Brussels reportedly plans to open an anti-dumping probe into Chinese biodisel.

Editor's Note: The recent EU summit in Brussels saw a historic approval of membership talks with Ukraine and plans for an anti-dumping probe into Chinese biodiesels. According to the World Economic Forum, China's dominance in global manufacturing continued in 2023, with nearly half of the world's new leading manufacturing facilities established there. Stay informed with the CCCEU's Weekly Update for more details. Happy reading and have a relaxing weekend!

▶︎ Focus

In Brussels, the final EU summit of the year convened on December 14th and 15th, focusing on pressing global issues. Deliberations encompassed discussions on the Ukrainian crisis, the expansion of the EU, revising the multiannual financial framework (MFF), and addressing conflicts in the Middle East.

Notably, during the session on the 14th, with Hungary notably absent, 26 EU nations reached consensus to initiate membership talks with Ukraine. However, the gathering faced a deadlock in approving a EUR 50 billion financial assistance package for Kyiv, encountering opposition primarily from Hungary, which hindered a unanimous decision on this matter.

Hungarian Prime Minister Viktor Orban stood firm against the crucial budget restructuring necessary for financial aid, expressing on social media the intention to revisit the matter in the next year's European Council (EUCO) session after thorough preparation. Meanwhile, the EU made significant strides by greenlighting accession talks with Moldova and bestowing EU candidate country status on Georgia. Moreover, for nations like Bosnia and Herzegovina, provided they meet the stringent accession criteria, the EU indicated plans to commence accession talks, underscoring its commitment to expansion and inclusion.

The opposition witnessed within the EU reveals internal rifts, notably evident in its approach to Ukraine and internal fiscal matters. The EU operates under a system where decisions typically demand a qualified majority, necessitating agreement from at least 15 out of the 27 member countries, accounting for a minimum of 65% of the EU's total population.

However, critical policy domains such as foreign and security policies, taxation, EU finances, select justice and home affairs issues, social security, enlargement, and treaty amendments demand unanimous consent. Achieving unanimity among the present 27 member states poses a challenge, and the prospect of accommodating up to eight candidate countries further exacerbates this demand, potentially elevating the total to 35 or even 37, encompassing two awaiting candidate statuses.

Various solutions are being pondered: adopting a qualified majority voting system, leveraging "passerelle clauses" for procedural changes, and adjusting criteria for forming a blocking minority to require opposition from 60% of member states.

Moreover, the EU's (hypothetic) expansion would necessitate reevaluating the composition of the European Parliament and possibly the European Commission, where each member state currently appoints one commissioner. These discussions highlight the complexities and challenges in EU governance.

According to Reuters, Ukraine's potential EU membership, with its population of 44 million and GDP per capita less than a third of the EU average, would significantly alter the bloc's financial dynamics. A study conducted by the German Economic Institute indicates that Ukraine would be eligible for approximately 186.3 billion euros (17% of the European Union's joint budget) over seven years, mainly for agriculture and to equalise living standards. This would transform many current EU countries from net recipients to net contributors of EU funds and increase the financial burden on existing net contributors.

In agriculture, Ukraine, with its vast arable land, presents another challenge. As an EU member, it would gain tariff- and quota-free access to the EU single market, potentially leading to a surge in Ukrainian agricultural exports, overwhelming certain sectors and markets, and causing discontent among EU farmers.

Regarding labour market dynamics, EU membership would open the EU's labour market to millions of Ukrainians, potentially leading to significant migration. This scenario is reminiscent of the influx of Polish workers into Britain following Poland's EU accession in 2004, a factor contributing to Brexit.

▶︎ Hot Topics

>>EU to open anti-dumping probe into Chinese biodiesel dumping soon: Media

Mlex reported that an expected EU probe into Chinese biodiesel imports is now likely to start in the coming days.

Investigators are understood to be ready to open the dumping probe "based on evidence from the EU industry of unfairly priced imports that harm the bloc's producers," said the report.

 >>China Adds 13 New "Lighthouse Factories"

The World Economic Forum (WEF) unveiled 21 new "lighthouse factories" and 4 "sustainable lighthouse" factories on Thursday. This recent update brings the global count of "lighthouse factories" to 153 since the inaugural selection in 2018. Notably, China leads the world with 62 of these distinguished factories, reflecting the nation's significant strides towards establishing itself as a manufacturing powerhouse and a pioneering force in global smart manufacturing.

