EU announces green proposals to counter US inflation reduction act

Brussels suggests investigating "hidden", "massive" subsidies in China's leading green sectors

Editor's Note: With the Chinese New Year just around the corner, the CCCEU kindly wishes you a happy and successful year of the rabbit ahead! This edition of the CCCEU Weekly Update keeps you in the know of China-EU dynamics. Enjoy your reading and have a lovely break!

On the way to normalcy...

Things appear to be gradually returning to normal. From January 8 on, inbound travellers to China will be free from quarantines and mass testing, such a relief for so many home-goers and business travellers.

But how about when people travel from China to Europe? Fears of mutations or risks seem to have weighed on the EU's policymaking, stirring some overreaction.

On Wednesday, Sweden, which holds the new presidency of the Council of the EU, convened a meeting to discuss new EU entry measures concerning China.

In an official readout after the meeting, member states are "strongly encouraged" to introduce, for all passengers departing from China to Member States, the requirement for a negative COVID-19 test taken not more than 48 hours prior to departure from China.

Member states are also encouraged to complement these measures with random testing of passengers from China, the sequencing of waste water from airports with international flights and aircraft arriving from China, and so forth, it said.

Many EU capitals adopt a stricter approach toward flight passengers from China.

For instance, France and Italy said they require COVID-19 testing and screening for people entering from China, and the Belgian government announced that it would test the waste water in the aircraft from China. Rome and Madrid reportedly urged the EU to take unified and coordinated border measures against inbound travellers from China.

The European Center for Disease Prevention and Control, however, said earlier that the introduction of mandatory COVID screenings of travellers from China is unjustified, considering that the variants circulating in China are already circulating in the EU and in view of the higher population immunity in Europe.

Ambassador Fu Cong, Head of the Chinese Mission to the EU, urged on Friday that the COVID response measures of European countries need to be "science-based" and "proportionate", and "should not affect normal travel or people-to-people exchange and cooperation." His op-ed was published in the Brussels Times.

Croatia embraces euros & Schengen

Croatia is now a member of the Schengen and Eurozone countries. Before you plan your visa-free trip to Zagreb, please note that due to technical reasons, air border inspection measures will only be cancelled on March 26 in Croatia.

The kuna in the resident account of the country is automatically converted into euros at the exchange rate of 1:7.5345, and only euros will be allowed from January 15.

The new journey for Croatia came ten years after it joined the EU.

We found some data on China-Croatia ties: in 2020, China's imports from Croatia hit 140 million US dollars; China's direct investment flow to Croatia was 154 million US dollars.

Last year, China and Croatia celebrated their 30th anniversary of the establishment of diplomatic relations. In July, Chinese Premier Li Keqiang remotely witnessed the opening of the Peljesac Bridge in Croatia, the largest transportation infrastructure construction project since the establishment of diplomatic relations between the two sides.

Earlier in December 2021, the 156 MW wind power project of Croatian Senj of China Northern Industry Co., Ltd. was officially put into operation, which was the largest power project implemented by the Croatian government in recent years.

In an interview with Xinhua News Agency, the Croatian political analyst Davor Guenero said that Croatia's accession to the Eurozone will bring economic benefits and stronger psychological recognition to the people.

On the one hand, it will promote the rapid circulation of goods and services and attract more EU tourists to visit Croatia; on the other hand, the euro, as the official currency, will help financial stability and lower interest rates.

The flip side of Croatia's accession, many argued,  might be associated with its ageing population as it could further drain out the country's labour resources.

Germany's trade falls 

According to CCTV, the latest data released by the German Federal Statistical Office on the 5th of local time shows that after working days and seasonal adjustments, Germany's import trade volume in November 2022 was 124.4 billion euros, down 3.3% from the previous year; export trade volume was 135.1 billion euros, down 0.3% from the previous year; and the foreign trade balance was in surplus by 10.8 billion euros, the largest trade surplus since January 2022.

Fed sees higher rates for "some time" ahead

According to U.S.News, the minutes of the Federal Reserve's mid-December meeting released Wednesday show the central bank continues to believe it will be "some time" before interest rates can come down, while also noting the economy had improved in the second half of the year.

EU seeks to reduce energy cost

OilPrice reported on January 3 that the EU is developing proposals aimed at lowering gas prices and renewable energy prices in what could be a major reform of the EU electricity market.

Some EU member states are pushing for market reforms to reflect the lower costs of renewable energy generation more fully. Spain, Europe's largest producer of renewable energy, and France, the largest producer of nuclear energy, have been advocating the decoupling of gas and renewable energy prices. For its part, the renewable energy industry has warned that emergency market interventions should not be mixed with long-term structural policy measures aimed at helping the EU achieve climate neutrality by 2050. The industry is also wary of the idea of a windfall tax and warns of policies that could stifle long-term investment plans in low-carbon energy.

What are experts talking about?

"China-Europe relations are expected to stop falling and stabilize", published by China-US Focus and written by Prof. Feng Zhongping, Director of the Institute of European Studies, Chinese Academy of Social Sciences. The article argues that although Europe will not change its perceived three-dimensional orientation towards China, Sino-European relations are expected to stabilise as the two sides cooperate effectively around common interests. It is also worth noting that while the "decoupling theory" has lost ground in many European countries after heated discussions, some countries are considering reducing their economic dependence on China and trying to diversify their industrial chains. Finally, if the EU and its member states can maintain a degree of autonomy in their policies towards China, the influence of the trilateral relationship between China, the US, and Europe will undoubtedly increase in a rapidly changing international landscape.

"Watching China in Europe - January 2023" written by Noah Barkin. In his article, the author provides personal observations and analysis of the most pressing China-related developments and activities across Europe, covering the changes in China's new crown policy, Sino-Russian relations, Sino-American relations, and the debate on China within Germany.

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.