The EU is seeking to forge a more defensive strategy toward China and is intensifying diplomacy to limit Beijing’s ability to buy foreign firms in the union, its top trading partner, diplomats and officials said.
Despite an agenda dominated by the UK’s imminent departure from the EU, leaders are to use a March 21 summit to discuss China policy, a first for many years.
It is part of a flurry of high-level meetings before Chinese President Xi Jinping (習近平) travels to Italy and France, and the EU holds a summit with China on April 9.
The acceleration of diplomacy, including special councils of EU envoys, experts and foreign ministers, marks a collective re-evaluation of Sino-EU ties after decades of rising trade and a feel-good factor toward Beijing that have contrasted with the US’ more aggressive stance.
European optimism has turned to frustration over China’s slowness to open up its economy, a surge of Chinese takeovers in critical sectors, the US’ pressure to shun China over espionage fears, and an impression in Brussels that Beijing has not kept its promise to stand up for free trade and globalization.
Four senior EU diplomats and officials in close contact with China said that they were losing hope on business issues that have been limping on for years, including almost a decade of talks on a treaty to increase investment flows.
“The Chinese say all the right things, but when it comes to taking a decision, they delay and delay,” one senior EU official said, citing a missed deadline in October last year for China to finalize a deal to recognize the EU’s system of protecting food names.
China has also backed out of an agreement to invest in a multibillion-euro EU infrastructure fund.
Chinese Ministry of Foreign Affairs spokesman Lu Kang (陸慷) on Friday last week told reporters that China hopes Europe could continue to provide a “fair, just, non-discriminatory environment” for Chinese companies.
With more than 1 billion euros a day in bilateral trade, the EU is China’s top trading partner, while China is second only to the US as a market for EU goods and services.
However, Chinese trade restrictions are more severe than EU barriers in almost every economic sector, according to New York research firm Rhodium Group and the Berlin-based Mercator Institute for China Studies.
Chinese investments into the EU far outweigh those of EU firms in China in most industries, they said.
In 2017, US President Donald Trump’s “America First” policies appeared to push China and Europe together after Xi’s defense of open trade at the World Economic Forum in Davos.
However, Europeans said that the change of style has not translated into less protectionism from Beijing.
The EU has said that a high-tech industrial development push, dubbed “Made in China 2025,” relies on illegal state support and subsidies that threaten European industries, including telecommunications and aerospace.
China has repeatedly denied such allegations.
At this month’s summit, EU leaders are likely to discuss whether it might be feasible to effectively ban Huawei Technologies Co equipment for 5G mobile networks, although the debate in EU capitals is at an early stage.
Europe has become the main battleground in a US campaign to rid Western networks of Chinese telecoms equipment, with Washington accusing Huawei of spying for Beijing, allegations that the company has repeatedly denied.
“Nobody in the EU wants to isolate China, but we need to equip ourselves better against a country that in some areas is becoming a strategic rival,” a senior EU diplomat said. “We have no clear policy, we are brainstorming on a massive scale.”
Chinese officials have rejected US-led allegations that its technology could be used by Beijing for spying.
Chinese Premier Li Keqiang (李克強) is set to attend the April EU summit in Brussels to press his case for fair treatment in trade and investment.
Li is also to hold a summit in Croatia later that month with 16 central and eastern EU and non-EU states.
EU leaders are not likely to agree a new strategy on March 21, but the European Commission, the union’s executive branch, is tomorrow expected to put forward ideas for a European industrial policy, echoing Franco-German demands to compete with foreign rivals and better protect technologies from overseas takeovers.
One idea is to revive a stalled 2012 proposal known as the International Procurement Instrument that would require foreign countries to open up their public procurement markets in return for access to Europe and restrict access in certain areas.
After a surge of Chinese investments across Europe, from Greece’s biggest port to a German robotics maker, the European Parliament last month agreed a system to coordinate scrutiny of foreign takeovers and investments.
However, officials said that the so-called investment screening is not enough.
European Commissioner for the Security Union Julian King last month said that it was “time to discuss whether we want to continue, as now, to see our own cutting-edge technologies sold off one after another.”
He also warned of the risks of “allowing one dominant [5G] supplier to emerge across the continent,” while British Secret Intelligence Service Chief Alex Younger said that Europe needs to be “at least as strategic” as China when it comes to developing future technologies.
“That’s a bit of a wake-up call and I think we should heed it,” he told reporters at the Munich Security Conference.
Additional reporting by Jan Strupczewski and Ben Blanchard
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