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Revisiting Brussels' de-risking policy By Klaus F. Zimmermann Mitigating risks in EU-China relationships has become a prominent focus in
contemporary policy discussions. The concept of "de-risking", a widely
recognized strategy in financial and business domains aimed at diversifying
risks to enhance the management of opportunities and challenges, proves equally
valuable in the realm of international relations. Re-examining this strategy is imperative, signifying a deliberate and
repeated assessment to guarantee that the risk reduction process does not
inadvertently result in significant losses of the substantial benefits derived
from fostering deeper international collaborations. The China-EU Summit, held in Beijing on Thursday, signifies the first
in-person summit in four years. The event presents a pivotal occasion to explore
the expansive collaboration prospects between China and the European Union, with
special focus on key areas such as climate change and trade. And to make it
productive, the EU expects China to take on increased responsibility in
addressing global challenges within the framework of a rules-based international
system, thereby fostering peace and security. China is pursuing the ratification of the Comprehensive Agreement on
Investment (CAI), a proposed deal between China and the EU. The agreement,
already endorsed in principle by EU leaders in December 2020, still awaits
ratification by the European Parliament. For the EU, the CAI seeks to enhance market access for EU companies in China,
addressing issues of asymmetry in market openness. It also seeks to establish
explicit regulations on Chinese State-owned enterprises, "subsidy transparency",
and prohibits practices such as "forced technology transfers", aiming to create
a fairer and more balanced economic relationship. As such, the CAI can help
stabilize the interest of EU business leaders to invest in China and to further
develop trade relationships. The concerns surrounding the signing of the CAI and its potential impact on
the EU's strategy of de-risking its relations with China are multifaceted, with
a predominant emphasis on the political implications of economic considerations.
The ultimate outcome, however, remains contingent on the precise terms of the
agreement and the manner in which it is executed. Opponents of the CAI raise the specter of interference in market mechanisms
and a departure from established rules governing market economies. This
apprehension is rooted in the fear that such deviations could undermine
globalization efforts and erode the integrity of market mechanisms. Furthermore,
there are valid concerns that the agreement may inadvertently exacerbate
existing trade imbalances, posing challenges to the EU's efforts to foster
equitable economic relationships. A recurring argument against the CAI revolves around the potential misuse of
China's rising economic prowess. Critics posit that China might leverage its
economic strength to exert economic and political pressure on other countries,
thereby compromising their independence. This fear is grounded in the belief
that the EU, by entering into such agreements, may find itself vulnerable to
undue influence, undermining its autonomy on the global stage. However, it is important to recognize that the realization of such dire
scenarios is contingent on the EU's inability to navigate and safeguard its
interests within the framework of these collaborations. A potential failure on
the part of the EU to uphold its economic standing and profile within these
partnerships might indeed lead to unwarranted dependencies. The key lies in approaching this agreement as an opportunity for both sides
to develop a mutually beneficial situation — a win-win scenario. By diligently
addressing challenges, fostering transparency, and adhering to agreed-upon
terms, the EU and China can establish a partnership that enhances economic
cooperation without compromising the autonomy and strategic interests of either
party. As these concerns are navigated and partnerships are developed on solid
foundations, the EU can strive to maintain a delicate balance between
collaboration and autonomy in its global relationships. Addressing climate change represents a significant area of potential
international collaboration between the European Union and China. This shared
challenge is recognized as a key priority by EU policymakers, who acknowledge
the necessity of China's substantial capacities and resources to effectively
meet climate goals. Both the EU and China understand the complex challenges
posed by climate change, desertification, pollution and biodiversity loss,
