On December 30, 2020, China and the European Union signed an investment agreement, which had been under negotiation for seven years without results, but now, with the resurgence of the epidemic in Europe and in the context of the decoupling of China and the U.S., the China-EU agreement was quickly signed, making the current relationship between the U.S., China, and the EU even more complicated, with some using the new “Romance of the Three Kingdoms” to describe the current world landscape.
The mainland media has been highly critical of the China-EU agreement, saying that it is a “balanced, high-level, mutually beneficial investment agreement”. Is this agreement really beneficial to the Chinese Communist Party? What are the EU’s considerations in it?
China’s concessions and raids on nuclear power plant investment
Although neither side has announced the complete content of the agreement, the information revealed by both sides shows that the agreement covers areas far beyond traditional bilateral investment agreements, including market access commitments, fair competition rules, sustainable development and dispute settlement. As the agreement covers many sensitive areas of the Chinese Communist Party, it also makes the outside world question whether the Chinese Communist Party can successfully complete the signing and implementation.
The European Commission said the CAI opens up China’s manufacturing, construction, advertising, air transport and telecommunications sectors to EU companies. And the agreement imposes clear obligations on Chinese state-owned enterprises, with the Communist Party promising to prohibit forced technology transfers and other distortions, and to increase the transparency of subsidies.
This should be the biggest promise made by the Chinese Communist Party, because the two items on forced technology transfer and subsidies for state-owned enterprises were not really touched and implemented in the agreement during the two-year-long trade negotiations between China and the U.S., but the Chinese Communist Party compromised in the China-EU agreement in just 30 days, and therefore, such a promise is very unsettling.
Moreover, in the China-EU agreement, the CCP also stated that it would be committed to the effective implementation of the ratified ILO conventions. And this article, the last obstacle of the recent controversy, was all but conceded by the CCP.
It is equivalent to the fact that all the conditions proposed by the EU have been committed by the CCP, without any actual concessions on the part of the EU. The EU statement also referred to the epidemic, the human rights situation in China, including serious concerns about developments in Hong Kong.
Xi said the agreement is “a balanced, high-level, mutually beneficial and win-win investment agreement,” but we can see from the content that it is clearly not, and in fact is a lopsided concession by the Chinese Communist Party that is even more unbalanced than the first phase of the U.S.-China trade agreement. And judging from the current internal and external situation of the CCP, the concessions made by the CCP to the EU are more to meet the urgent political needs of the CCP’s top management at present. Under the U.S.-China decoupling, the CCP can no longer decouple with Europe and China.
In fact, it is also impossible for the CCP to fulfill the agreement commitment. How can the CCP rapidly develop its own technology when it has complied with the knowledge protection? And how can European companies compete freely when the Chinese Communist Party has been tightening its control and exploitation of its own companies?
Xi Jinping also mentioned that he “hopes the European side will adhere to free trade and multilateralism”, and in the current world situation, Xi Jinping’s words imply that he hopes the EU will not be influenced by the US and will stand by the Chinese Communist Party against the US. If the EU fails to do what the CPC wants, the CPC can find an excuse to overturn its commitment on the grounds that the EU does not adhere to free trade and multilateralism, just like the Sino-British Joint Declaration and the first phase of the US-China trade agreement. and the first phase of the U.S.-China trade agreement.
So, why did the CCP make such a big concession? Just last December 23, a week before the document was signed, the German weekly Wirtschaftswoche reported that the Chinese side had demanded investment in European nuclear power plants and the use of Chinese technology during negotiations.
In recent years, the Chinese Communist Party has been investing heavily in European infrastructure such as power and ports, and European countries such as Germany are already worried about national security risks and setting review thresholds. China’s sudden request for investment in nuclear power plants will inevitably lead to controversy within the EU.
Based on this situation, some analysts believe that the CCP’s ambition is on energy in Europe. So, why does the CCP want Europe’s energy?
CCP wants to compete for control of Europe’s energy
There is more clean energy in Europe, and the overall power generation structure, with data from 2017, nuclear power accounts for 25% and has the largest share. This is followed by coal power with 22% and natural gas with 20%. China, on the other hand, has a serious energy overcapacity and a low technology content in energy construction. After the signing of the Sino-European agreement, Europe will open its market for renewable energy and allow more Chinese communist companies to participate in the construction of renewable energy infrastructure.
Mainland media reported that the China-EU investment agreement will benefit Chinese manufacturers of new energy power equipment, especially photovoltaic modules. China’s photovoltaic industry, due to the previous “Great Leap Forward” type of swarm of investment, resulting in a huge overcapacity, and Europe is now China’s largest PV module export market.
More than half of China’s global investments are in energy, with Xi Jinping’s visit to the UK in 2015 focusing on nuclear power projects.
Once the Chinese Communist Party has mastered the energy lifelines of European countries, it is not an exaggeration to say that it will be able to control European countries, and perhaps Europe will even become another Africa.
The United Kingdom has just left the European Union, the United States has no time to care about the East
In the current international environment, one of the reasons why the Chinese Communist Party (CCP) signed the Sino-European agreement quickly is that the U.S. is not able to take care of itself because of the election fraud, and from the current news and evidence, the CCP is also behind the election fraud in the U.S. Since the CCP has made so much effort to mess up the U.S. political scene, naturally it will not miss this so-called weak period of power in the U.S. For the CCP, the U.S. may not have time to interfere in European affairs now, so the CCP and the EU signed this agreement in a hurry to complete the negotiations in a “surprise” before the next U.S. government takes office.
For the EU, there may be another important reason for the quick signing of the Sino-European agreement: the UK’s departure from the EU, which was just announced on December 24, when the UK and the EU reached a post-Brexit trade agreement.
