Editor's Note: On July 29, according to the "Financial Times", some European countries have been increasingly concerned about "reliance on China" due to geopolitical factors, and the term "de-risking" has been used more frequently. Earlier this month, the German government even issued its first "China strategy", warning German companies to reduce their reliance on China in the name of "de-risking." Stefan Hartung, Chairman of the Board of Directors of the German Bosch Group, stated in an interview with the Financial Times at the Bosch Group headquarters in Stuttgart, Germany, that if Europeans want to maintain competitiveness, governments should focus on improving the single market. He believes that European governments should spend more time improving the competitiveness of the European Union rather than "hyping up" the "risk" of European companies doing business with China. On July 30, French Minister of Economy, Finance, Industry, and Digital Sovereignty, Bruno Le Maire, who has recently visited China, expressed that France hopes for better market access conditions in China and wants to establish a more "balanced" trade relationship. He emphases that there is no possibility of decoupling between China, the United States, and Europe. This edition of the CCCEU Weekly Update keeps you informed of China-EU dynamics. Enjoy reading and have a nice weekend.

▶︎ Focus

Chairman of the German Bosch Group: Europe cannot reduce risks by "isolating itself" and should strive to improve the EU's competitiveness. On July 29, the British "Financial Times" published an interview article with Stefan Hartung, Chairman of the Board of Directors of the German Bosch Group, the largest automotive parts supplier in Europe. He stated that European countries should not exaggerate the "risks of doing business with China" but rather should focus on improving the competitiveness of the European Union. He bluntly pointed out that Europe cannot reduce risks by "isolating itself."

The Chinese market holds a significant position in Bosch's business. According to a February report by Reuters UK, Bosch's sales in the Chinese market account for about one-fifth of its total global volume. Over the past decade, Bosch's cumulative investment in the Chinese market has exceeded 50 billion yuan. In January 2023, Bosch announced a $1 billion investment to build a new energy vehicle core components and autonomous driving research and development manufacturing base in Suzhou. At that time, Stefan Hartung said in a statement, "China is the world's largest automotive market, full of hope and vitality."

French Finance Minister calls for improved market access conditions in China, not decoupling. On July 29, Chinese Vice Premier He Lifeng and French Minister of Economy, Finance, Industry, and Digital Sovereignty, Bruno Le Maire, jointly presided over the ninth China-France High-Level Economic and Financial Dialogue in Beijing, with senior officials from both countries attending the meeting. The dialogue made contributions to the preparations for the 60th anniversary of the establishment of diplomatic relations between China and France in 2024. After meeting with senior Chinese officials on Sunday (July 30), French Minister of Economy Bruno Le Maire said that France hopes for better market access conditions in China and wants to establish a more "balanced" trade relationship, rather than "decoupling" from the world's second-largest economy. He said, "De-risking does not mean that China itself is a risk. De-risking means that we want to be more independent, and we are ready to welcome the Chinese automotive industry to invest in France and Europe." Officials from the 27 EU member states are trying to reduce the trade deficit with China, which expanded to 396 billion euros (approximately $432 billion) last year. Bruno Le Maire said that cosmetics, aerospace, and agriculture are areas where France may increase exports.

"We can see that unlike the Cold War when 'Europe fully supported the United States,' in the 21st century's biggest geopolitical game between China and the United States, Europe has not fully leaned towards the United States and is instead hesitating on whether it has come to a strategic turning point. In other words, in the United States' efforts to guide allies to contain China, Europe is hesitant about whether to follow suit. The reason France made this appeal is precisely because it holds a dominant position in the EU and needs to consider an urgent need for a strategic shift in Europe."

In addition, Martin Wolf also stated in the "Financial Times", "We must remember peace and prosperity, but also remember the threats the world is facing now. The West must improve its relations with emerging and developing countries, which requires the West to recognize its double standards and hypocrisy."

China is one of Europe's important trading partners, and the trade volume between the two sides is huge. However, European countries are becoming more cautious about their economic relationship with China in order to reduce the risks involved.

These concerns involve issues such as intellectual property protection, market access restrictions, and government intervention. Additionally, some are concerned about the potential impact of China's infrastructure investments related to the "Belt and Road" initiative on the sovereignty of European countries. China and Europe should establish a more stable and mutually beneficial economic relationship to promote prosperity and development for both sides.

Based on this, 1) China and the EU should continue to improve relationship, lower market access barriers, and provide a fairer competitive environment for each other. 2) Continue to strengthen intellectual property protection measures to ensure the technology and innovation of both sides. 3) Establish a stable trade mechanism through dialogue and negotiation to resolve bilateral trade disputes and issues. 4) Both sides should be committed to sustainable development, promote environmental protection and social responsibility, and ensure that trade does not harm the interests of either party.