viewing them as threats to humanity and the planet. The EU and China have a history of cooperation on climate change through the
EU-China Partnership on Climate Change. Committed to the goals of the Paris
Agreement, they emphasize the importance of intensifying collaboration on
climate change and clean energy. This commitment extends to joint research
initiatives, including the food, agriculture, and biotechnology initiative and
the recently introduced Climate Change and Biodiversity Project. While recognizing the potential benefits of collaboration, it's essential to
navigate the complexities involved, and make collaborative efforts to ensure
mutual benefits and address the concerns of both parties. As the EU and China
continue their cooperation on climate-related issues, maintaining a nuanced
approach is crucial to fostering sustainable solutions and achieving a
harmonious balance between environmental goals and national interests. The author is a professor at the Free University of Berlin and the
president of the Global Labor Organization, a Germany-based worldwide network of
researchers investigating the path of globalization. The views don't necessarily reflect those of China Daily. It's crucial to fix effective cooperation rules By Ann Buel The EU-China Summit was finally held in Beijing on Thursday. Tensions ahead
of the EU-China Summit are clearly visible. The European Commission has adopted
its so-called "de-risking" strategy of cautious cooperation with China while
making sure the EU's strategic industries and supply chains are independent or
at least not completely under the direct influence of China. And the European
Parliament is yet to ratify the EU-China Comprehensive Agreement on Investment,
because of the sanctions imposed on some members of the European Parliament by
the Chinese side. However, the EU's de-risking from China is not the same as "de-coupling".The
global markets are highly interdependent, and since China is an important global
economic player, it's impossible for any country to de-couple from China, with
even the United States rejecting the idea. The European Union is slowly but surely turning toward a so-called effective
approach to China. Just look at the electric cars that are selling the most worldwide.
China-made electric vehicles (EVs) seem to be conquering the global market the
same way its hairdryers and washing machines did two decades ago. In fact,
Chinese EVs are pushing out once untouchable car-manufacturing giants from
Europe, Japan and the US. Chinese officials are happy that their country is now the world's largest
electric car maker. Their data show Chinese companies exported more than 2
million electric vehicles in the first half of this year, an increase of 75
percent year-on-year, perhaps because, like Chinese hairdryers, its cars are
also affordable. This is not to the liking of the European Commission, whose president Ursula
von der Leyen has said: "Global markets are now flooded with cheaper Chinese
electric cars… and their price is kept artificially low by huge state subsidies.
This is distorting our market." Indeed, the European Commission Directorate-General for Competition has
recently launched a probe into Chinese State subsidies, which has been
criticized by Chinese officials who have called the move "pure
protectionism". However, this is not the first time Chinese goods have been subjected to the
EU's anti-dumping policies. Chinese textiles, solar panels and other goods have
previously been subjected to similar, if not the same, policies. The
anti-dumping question was recently emphasized by the Chinese mission to the EU
at a private meeting on climate cooperation. For some European officials, price, in this case, low price, is one of the
means Chinese EV manufacturers are using to gain advantage in market
competition. The other advantages in market competition are gained from quality
and branding. Since this is a widely accepted and universally practiced
strategy, nobody can accuse China of using price to gain advantage so long as
China does not lower the prices by using means, such as State subsidies, banned
by the World Trade Organization. On the other hand, the EU countries as well as the US grant state subsidies
to enterprises using funds and laws such as the EU national funds and the US'
Inflation Reduction Act. Also, China has reduced State subsidies in recent
years, and thus the anti-dumping allegations against it sound groundless. Another issue is the trade imbalance. China's economic development trajectory
is changing profoundly. The country is entering a period of slower growth. And
the economic imbalances in China matter to the EU. In 2022, for example, China's
trade surplus with the EU was the highest in history, just below €400 billion.