For the EU, the Brexit negotiations have cost the EU a lot of resources and energy, and have dragged the EU’s global strategic blueprint into the dilemma. The EU, which wants to break this dilemma, must find a market to support it, and the Chinese market has become the best choice for the EU.
Of course, the U.S. is angry about the EU’s deal with the Chinese Communist Party. Peter Navarro, President Trump‘s trade adviser, criticized it as a compromise Europe made with China, but he also acknowledged that the geopolitical implications of the agreement will be a bigger issue the U.S. will have to face when the Chinese Communist Party tries to align itself with Europe.
U.S. Deputy National Security Advisor Matthew Pottinger also criticized “the European Commission for removing the veil of shame by rushing to work with Beijing despite [China’s] egregious human rights abuses.
It was also humiliating for U.S. presidential candidate Joe Biden, who has been in charge of U.S.-European relations for more than 20 years as chairman of the Senate Foreign Affairs Committee. The signing of the investment agreement with the Chinese Communist Party at this time will undoubtedly make Biden lose face in his old job, which he was most proud of. In addition, the China-EU investment agreement will deal a major blow to Biden’s ambition to restructure the transatlantic alliance and undermine his “Europe against China” strategy. The Chinese media itself said that this is undoubtedly a slap in the face to Biden.
The EU: Left Handed Chinese Communist Party and Right Handed American Interests First
Let’s look at the previous trade between China and the EU: in 2019, the EU’s exports to China were worth about 198 billion euros and imports about 362 billion euros, i.e. bilateral trade amounted to more than 650 billion dollars.
According to the 2019 statistics, the EU is China’s first trading partner, second largest source of imports and largest export market. China is the second largest trading partner, the first source of imports and the second largest export market of the EU. And the two sides have comparable economic scale and complementary industrial development.
Before the EU-China investment agreement, the Transatlantic Investment and Trade Agreement (TTIP) negotiations with the U.S. were the top priority for the EU, while the Chinese Communist Party also prioritized trade negotiations with the U.S.
The signing of this agreement between China and the EU was obviously a major role played by German Chancellor Angela Merkel. So why is Merkel in such a hurry to finalize the agreement by the end of 2020, despite criticism from many quarters?
The first reason is to hurry. Excluding the UK, which has just left the EU, the EU has 27 member states, which take turns to hold the EU presidency for six months, and January 1, 2021, is the end of the German presidency of the European Council, and the next German presidency will be 14 years later.
For German Chancellor Angela Merkel, the opportunity is too good to miss, and Germany has the biggest interest in China among the EU countries. Sino-German trade accounts for a third of China-Europe trade. In the past decades, German auto manufacturing has long established many factories in China, whether VW, Mercedes-Benz, BMW, Audi, Germany has invested a lot, so it is eager to have an agreement that will allow the Chinese Communist Party to further relax the control of European companies.
In addition to mechanical manufacturing is the world’s first-class, as a major producer of pharmaceuticals, Germany has also been hoping to enter the Chinese pharmaceutical market, because China’s pharmaceutical industry has been profitable, for example, not long ago the Chinese mainland media reported that the price of imported cardiovascular stents from 30,000 yuan to 700 yuan, the pharmaceutical industry will be more profitable than the automotive industry, therefore, German pharmaceutical companies have been urging Angela Merkel to facilitate the signing of an agreement between China and Europe, so as to enter the Chinese market.
In addition to Germany’s Merkel’s calculations, the EU has its own speculative psychology. The EU has learned from the U.S.-China trade war, as it found that under Trump’s tough U.S.-first approach, the Chinese Communist Party (CCP) surprisingly bowed down. As the U.S.-China relationship deteriorated, the EU saw the CCP’s dilemma and took advantage of the CCP’s eagerness to pull Europe’s strings and smoothly pressured the CCP to get the China-EU agreement signed.
China-EU investment agreement is full of variables
The agreement between the EU and the CCP, in terms of content alone, is a big win for the EU, which has received far more commitments from the CCP than the U.S. However, based on the CCP’s past performance in the WTO and the CCP’s performance in implementing the first phase of the U.S.-China trade agreement, the final implementation of this CEIEA is still full of uncertainties.
In addition, although China and Europe have now completed negotiations on the investment agreement, it will take several months for the agreement to be translated into law and for it to be adopted by each of the 27 EU parliaments and ratified by the European Parliament, a process that will likely begin in the second half of 2021 and end in approximately 2022.
Many in the European Parliament are human rights defenders, and sources say some MEPs are still ready to raise more questions about labor standards and human rights issues. The New York Times also reports that political opposition in Europe and the U.S. is expected to ultimately put the agreement on hold.
In addition, the biggest variable may be the U.S. Although the Chinese Communist Party media itself has said that the signing of the China-Europe agreement has disrupted Biden’s “United Europe and China” plan, although the Chinese Communist Party is not afraid to offend Biden, there is no doubt that the Chinese Communist Party is still waiting to see the final outcome of the U.S. election, and has repeatedly said that it does not want to disassociate itself from the U.S. decoupling. However, judging from the rapid signing of the China-EU agreement, it is clear that the CPC cannot wait for the final results of the U.S. election before making concessions to the EU, which also shows that the CPC has no idea about the next step of U.S.-China relations.
Over the past two years, the CCP’s performance in the U.S.-China trade agreement has shown the world that the CCP’s usual tactic is to make false promises, to delay for real, and not to implement the agreement even after it is signed. Although the CCP signed the agreement with the EU for various reasons, the CCP regime will face an insurmountable dilemma whether the CCP wants to really implement it or not.
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