August 18, 2019

Europe Holds Summit With China, More Skeptically This Time

Europe Holds Summit With China, More Skeptically This Time

BRUSSELS — The European Union, which does more than one billion euros a day in two-way trade with China, came late to the industrial, political and security threats China poses. For a long time, Europe saw China as another Japan, only with some human-rights issues.

But with the outspoken ambitions of the Chinese leader, Xi Jinping, and continuing battles over technology transfer, closed markets and industrial espionage, that is changing.

On Tuesday, the European Union and China meet in Brussels for their 21st annual summit. The challenge for Europe is to forge a united front in the face of a China that only last month it labeled an “economic competitor” in critical industrial fields and a “systemic rival” politically.

The mood is certainly tougher now, especially after Italy last month became the first Group of 7 country to join China’s vast Belt and Road project, which the French analyst François Heisbourg described as “China’s own concept on how to organize the global space.”

In difficult negotiations, the Europeans have had a hard time trying to agree on a joint statement with the Chinese that is serious about substance.

A senior European official pointed to a statement finally reached after the last summit, in Beijing in July, which was full of promises not delivered, especially on issues like investment ground rules and market reciprocity, which are sources of tension now.

If anything, there has been backsliding and more vivid violations of human rights, like the detention of foreigners and the settlement camps for Uighurs.

Last month, President Emmanuel Macron of France said that the European Union had finally woken up to China. “China plays on our divisions,” he said. “The period of European naïveté is over.”

But the bloc was slow to respond to Belt and Road, just as it was slow to react to China’s effort in 2012 to sow divisions on the Continent with its “16 plus 1” initiative — itself and 16 Central and Eastern European nations.

They are to hold their own meeting starting Thursday in Croatia, and Prime Minister Li Keqiang of China, who leads the delegation to Brussels, will go there as well. At the end of the month, many European Union member states will also go to Beijing for a Belt and Road forum.

The 16 plus 1 group contains 11 European Union member states, five of which use the euro, and four of which are formal candidates for membership in the bloc. And Greece is reported to be eager to join.

All have been eager for Chinese investment, which carries fewer demands, if higher risks, than Western banks or development funds. And already countries with significant financial ties to China, like Greece and Italy, have blocked European consensus on resolutions condemning Chinese behavior.

“China will attempt to use every opportunity, including the E.U.-China Summit, and the 16 plus 1 meeting in Croatia, to pit Europeans against each other and against the United States,’’ said Jamie Fly, the director of the Asia and Future of Geopolitics Programs for the German Marshall Fund in Washington.

‘‘It would be foolish and shortsighted to take the bait,” he added.

Avoiding that may not be easy. President Trump sees the European Union as an economic “foe” and threatens tariffs on European goods and sanctions on European companies over their connections to Iran.

China, on the other hand, works hard, despite recent conflicts, to be attractive to European businesses, both for investment and trade. “China uses honey while the U.S. is using vinegar,” Mr. Heisbourg said. “The U.S. is pushing Europe in China’s direction.”

China also emphasizes its agreement with Europe on issues Mr. Trump has opposed.

Those include climate change, with China producing more than a quarter of the world’s greenhouse gases but presenting an important market, as well as commitment to the Iran nuclear deal, which Mr. Trump has abandoned.

Not least, Beijing has offered vocal support for what a senior European official called “the rules-based multilateral trading system, with the World Trade Organization at its core.”

The relationship is crucial for both Brussels and Beijing, and the honey is difficult to resist. The European Union is China’s biggest trading partner, and China is the bloc’s second-biggest after the United States.

Ivan Hodac, the former head of the European Automobile Manufacturers’ Association, which has major interests in China, says the new European wariness is coming late.

“The E.U. is divided,” Mr. Hodac said. “Each country has its own financial interest. So long as there is no free trade agreement or investment deal with China,” he said, Europe is vulnerable. “And the Americans need to understand we are really in it together.”

Washington and Brussels share similar goals with China — a more transparent economic relationship, a more equal playing field, reciprocal openness to the Chinese economy, and curbs on trade barriers and subsidies to national companies.

But Mr. Trump has favored trying to reach his own deals with China while also, the Europeans argue, undermining the W.T.O., whose rules China has at least promised to obey. Both Brussels and Washington want to reform the trade body, but need Chinese agreement to do so.

There are also new security concerns, with the United States warning allies away from Huawei, the large Chinese telecommunications company, as the world moves to 5G wireless networks.

With defense and industry increasingly dependent on 5G and artificial intelligence, areas where China is innovating and investing heavily, Washington and other allies, like Germany and France, see dangers.

Yet Huawei is cheaper than its competitors, attractive to smaller countries and central European ones, and there is no large American alternative. Nor is there a European Union version of the Committee on Foreign Investment in the United States, or Cfius, an interagency group that carefully screens Chinese and other foreign investments to protect national security.

In a column for the German economic newspaper Handelsblatt, Mr. Li denied accusations that Beijing was trying to split the bloc by investing in Eastern European states.

“We emphatically support the European integration process in the hope of a united and prosperous Europe,” he wrote, adding that Beijing’s close cooperation with Eastern European states was “advantageous for a balanced development within the E.U.”

China was ready to work closely with Europe in upholding the Paris Climate Agreement, supporting sustainable development, retaining the international nuclear deal with Iran, fighting terrorism and exchanging views on reforming the W.T.O., Mr. Li wrote.

These are welcome words for the Europeans. But they are more skeptical now that such promises will be met.

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