Editor's Note: Greetings! This edition of the CCCEU Weekly Update brings you insights into the challenges Chinese companies encounter in Europe, navigating bans and barriers on one side while showcasing innovation and resilience on the other. Enjoy your read, and have a wonderful weekend.

Focus

As global dynamics shift, China-Europe economic and trade relations encounter new challenges and opportunities, underscored by recent events that highlight their complex interplay.

Primarily, with the EU election approaching, the European Parliament is reportedly preparing to use TikTok in the upcoming election campaigns. Previously, "aiming to resist cybersecurity threats," TikTok was banned by the three major EU institutions—the European Commission, the Council of the EU, and the European Parliament. At the moment, the EU's ban on TikTok still exists, but some politicians worry that if TikTok is boycotted, they will be unable to reach critical voter groups. Therefore, despite concerns over Chinese data access and content recommendation algorithms, all parties have flocked to TikTok, using the app on their personal devices to campaign and attract young voters at all costs.

"All these young people, especially first-time voters, they don't Google any more, they TikTok. They get their political information from TikTok," MEP Hannah Neumann was quoted as saying by South China Morning Post.

Secondly, the EU recently announced the extension of its previous twelve rounds of sanctions for another year. In its thirteenth round of sanctions against Russia, four Chinese companies were included. It is reported that these four companies include three headquartered in mainland China and one in Hong Kong, mainly involved in trade, chips, and other technology industries. These companies will be prohibited from doing business with Europe to cut off the channels for these companies to purchase products from the EU and resell them to Russia.

Meanwhile, on February 22, the US Treasury Department stated that the US plans to impose sanctions on over 500 targets related to Russia. Several Chinese companies were also affected.

In addition, US President Joe Biden reportedly took action this Thursday to prevent Chinese electric vehicles from entering the US market, saying that internet-connected cars and trucks from China pose a "risk" to national security. The US Department of Commerce immediately took action, launching a security threat investigation, which could lead to new regulations or restrictions on cars produced in China.

According to the New York Times, government officials explicitly stated that this is the first step, and various policies will be introduced afterward to prevent the influx of low-cost Chinese electric vehicles—whether made in China or assembled by Chinese companies in countries like Mexico—into the US market.

At the same time, Politico reported that the UK is also considering whether to launch an anti-subsidy investigation into Chinese electric vehicles.

Thirdly, amidst challenges, Chinese enterprises shine at two major European events.

In Barcelona, the Mobile World Congress (MWC) is underway, with Chinese firms comprising over 12% of its 2,400 exhibitors. Groundbreaking advancements in 5G and other technologies are being unveiled.

In Geneva, the International Motor Show has returned after four years, with Chinese car brands attracting attention with new releases.

From tech to automotive, Chinese companies are deepening their European market presence through innovation and collaboration.

In a week marked by TikTok, sanctions, investigations, and high-profile exhibitions, "speaking from strength" emerges as the theme across transatlantic electoral, political, and business landscapes. Despite facing significant challenges, Chinese enterprises display resilience and vitality. Their success stems not from "unfair" practices but from technological innovation, quality, market competition, audience engagement, and strategic investment.

The shortsighted tactic of opposing for the sake of opposition in cyclical election politics often overlooks the immediate needs of society. It's evident that respecting market economy laws, fair competition principles, avoiding blanket national security assumptions, and ensuring an open, fair, and nondiscriminatory business environment are crucial. These measures safeguard enterprises and foster sustainable economic growth.

 Hot Topics

Brussels releases summary notice of its in-depth investigation into CRRC

On Feb. 29, the EU's official journal published a summary notice of the first in-depth probe into Chinese company CRRC under the bloc's Foreign Subsidies Regulation. The EU is obliged to release such a summary notice under FSR if the Commission opens an in-depth investigation.

China, EU hold talks on regional policy cooperation

On February 27, 2024, under the China-EU Regional Policy Dialogue framework, the 15th China-EU High-Level Seminar on Regional Policy Cooperation was held in Taicang, Suzhou, according to EEAS.

With the theme "Sustainable Urban Development and Regional Cooperation,"  the seminar aimed to showcase the achievements of the International Urban and Regional Cooperation Programme EU-China (IURC China) in 2021-2023 and to share the best practices and success stories between cities and regions from the EU and China, in responding to the common challenges of global economic and social recovery in the post-pandemic era and contributing to the Sustainable Development Goals of the United Nations, a press release said.

