Thursday

18th Aug 2022

EU and China agree on words, not yet on action

  • Jean-Claude Juncker, Donald Tusk and Chinese prime minister Li Keqiang (c) face-to-face in Beijing (Photo: European Commission)

EU-China relations took a symbolic step forward in Beijing on Monday (16 July) when leaders agreed on a joint statement that includes trade and climate issues - something they failed to achieve a year ago at a previous summit in Brussels.

"A lot of common ground has been reached," Chinese prime minister Li Keqiang said after meeting European Commission and Council presidents Jean-Claude Juncker and Donald Tusk.

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Amid EU recriminations that European companies are discriminated against in China, Li assured that "China wants to seek a more balanced trade relation" and that "its determination for greater openness is firm".

"Please let us know if you feel that you are treated unfairly," he said, referring in particular to intellectual property rights.

Last month the EU took China to the World Trade Organization (WTO), saying that Chinese law "undermines intellectual property rights of EU companies" by forcing them to transfer technology.

The issue has been at the centre of EU calls for more reciprocity in market access and investment opportunities.

"The EU took note of China's recent commitments to improving market access and the investment environment, strengthening intellectual property rights and expanding imports, and looks forward to their full implementation as well as further measures," said the joint statement adopted by the three leaders.

The EU and China also had a first exchange of offers on the Comprehensive Agreement on Investments (CAI) which has been under discussion since 2013.

"What we need is an agreement that fulfills our common ambition and gives investors on both sides predictable and long-term access to our respective markets," Juncker said.

"Actions are more important than words," he insisted, hinting at some continued mistrust from the EU.

For the two sides, however, the most important thing - on the day when US and Russian presidents, Donald Trump and Vladimir Putin, were meeting in Helsinki - was to give a signal that the two main economic powers next to the US could work together to uphold multilateralism in an uncertain global environment.

New territory

"The architecture of the world is changing before our very eyes. And it is our common responsibility to make it a change for the better," Tusk noted, calling the EU, China, the US and Russia "not to destroy this order, but to improve it."

Tusk said the four powers should "not to start trade wars, which turned into hot conflicts so often in our history, but to bravely and responsibly reform the rules-based international order."

On the day after Trump said that the EU was a "foe", Li said that China "wants to see a united and prosperous EU."

He echoed EU calls for a reform of the WTO and agreed to form a joint working group on the issue.

"The EU and China are entering into new territory as ad hoc coalition partners," Fraser Cameron, the director of the EU-Asia Centre, told EUobserver.

He noted that the summit showed that "there is a new determination to do everything possible to preserve the global trading system, under attack from president Trump's unilateral approach."

But the summit's ambition may face obstacles, as a reform of the WTO would include issues that the EU and China still have to resolve.

"We need new rules in the field of industrial subsidies, intellectual property and forced technology transfers, reduction of trade costs, as well as a new approach to development and more effective dispute settlement," Tusk stressed.

Wishful thinking

"It is of course wishful thinking to believe that China and the EU are going to be able to reform the WTO," Alicia Garcia Herrero, chief economist for Asia at the Natixis bank and senior research fellow for Bruegel think tank, told this website.

"Other than a potential reform of WTO, not much of substance can be drawn from the meeting," she added.

"It seems to me that we are very far from any rebalancing from Europe toward China, even if minimal," she argued, referring to EU calls for reciprocity and a reduction of the role of Chinese state-owned companies.

"We are making progress," Juncker told journalists. But he added a hint of EU impatience, noting that "if China wishes to open up it can do so. It knows how to open up."

"I would argue that this is a missed opportunity for both parties given how much both are being bullied by Trump," Garcia Herrero said.

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