Editor's Note: Greetings from snow-covered Brussels. This edition of the CCCEU Weekly Update keeps you informed of the commission's pending European economic security package and key China-EU developments. Enjoy our read and have a nice weeekend.    

▶︎ Focus    

Brussels is poised to reveal an expansive European Economic Security Package (EESP) next week, featuring critical elements such as revised rules for foreign direct investment (FDI) screening and an "initiative on outbound investments." Among the package's highlights are recommendations on research security and a comprehensive white paper on dual-use research. 

This development follows European Commission President Ursula von der Leyen's introduction of the "European Economic Security Strategy" during the June 2023 College of Commissioners meeting. The strategy, grounded in three fundamental pillars, emphasizes promoting the EU's competitiveness, safeguarding economic security, and cultivating stronger global partnerships and networks: 

I. Promoting the EU's competitiveness and growth through reinforcing the Single Market, supporting a resilient economy, and advancing the EU's research, technological, and industrial base. 

II. Protecting economic security through a spectrum of policies and tools, including targeted new instruments where necessary. 

III. Establishing broad global partnerships to diversify and bolster mutual resilience. 

In December 2023, the Executive Vice-President of the Commission, Dombrovskis, detailed the strategy's objective during a European Parliament plenary debate, emphasizing the need to minimize risks in economic relations while maintaining openness and dynamism. The strategy identifies key risk categories, encompassing supply chain resilience, the security of critical infrastructure (both physical and cyber), technology security, and the weaponization of economic dependencies or coercion. 

The initial implementation of this strategy prioritizes critical technology sectors such as advanced semiconductors, artificial intelligence, quantum technologies, and biotechnologies. Planned future initiatives include revising the FDI Screening Regulation and enhancing export controls. 

On January 17, 2024, a report titled 'Understanding EU-China Economic Exposure' revealed the EU's dependency on China across trade, investment, and technology. 

Additionally, on January 19, 2024, Eurativ reported that the EESP recommends screening greenfield foreign investments in the EU, impacting sectors like solar and wind technologies, electric vehicles, and semiconductor investments by non-EU entities. 

This, very likely, will pose challenges for Chinese companies seeking business and investment opportunities in Europe.    

▶︎ Hot Topics    

>>Chinese premier says China to stay committed to partnership with EU

China stands ready to work with the European Union (EU) to stay committed to partnership, stick to dialogue and cooperation, pursue mutual benefit and win-win results, and properly handle differences under the principle of mutual understanding and respect, Chinese Premier Li Qiang said here Tuesday.

In today's world that is fraught with changes and turbulence, China-EU ties remain stable among major-country relationships, which is a result of joint efforts from both sides, Li said when meeting with European Commission President Ursula von der Leyen on the sidelines of the World Economic Forum Annual Meeting 2024.

It is hoped that the EU will uphold justice, compliance and transparency in economic and trade matters, treat Chinese enterprises fairly, and prudently introduce restrictive economic and trade policies and deploy trade remedies, Li said.

 >>Closer China-EU Partnership: Adding Positive Energy to a Turbulent World

2023 was a year of great significance for China and the EU. We celebrated the 20th anniversary of the establishment of comprehensive strategic partnership. And leaders from the two sides had first face-to-face Summit in three years, setting a new direction for the bilateral relationship, writes Ambassador Fu Cong, head of the Chinese Mission to the EU.

 >>LEAK: EU to ask member states to to screen foreign direct investments

The European Commission will next week propose new rules requiring EU member states to screen foreign direct investments (FDIs) into the bloc's sensitive industries to determine if they pose a security risk, according to a draft regulation, seen by Euractiv.

According to the draft proposal, the European Commission aims to enhance information-sharing between member states and improve the mechanisms for nations to notify one another of relevant investments.

The draft proposal would also introduce the novelty of screening greenfield investments.EU countries should therefore include them in the screening mechanisms, "in particular when such investments occur in sectors relevant to their security or public order or when they present characteristics such as size or essential nature to be relevant to their security or public order".

  >>LEAK: EU to present five new initiatives to enhance EU's economic security

The European Commission is expected to table five new initiatives as part of its recent push towards a more comprehensive economic security strategy, according to a draft economic security package, obtained by Euractiv.

The five new components are the latest additions to the EU's growing trade defence toolbox, which includes filtering foreign direct investments into the EU and a newly agreed anti-coercion instrument that foresees trade countermeasures against economic coercion.

 >>EU Commission to back 90% emissions cut for 2040 climate target - sources

The European Commission is set to recommend the EU reduces its net greenhouse gas emissions 90% by 2040, from 1990 levels, to ensure the bloc can reach net zero emissions a decade later, sources familiar with the matter told Reuters.

The European Union is drafting its first 2040 climate target, to bridge the gap between its existing goals to cut net emissions 55% by 2030 and reach net zero emissions by 2050.

The European Commission will present its recommendation for a 90% emissions reduction target for 2040 on Feb 6., the sources told Reuters.

▶︎ What are experts talking about？

EU's "De-Risking" Trap

Source: China-U.S. focus

Author: Dong Yifan, Assistant Research Fellow, China Institutes of Contemporary International Relations

From China's point of view, peddling de-risking, both in concept and practice, is fraught with danger. It will not only undermine trade as the "ballast" of China-EU economic ties over the past 50 years but will also plunge the two into an abyss of decoupling and severed chains, thus generating a negative domino effect in the geopolitical arena. This would only further aggravate the trend of fragmentation and camp-based confrontation in global markets and supply chains, while undercutting cooperative innovation.

Understanding EU-China Economic Exposure

Source: The Economic Commission

Author: Frank Vandermeeren,  DG GROW Chief Economist team - Economic and Policy Analyst

The EU is operating an increasingly complex geopolitical environment.In this context, the EU aims to de-risk – not de-couple – from China.De-risking requires understanding exposure.

The EU's exposure to China takes different forms. Much of the debate on EU exposure to China focuses on imports of strategic products. This is understandable, as these have been at the origin of recent disruptions. Still, there are other forms of exposure. While potentially less prone to immediate supply chain problems, their possible adverse effects can be equally important in the medium to long term. This economic brief looks at three channels of exposure, each with their own set of underlying drivers: trade, investment and technology.

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.