 >>ITU agrees 6G frequencies in Europe, looks to 8GHz band

EUnews reported on Friday that the ITU has agreed to identify the upper 6 GHz spectrum for next-generation wireless in Europe, RCC, ASMG and Africa regions, in addition to other countries in Latin America and Asia.

The ITU, which agrees global frequency allocations, will set up a study group for the 7-8.5 GHz range for 6G in time for the next ITU World Radiocommunication Conference (WRC) in 2027. The global agreement at this year's WRC-23, which finished today, paves the way for 6G from 2030 onwards.

 >>ECB resists rate cut bets with pledge to stay tight

The European Central Bank pushed back against bets on imminent cuts to interest rates on Thursday by reaffirming that borrowing costs would remain at record highs despite lower inflation expectations, Reuters reported.

Laser-focused on fighting the most severe bout of inflation in a generation, the euro zone's central bank left borrowing costs unchanged and did not even hint at a possible reduction.

 >>EU companies doubled R&D investment growth in 2022

Europe's industry significantly increased its investment in research and development in 2022, according to the 2023 edition of the EU Industrial Research & Development (R&D) Investment Scoreboard.

EU private R&D investment growth has reached the highest rate since 2015 and more than doubled compared to 2021, with a 13.6% increase in 2022, it said.

 >>Scale of FDI in China remains at high level: MoC

Xinhua reported that the scale of foreign direct investment (FDI) in China remains at a high level while the structure of investment continues to optimise as high-tech industries attract rising investment, the Ministry of Commerce (MOC) said on Thursday.

Noting foreign businesses' ever-growing willingness to invest in China, MOC spokesperson Shu Jueting said that in the first 10 months of this year, actual FDI, including free trade port investment, from Canada, Britain, France, Switzerland, and the Netherlands rose 110.3 percent, 94.6 percent, 90 percent, 66.1 percent, and 33 percent, respectively.

A total of 41,947 new foreign-invested companies were established in China during the first 10 months of 2023, marking a 32.1 percent increase from the same period last year, the MOC said in November.

▶︎ What are experts talking about？

Dubai Climate Conference Solidifies Consensus, Global Climate Governance Embarks Anew

Source: China Institutes of Contemporary International Relations

Authors: Zhao Jingya, Cai Yu

The 2023 United Nations Climate Change Conference, known as COP28, concluded in Dubai on December 13th. This event marked a major advancement from COP27, particularly in global stocktaking and transitioning towards renewable energy, accelerating climate action. However, it also highlighted ongoing disputes over fossil fuels between developed and oil-producing countries and the challenge of insufficient financial support for climate change adaptation in developing countries, particularly affecting African nations.

In response, China solidified its position as a leader in climate action. The nation has achieved over a 51% reduction in carbon dioxide emission intensity since 2005 and increased its non-fossil fuel energy sources to 50.9%. Additionally, China committed over 1.2 billion RMB to South-South cooperation for climate adaptation in developing countries. Playing a pivotal role in COP28 negotiations, China's efforts are aligned with its Paris Agreement commitments, focusing on peaking carbon emissions and achieving carbon neutrality while fostering global cooperation for a sustainable future.

Bringing the reform of European Union fiscal rules to a successful close

Source: Bruegel

Authors: Zsolt Darvas Jean Pisani-Ferry Jeromin Zettelmeyer

The long-awaited reform of the EU fiscal framework—the set of rules designed to ensure that debt in one country doesn't drag down the rest—seems to be heading towards agreement. EU finance ministers will squeeze in an extra meeting on December 19 to close the deal.

But will it be a good deal? Negotiations on the reform, proposed by the European Commission in April 2023, focused initially on the so-called preventive arm of the framework. According to the Commission's proposal, governments would be required to put public debt "on a plausibly downward path" by the end of a four to seven-year adjustment period or keep it below 60% of GDP and bring or maintain government deficits below 3% of GDP over the same period. The main dispute between countries has been whether these requirements should be complemented by 'safeguards' – simple quantitative rules requiring minimum debt and/or deficit reductions – and how such safeguards should be designed.

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.

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