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22nd Oct 2018

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EU and China move to fill US void

  • As the US steps back from global leadership, the EU and China look for their new spots on the world stage (Photo: ec.europa.eu)

The EU and China are hoping to forge deeper ties in the face of an increasingly inward looking US at the first summit of EU and Chinese leaders since the election of US president Donald Trump.

Chinese premier Li Keqiang will meet European Council president Donald Tusk and European Commission president Jean-Claude Juncker on Thursday and Friday (1-2 June) in Brussels.

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  • Enviromentalist protestors in Paris in 2015 when the climate deal was clinched (Photo: Yann Levy/350.org)

As Trump seems to be taking the US out of the Paris climate accord and pushes for an “America first” protectionist trade policy, Chinese and EU officials will emphasise the need to tackle climate change and pursue free trade.

"The summit is likely to give serious signals that it is important to uphold binding rules in a multilateral trading system,” a senior EU official said.

However, persistent differences over trade, investment policy and human rights could foil building a closer partnership.

Climate leaders

Following Chinese president Xi Jinping's speech at the World Economic Forum in Davos earlier this year, where he defended globalisation, China is looking for a partner to fill the gap the US withdrawal has created on global issues, such as climate and trade.

Beijing is also looking for support to step up its presence in world politics after years of feeling that it was being lectured by Western countries.

"China currently invests massively in multilateralism and global governance, and hopes to be the one filling the leadership vacuum on this, following Trump's election,” Alice Ekman, head of China Research at the French Institute of International Relations (Ifri) told EUobserver.

She said that China "sees the EU as a potential supporter of China's priorities ... but certainly not as a leader". China envisages EU support on some of its priorities, such as the Belt & Road (an infrastructure project linking Asia and Europe), its global governance reform, and anti-corruption campaign.

After Trump irked his allies in the EU and Nato last week , the EU is also keen to strengthen the partnership with Beijing.

Just as German chancellor Angela Merkel warned that Europe no longer can rely on its old allies, Li also visited Merkel in Berlin on Wednesday.

In Brussels, EU and Chinese leaders are expected to put their weight behind the 2015 Paris climate agreement in a statement, detailing how China plans to implement it.

“China has gone through a profound transformation, moving from climate 'bad-boy' to climate leader in an era of Trump", Li Shuo of Greenpeace China said at an event in Brussels on Wednesday.

"The EU-China agreement will become even more important, if another major partner pulls out,” a senior EU official said referring to the US.

The EU and China also plan to work more closely on the Middle East and North Korea. And visa-free travel, already available for Chinese diplomats, will be under discussion for tourists.

Several agreements will be signed: from better cooperation on intellectual property to launching 2018, the year of EU-China tourism, and working together on joint research centres.

Deep differences

Other issues on the agenda, such as investment and trade, will however highlight the differences.

The EU is expecting China to reform its rules on foreign investment, which European businesses say are discriminating against them. An agreement on the issue has been under discussion since 2013, but talks have been lagging behind.

“The welcomed commitments from them [China] about liberalisation have not been matched by concrete action. The country needs to walk the talk,” EU trade commissioner Cecilia Malmstroem said last week at a business forum.

A top European business lobby group, the European Union Chamber of Commerce in China, published a survey on Wednesday about the business climate in China.

Sixty percent of respondents felt that, by 2020, Chinese companies will close key innovation gaps with foreign firms.

The chamber called the survey a "wake-up call to the whole of Europe" over growing competition from Chinese companies.

In 2014, the EU accounted for nearly 16 percent of total foreign investment in China, making it one of the top five investors in the country, but that is only 4.5 percent of total EU investment outflows.

Progress is not expected to be made on investment rules on the summit.

Protection

Key differences remain in trade, as well, while the EU ramps up its trade defence instruments to protect businesses from Chinese dumping – especially in the steel sector.

The EU has also decided on a new methodology to calculate dumping, which, in effect, will circumvent a previous obligation that stems from China's membership of the World Trade Organisation (WTO) to treat China as a “market economy” 15 years after joining. This would make it more difficult to impose tariffs on the country.

EU officials will bring up the issue during the talks, reassuring China that the WTO's discipline is taken very seriously by the EU. “Talks will be less acrimonious than last time,” the EU official said.

The trade implication of steel overcapacity and state subsidies by China, the EU's second-largest trade partner, will also be discussed.

The commission is conducting 17 anti-dumping investigations and three anti-subsidy investigations against China.

EU leaders are also expected to raise human rights issues, especially the treatment of NGOs, media legislation further curbing free speech online, and the militarisation of islands in the South China Sea.

Experts warn that, despite edging closer together, this does not necessarily lead to a new alliance.

"Overall, I do not expert this summit to be a turning point in EU-China relations," Ifri's Alice Ekman said.

"Many points of tensions remain on the table: from the lack of reciprocity in terms of market access, to recent restrictions on foreign NGOs in China, or the way the severe anti-corruption is implemented on the territory of some member states without prior notification or agreement," she said.

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