Its current global trade surplus is the largest that any economy has ever had in
history. The influential European Council on Foreign Relations, headquartered in
Berlin, has done some insightful analyses of China-EU relations recently. For
instance, during its EU-China conference on Nov 16, the ECFR emphasized that
there is a need to hold debates among all EU stakeholders in China in order to
drive narratives on and exchanges with China. The conference strengthened an
opinion that China is not the same country as it was 10 years ago, and to
properly understand China, it is necessary to get all the facts right, and
invest more in gaining real knowledge about China not only with our Horizon
Europe research program, but also by hiring more China experts from EU
institutions. The relationship with China is a determining factor for the EU's economic
prosperity and strategic security. With the Russia-Ukraine and Israel-Palestine
conflicts continuing on the borders of the EU, an uncertain economic outlook and
other turbulent issues presenting major challenges to the world, the EU needs to
adopt a stable policy toward China. In this respect, the EU is participating in the EU-China Summit in good
faith, and there will still be enough room for discussions on a more ambitious
China-EU relationship that benefits both sides. The author is a former official of the European Commission. The views don't necessarily reflect those of China Daily. Deepening Sino-EU cooperation serves global interests By Chen Weihua The China-EU Summit, being held in Beijing on Thursday, is important for many
reasons, not least because it is the first face-to-face meeting between the two
sides since 2019 at a time of escalating geopolitical tensions. The several virtual meetings during the three years of the COVID-19 pandemic,
albeit critical, were no substitutes for face-to-face meetings. There is no
doubt the top leaders of the two sides need to meet more often and hold dialogue
to understand each other better since misunderstandings and lack of mutual trust
are still plaguing China-EU relations. Unlike the European Union which has since March 2019 changed its definition
of China-EU relations to cooperation partner, economic competitor and systemic
rival, China's stance has been consistent: it views the China-EU relationship as
a comprehensive strategic partnership, which began 20 years ago. China and the EU, despite their differences, have great potential to expand
cooperation, which has benefited both sides. Apart from trade, investment and
people-to-people exchanges, such cooperation also includes working together to
overcome global challenges such as climate change, global economic slowdown and
nuclear proliferation. China's recent decision to provide visa-free travel for citizens of five EU
member states — France, Germany, Italy, the Netherlands and Spain — is a major
step aimed at encouraging people to people exchanges. The EU should reciprocate
this gesture with measures to facilitate the visa applications of Chinese
tourists and business people, which have so far been a source of complaint. As someone who witnessed in 2016 the launch of China-US reciprocal 10-year
visa agreement, I feel it would be great if China and the Schengen countries
came to a similar understanding. Perhaps top EU leaders such as European Council
President Charles Michel and European Commission President Ursula von der Leyen
should spend some time traveling in China besides participating in the summit in
order to see and understand the real and diverse China. Such an experience may make them realize that the differences between the two
sides should not prevent them from deepening cooperation in different fields.
For example, the EU should view China's position document on the Russia-Ukraine
conflict without any bias and realize the importance of its call for a
cease-fire in the Israeli-Palestinian conflict instead of nitpicking. It should
realize that the two conflicts, if allowed to escalate, would deal a huge blow
to the EU by, for instance, triggering an influx of refugees in Europe, which is
already a top concern for the bloc. The EU has asserted that it does not seek to decouple from China. Yet the
sheer rhetoric of "de-risking" is souring China-EU ties. Mercedes-Benz CEO Ola
Kallenius put it rightly — "for us, de-risking doesn't mean reducing our
presence in China but increasing it". Similarly, many German companies, from
Volkswagen to Bosch to BASF, continue to increase their investments in
China. One of the reasons for the EU's trade deficit with China is that many EU
companies' units manufacture products in China and export them to the EU. The EU could change that by welcoming more Chinese investors and lifting the
growing screening measures that discriminate against Chinese investors and
withdrawing the export control imposed on companies such as the Dutch firm ASML,
the world's largest semiconductor equipment manufacturer. The EU could also reduce the deficit by ratifying the Comprehensive Agreement
on Investment, an agreement that took seven years to finalize and will remove
the barriers for both EU and Chinese investors. EU leaders should realize that Chinese companies, contrary to Western
perception, have become strong competitors of global enterprises. For example,
Chinese electric vehicle and solar panel companies are global leaders thanks to
the country's early transition toward clean energy. In fact, the EU should
applaud China's achievements in green transition because it could contribute a
lot to the EU's ambitious Green Deal. Trying to build barriers to undermine China's green transition by launching
anti-subsidy investigations and even threatening punitive tariffs will undermine
the global fight against climate change. So the EU should change its mindset,
and accept that China, the world's largest developing country, can take the lead
in some advanced industries, especially those critical to the global fight
against climate change and green transition.
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