese company's purchase of a Hamburg port terminal, Mr. Scholz played down the significance of the deal by saying that "It is not a question of selling the port...at most, it's about participation in a terminal." 

France urges to rethink trade dialogue with China. French President Emmanuel Macron, instead, was reported to have said that the 27-member EU should recalibrate ties with China, calling for a more even playing field between the two sides. "We have made strategic errors in the past with the sale of infrastructure to China," he was quoted as saying.

The Netherlands voices EU self-confidence and interdependency. Dutch Prime Minister Mark Rutte told reporters that: "It's important that Europe operates as self-confident as possible, but also independently." He noted that Brussels should seek "equality and reciprocity, so that we are not a kind of extension of America but that we have our own politics vis-à-vis China."

Slovenia pursues a "diversified approach" to Russia and China: Slovenia's Prime Minister Robert Golob reportedly said that EU leaders offered a variety of views on China during Friday's conversation: some of them compared Beijing and Moscow together, "like being in the same basket," while some of them were "totally" opposed to that. He added that it is in Slovenia's interest not to push China and Russia together.

The Baltic countries opted for "27+1": "China is best dealt with when we are 27, not when we are … one on one, vis-à-vis China," Krišjānis Kariņš, the Latvian prime minister, was quoted as saying. His Estonian counterpart, Kaja Kallas, extended a similar message: "My message on China is that we should be dealing with China with the 27+1 format. We are strong when we are united talking to big powers. "

It is worth noting that Hungary has stayed firm on cementing Europe-China economic relations. Hungary's government will do its best to reject all proposals that would fracture economic cooperation between the EU and China, because those would also cause serious harm to Europe's automotive industry, said Minister of Foreign Affairs and Trade Peter Szijjarto on Thursday at the second Hungarian Battery Day conference. Xinhua has the story.

China-Europe freight trains increase

According to Xinhua, China's total rail cargo volume, an indicator of economic activity, maintained steady expansion from January to September this year, data from China State Railway Group Co., Ltd. (China Railway) showed.

According to the company, China's railways handled transport of 1.57 billion tonnes of coal during the period, up 11.1 percent year on year.

During the period, the number of China-Europe freight train trips rose 7 percent year on year to 12,000. The trains carried 1.18 million twenty-foot equivalent unit containers, up 8 percent from same period of last year.

Chinese electric cars are coming

The Paris Motor Show, one of the largest automobile exhibitions in the world, was attended by a fleet of Chinese electric car manufacturers, including BYD, GWM, and Nio. 

China-EU "dragon programme"

According to a press release from the Chinese Ministry of Science and Technology, China and the EU gave a mid-term review of their ongoing science and technology cooperation "Dragon" programme via video conference on Monday.

Smart logistics terminal kicks off

According to Xinhua, Europe's first land-based intermodal logistics terminal using 5G technology opened near the village of Fenyeslitke in eastern Hungary on Tuesday.

The 5G network required for the East-West Gate (EWG) project was built by Vodafone Hungary, and the network equipment was supplied by Huawei of China.

EU faces talent gap for booming batteries

According to the European Institute of Innovation and Technology, across Europe, 37 gigafactories are currently in various stages of development. In Germany alone, ten of these gigafactories are expected to start production over the next few years, including Tesla's battery factory in Grünheide, Volkswagen's in Salzgitter, Northvolt 3 in Heide or CATL's plant near Erfurt.

According to Benchmark Minerals, as early as 2024, Europe's share of battery cell production will be around 15%, placing it in second place worldwide behind China—ahead of the USA and the rest of Asia. From today's perspective, an annual value creation of 250 billion euros in Europe from 2025 is therefore realistic. This could create up to 4 million jobs in the battery sector. "Companies are desperately seeking battery experts," a fresh statement has said.

INTA to hold hearing on forced labour product ban

According to the European Parliament's international committee, or INTA, a public hearing on the trade-aspects of the EU instrument to tackle forced labour will take place on Oct. 25. A detailed agenda can be found here.

What are experts talking about?

Wei Jianguo, former vice minister of the Chinese Ministry of Commerce, discussed "New Signals of Reform and Opening-up in the 20th National Congress Report". According to the author, the report releases three important signals: first, the door of China's Chinese economic reform will be further opened after the congress; second, China has a more ambitious agenda for expanding openness that includes regulation, management, and standards; and third, China seeks to achieve high-quality development.

A briefing on China's 20th Party Congress was released by the European Parliamentary Research Service (EPRS) on Wednesday, analysing what to expect after the congress. Concerning economic policies, the report noted that China promised to foster a "world-class business environment" that is market-oriented and law-based, and promised that China would continue to promote trade and investment liberalisation.

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.