▶︎ Hot Topics

>>French finance minister says economic 'decoupling' from China is impossible

"We are totally opposed to the idea of decoupling. Decoupling is an illusion," Finance Minister Bruno Le Maire said. "There is no possibility of having any kind of decoupling between the American, European and Chinese economies." Le Maire nonetheless defended France's ambition to become more economically independent in certain sectors. But, he added, the concept of de-risking, which has become a byword in the West in recent months, is not seen as an allusion to China.

>>Sergei Stanishev, Vice-Chairman of the Foreign Affairs Committee of the European Parliament: China and Europe should work together to tackle global challenges

Stanishev said that every time he visits China, he has different gains and experiences. For Europeans including him, the most impressive thing is China's rapid development. In contrast, in European countries, due to too frequent government changes, politicians are eager to please voters, often only focus on short-term tasks and goals, and lack continuity in policies. The four-year ruling period itself also determines that it is difficult to consistently implement some major and long-term forward-looking plans. Stanishev emphasized that it is not advisable to advocate the "decoupling" of Europe and China. In fact, there are broad common interests between Europe and China. According to Eurostat data, the bilateral trade volume between the EU and China has exceeded 800 billion euros in 2022. The two sides are each other's important trading partners. "Decoupling" from China is not in the interests of European companies and the public.

>>China-Europe freight train trips reach 10,000 in 2023

A Madrid-bound freight train departed from Yiwu in east China's Zhejiang Province on July 29, marking the 10,000th trip for China-Europe freight trains this year. The train is expected to arrive in Madrid in about 21 days. It's carrying 110 twenty-foot equivalent units (TEUs) of goods including accessories, automotive parts, electric bicycles, and photovoltaic modules. China State Railway Group Co., Ltd. said that the 10,000 trips milestone this year was achieved 22 days earlier than last year. These trains have transported over 1.08 million TEUs of goods this year, up 27 percent over a year ago.

>>China, Georgia upgrade ties to strategic partnership

The inauguration of a "strategic partnership" between Tbilisi and Beijing has been widely celebrated by Georgian government circles. The announcement, made last week by Georgian Prime Minister Irakli Garibashvili and Chinese leader Xi Jinping, came as a surprise to some. "The two sides had an in-depth exchange of views on bilateral relations and international and regional issues of mutual interest and reached broad consensus. The two sides decided to elevate bilateral relations to a strategic partnership," reads the lengthy July 31 statement, which goes on to lay out the political, economic, cultural, and international domains of the future bilateral partnership. The announcement came during the Georgian prime minister's long official visit to China, which he himself described as "historic."

>>EU countries that exclude China's 5G lag behind in 5G build-out

The European Commission is pushing to exclude Chinese 5G suppliers, but the commission's own statistics show that this clearly does harm to network expansion. Some countries that formally or informally excluded Chinese 5G suppliers from the expansion of mobile communication networks in the early stage fell sharply behind in the digital comparison rankings of the 27 EU member states, according to a statistical assessment report obtained by Golem News Network.

▶︎ What are experts talking about？

Whether Spain turns to the right matters for the EU

Source: Institute of European Studies, Chinese Academy of Social Sciences

Author: Zhao Junjie

(Researcher at the Institute of European Studies, Chinese Academy of Social Sciences)

Spain held early parliamentary elections in recent days, and as a result, no political party won an absolute majority. The ruling Labor Socialist Party won only 31.7% of the vote and won only 122 seats. The right-wing People's Party won 136 seats in the House of Representatives, and its vote rate increased by 12% compared with the previous term, making it the largest party in parliament. The emerging far-right Vocal Party won 33 seats and 12.39% of the vote.

No matter what the outcome of the election will be, several points are relatively clear about the direction of the Spanish political situation: First, this election fully demonstrates that the fragmentation of political parties in Spain is becoming increasingly serious. Secondly, judging from their governing achievements and political views, the Spanish People's Party and the Workers' Socialist Party have their own strengths and weaknesses. Thirdly, Spain, as a big country in Europe, once there is a tendency to turn to the right in this round of general elections, it is bound to have a linkage effect on right-wing politics in Europe.

EU-China relations at a crossroads, Vol. II: Decoding complexity, mitigating risk

Source: European Policy Centre

Author: Ivano di Carlo

(Senior Policy Analyst in the Europe in the World Programme at the European Policy Centre)

For Europe, whether we call it supply resilience or supply security, measures to make the supply of goods and services less exposed and vulnerable to disruptions are growing in number and intensity.

First, the COVID-19 pandemic highlighted the shortcomings of global supply chains and made a convincing case for their shortening. Then came the spotlight on the use of forced labour in the production of textile and technological components, which contributed to shaping the issue of human rights and labour rights in our products' supply chain. Finally, the war in Ukraine and Russia's subsequent cut of gas supplies to Europe left no doubt about the need to better manage dependencies in European supplies.

END

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.