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Bloomberg

Chinese tensions are escalating as Europe moves toward Biden’s country

(Bloomberg) – A major investment deal reached in December between the European Union and China – after seven years of painful negotiations – could turn out to be a brand of top-notch ties. Since then, the executive branch of the EU and Germany have formulated legislation that would make it difficult for Chinese entities to invest, while joining the United States in exchanging “tit for tat”

; sanctions with Beijing. The Italian government has turned from an enthusiastic supporter of President Xi Jinping’s Belt and Road initiative to block planned acquisitions by Chinese companies. And in France, the Chinese ambassador did not even show up for a call in March, citing “reasons for the agenda.” Taken together, the moves signal a consolidation of Europe’s position on Beijing. Even the biggest change is yet to come, with opinion polls showing that the German Green Party is set to play a significant role in government after the September elections, raising the prospect of more skeptical cooling on the part of Europe’s largest economy. . Chancellor Angela Merkel talks to Chinese Last week, Prime Minister Li Keqiang pledged closer co-operation on Covid-19 vaccines and the fight against climate change. Yet in Berlin, it is said that optimism about relations has disappeared and a Chinese official has characterized relations with Europe as a downward trajectory. Whether the Greens come to power in Germany or not, EU-China relations are at a critical juncture, the spokesman said, asking not to be identified on strategic issues. Numerous signs of tension suggest that Europe’s biggest players are approaching the views of President Joe Biden’s administration in conflict with China. As Secretary of State Anthony Blinken holds talks in London this week with colleagues from the Group of Seven, a more Washington-loving Europe would signal reparations for the Trump administration’s transatlantic ties, with trade, tariff and access to technology. “The mood has changed,” said Jörg Vutke, Beijing-based president of the European Chamber of Commerce in China and a board member of the Mercator Institute for Chinese Studies in Berlin, one of the entities sanctioned by China in March. He cited the “perfect storm” of China’s confidence in Taiwan, its move to impose political control over Hong Kong and international sanctions for alleged human rights abuses in the Xinjiang region, disguised by the fact that China has not kept its promises to open up economically. Certainly Europe is not united in its prospects, with EU members like Hungary still ready to commit to China. And while Biden said China could expect “extreme competition” from the United States while seeking to work with them on global issues such as climate change, Europe faces a greater dilemma as it seeks to face its own path. . Economic ties remain paramount, as China is the EU’s largest trading partner, with a total volume of about $ 686 billion in 2020, surpassing US-China trade of $ 572 billion. Yet even the Netherlands, which is among China’s top 10 trading partners, is becoming increasingly cautious, protecting its high-tech companies from takeovers and implementing a special Chinese strategy. According to the Chinese official, the United States forced the EU to take part. The mood was different only four months ago, when Merkel helped direct the bloc to seal the comprehensive EU-China investment agreement, which Commission President Ursula von der Leyen said was “an important landmark in our relations with China.” ratified by the European Parliament, it will provide improved access to the Chinese market for European investors, while committing China to “ambitious principles”, including on forced labor. However, by the end of March, the EU had joined the United States, Canada and Britain in imposing sanctions on China for allegedly harassing Muslim Uighurs in Xinjiang, including forcing them to work. Beijing responded with its own sanctions, while a public reaction saw Swedish fashion retailer Hennes & Mauritz AB being subjected to an unofficial boycott. “The EU has recently added more items to the agenda related to human rights, ideology, democracy,” said Zhang Monan, a senior fellow at the American-European Institute at the China Center for International Economic Exchange in Beijing. “This kind of opposition and friction is expected to continue.” She added that the EU is expected to formulate policy independently, as it does not want to be subordinated to the United States. The European Commission is now proposing rules to impose fines and block deals targeting foreign government companies, while Merkel’s cabinet approved additional foreign investment powers last week aimed at high-tech sectors, including artificial intelligence and quantum computing. Both measures would prevent China. China had hoped to separate economic issues from political ones and link Europe to its huge consumer market, but that is increasingly impossible now, said an academic from a think tank linked to the Chinese government. Ratification of the CAI has become a bigger challenge, said the man, who is not authorized to comment publicly due to rules for talks with foreign media. Signs of tension were shown during the virtual conversations led by Merkel and Lee. Contrary to common practice, the introductory notes were not broadcast live and there was no closing press conference. A transcript released a few hours later from Germany shows that Merkel has dealt with human rights, saying there are differences of opinion, especially with regard to Hong Kong. “China and Germany have different views on some issues, that’s a fact,” Li told Merkel, urging Germany not to interfere in domestic affairs, a statement from the Chinese Foreign Ministry said. Lee said he hoped they could “eliminate unnecessary distractions” to maintain “healthy and stable” bilateral ties. Change in Europe has not been lost by Washington. An official from the Biden administration said there had been a naval shift in European thinking that was rising with the US position on China. There is a real evolution in Germany as well, the official said. This change could become more pronounced if the Greens turn the result of their polls into a strong performance or even a victory in September, and Merkel will give way. While all coalitions involve political compromises, the Greens have a tougher stance on China than the current administration, calling for an end to “blatant human rights violations” in Beijing and for closer European and transatlantic coordination with China. A coalition with the Conservatives, as suggested by opinion polls, would show continuity in German foreign policy, but with “different nuances” towards China, said Jana Puglierin, head of the European Council on Foreign Relations’ office in Berlin. “The Greens would obviously advocate a less mercantilist policy that we have seen under Merkel,” she said. For now, Europe is determined to avoid complete secession from China. French President Emmanuel Macron and Merkel held a joint conversation with Xi in April, and a report in the Chinese Global Times on April 28 referred to “optimism and confidence in China-Germany cooperation”, despite the risk of “some impact” after the election. Merkel’s potential successors and business leaders know the “great potential” of Europe working with China, “so they must ensure that strong ties are not broken by any third country or internal conservative forces.” However, Wuttke in the European The Chamber of Commerce said China underestimated human rights concerns in Germany. Especially after the departure of Merkel, who supports the engagement with China, this will probably become a more definite policy in Berlin, “he said. For more articles like this, please visit us at bloomberg.com Subscribe now to stay ahead with the most trusted source of business news © 2021 Bloomberg LP


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