Chinese company takeovers in Europe fall to 12-year low – more investments in Switzerland: EY

Chinese buyers are becoming increasingly rare when it comes to company takeovers in Europe, according to a report by EY.

The number of transactions fell from 139 to 119 in 2023 compared to the previous year, it said. In 2016, at the height of the boom in Chinese M&A transactions in Europe, 309 acquisitions of Chinese companies were registered. The transaction volume also fell again: the value of investments and takeovers fell from USD 4.3 billion to USD 2.0 billion, although no purchase price information is available for the majority of takeovers.

Chinese EV Outbound Investment Hits Record in 2023: Report

Reuters reported that Chinese outbound foreign direct investment along the electric vehicle value chain will likely set a new record in 2023, a report from Rhodium Group showed. Chinese firms put $28.2 billion into EV-related industries last year, the report said, which falls short of the $29.7 billion spent in 2022 but does not include several big-ticket projects with no known price tag, such as BYD's Hungary plant and Gotion's 25% stake in a Slovakian battery producer.

ECB to cut rates in June: expert poll

The European Central Bank will first cut interest rates in June, according to a near two-thirds majority of economists in a Reuters poll, though they were split on the chances of the cut coming earlier or later than they expected, Reuters has reported.

Inflation, which the ECB targets at 2.0%, moderated to 2.8% in January from a peak of 10.6% in October 2022 and is expected to drop further. But policymakers have made it clear they are not yet ready to consider cutting rates, even as growth falters.

Council adopts regulation on instant payments

On Feb. 26, the Council adopted a regulation that will make instant payments fully available in euros to consumers and businesses in the EU and in EEA countries. The instant payments regulation will allow people to transfer money within ten seconds at any time of the day, including outside business hours, not only within the same country but also to another EU member state. The regulation takes into consideration the particularities of non-euro area entities, a press release said.

New global rules to simplify trade in services enter into force in the WTO

Trade in services just got a boost with the entry into force of new World Trade Organisation (WTO) rules facilitating and simplifying trade in services. The new rules apply to a large and diverse group of WTO Members, including developed, developing, and least developed countries, representing 92% of world trade in services.

Commission seeks to boost Europe's advanced materials

On Feb. 27, the Commission proposed an encompassing strategy to move towards EU industrial leadership in advanced materials, a key enabling technology highly relevant for the twin green and digital transitions. The Communication on Advanced Materials for Industrial Leadership puts forward concrete steps enabling us to align research and innovation priorities and investments in the EU, ensuring European leadership in this key technology. This initiative, eagerly anticipated by the Member States and industry, is the first step towards a common European approach for advanced materials, laying the groundwork for further action.

What are the experts saying?

Analysis of the EU's Economic Security Strategy and Its Impact on China: From 'Open Strategic Autonomy' to Comprehensive 'De-risking'

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

Author: Zhao Jizhou

In June 2023, the EU released its first Economic Security Strategy, attracting widespread international attention. This article comprehensively and systematically reviews and analyses the strategy, including its background, policy framework, related shifts in EU economic policy concepts, its implementation prospects, and its impacts. Overall, under the combined effects of the COVID-19 pandemic, the full escalation of the Ukraine crisis, the rise of new industrial revolutions, and the US's strategic competition with China, the EU is currently deep in a state of risk and competitiveness anxiety. The introduction of the Economic Security Strategy marks a fundamental shift in the underlying logic of the EU's internal and external economic policies from "efficiency first" to "balancing efficiency and security," and in some areas, even "security first."

The state of financial knowledge in the European Union

Source: Bruegel

Authors: Maria Demertzis, Luca Léry Moffat, Annamaria Lusardi, Juan Mejino Lopez

Interest in financial literacy stems from the question of whether households have enough knowledge and skills to manage their financial well-being. Financial knowledge is essential in modern economies, in which the responsibility for saving and preparing for retirement has shifted increasingly to the individual. From pensions to mortgages, to new financial instruments, individuals must make decisions that are more complex and riskier than in the past. Meanwhile, the digitalization of finance has made it easier to access financial products, exposing consumers to unknown and rapidly changing risks.

According to the research, only one in two individuals in the European Union, on average, is financially knowledgeable. In response to a 2023 survey containing five questions assessing basic financial knowledge, only half of the respondents answered at least three of the five questions correctly. This represents a low level of financial knowledge and an obstacle for individuals to invest in financial markets.

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.