China-Europe relations are increasingly raising concerns. The EU signaled Tuesday (May 4) that it will not approve investment agreements with China as long as Chinese Communist Party officials are sanctioned for human rights abuses. The EU has also developed a strategy to counter the Chinese Communist Party’s state-sponsored acquisition strategy.
EU Executive Vice President Valdis Dombrovskis said Wednesday, “The ratification process (of the China-EU investment deal) cannot be separated from the broader evolving dynamics of European and Chinese relations.” He called the Communist Party’s retaliatory sanctions against people, including members of the European Parliament, “unacceptable and regrettable.
Dombrovskis said the next step in ratifying the China-EU Comprehensive Investment Agreement would “depend on the evolution of the situation. The EU imposed sanctions on Chinese Communist Party officials for human rights violations in Xinjiang in March. The Chinese Communist Party then imposed retaliatory sanctions on EU lawmakers and members of parliament, as well as academics and think tanks.
On Wednesday, the European Commission developed a strategy to resist acquisitions funded by the Chinese Communist Party state and dial back semiconductor production, Bloomberg reported. The moves against the Chinese Communist Party are part of the EU’s plan to ensure that it has more control over its own future, a so-called “strategic autonomy” push.
It was previously unthinkable for Europe to take such a hard line against the Communist Party, but that has recently changed, Merics analyst Francois Chimits told the Wall Street Journal, reflecting a political shift from economic liberalism to protectionism in the EU.
Here are five drivers that will reshape European-Chinese relations.
Countering Chinese Communist government subsidies
For years, the EU has been unhappy with the Chinese Communist government’s subsidies to companies, which have allowed Chinese companies to compete at low prices and put European companies at a competitive disadvantage. The EU announced a draft on Wednesday (May 5) that would impose new rules on foreign companies receiving foreign government subsidies in Europe, a move that would give regulators the power to take action against Chinese companies, making it more difficult for them to undercut prices to compete with European companies.
Margrethe Vestager, the European Commission’s executive vice president and antitrust commissioner, said at a news conference Wednesday that “if (foreign) subsidies drive the best companies out of the market, it’s not fair to European workers or consumers. This has to stop.”
G-7 coordination
G-7 foreign ministers are considering a proposal to establish a consultative mechanism that would include the G-7 as well as other stakeholders to coordinate their positions on the CPC.
Chip Production
The European Commission has developed plans to diversify its supply chain and conduct regular sectoral reviews to address EU dependencies in key strategic areas, including semiconductors. In an earlier interview, EU Industry Commissioner Thierry Breton said it was “naive and open-minded” for Europe to outsource chip production to China, Taiwan and South Korea so far.
Close relations with India
The EU and India are discussing a draft joint statement to restore free trade between the two sides. European Commission President Ursula von der Leyen described Communist China’s rival India as a “democratic partner” after a phone call with Indian Prime Minister Narendra Modi this month. European Commission Executive Vice President Vestager on Tuesday (May 4) described the Chinese Communist Party as a “systemic competitor. The EU and Indian leaders will issue a statement after a virtual meeting on Saturday (May 8).
Human Rights in Hong Kong
The EU is also unhappy with the Chinese Communist Party’s misdeeds in Hong Kong. EU officials are discussing issuing a ministerial statement next week condemning the CCP’s human rights abuses in Hong Kong.
On January 21, the European Parliament passed a resolution on the human rights situation in Hong Kong, demanding that the Hong Kong government immediately and unconditionally release all pro-democracy activists arrested since the implementation of the “Hong Kong version of the National Security Law” and drop the charges against them, and urging European leaders to sanction nine Chinese and Hong Kong officials, including Xia Baolong, director of the Communist Party’s Hong Kong and Macau Affairs Office, and Carrie Lam, Hong Kong’s chief executive. officials.
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