In an article in the French newspaper Le Monde on May 17, the economist Matos detailed the dangers of the investment agreement for Europe and pointed out that the biggest danger is that the “good” European model will be replaced by the “bad” Chinese model. The “bad” Chinese model will replace it.
When the European Commission announced the investment agreement with Beijing at the end of last year, it said it would benefit the “strategic autonomy” of the EU. But economist Francisco Juan Gómez Martos argues that from a geostrategic point of view, the agreement is not only incompatible with the EU’s strategic autonomy but, on the contrary, would subordinate the EU to Beijing’s strategic considerations. Through this trade agreement, Beijing hopes to avoid the EU’s alliance with democracies like the United States and Japan.
From an economic point of view, the European internal market, which is crucial for the well-being of the European population, is losing momentum, in large part because China (the Chinese Communist Party) is gradually integrating some EU member states increasingly into the Chinese (the Communist Party) value chain.
From a trade perspective, the agreement was signed in the context of the EU’s trade deficit with China, although the agreement did not solve the problem. Since the beginning of the century, the EU’s trade deficit with China has been increasing and has been underestimated.
From the point of view of industrial production, this investment agreement would allow the EU to increase its structural dependence on China in key areas. During this Communist virus epidemic crisis, the EU’s dependence on the Chinese market has led to shortages in masks, testing agents and other essential goods to fight the Communist virus. At the same time, Europe experienced product shortages in several areas of the production chain, leading to supply chain disruptions.
In addition, China has two-fifths of the world’s rare earth ore reserves, and rare metals are indispensable in electric car batteries, wind turbines, solar panels and missile guidance systems, so these could become extremely effective political weapons for the Communist Party. Matos thus suggests that the EU restructure and diversify its production chain.
From the point of view of social and regional cohesion in Europe, the implementation of the EU-China investment agreement could trigger potential social unrest. This is because of the improper business competition patterns and management of some Chinese companies, as well as the lack of knowledge of international conventions and the lack of human rights protection for employees in some Chinese companies.
From the perspective of free Chinese investment in the EU, if the EU relaxes restrictions on direct investment in the European internal market by companies funded by the Beijing government, it could lead to the introduction of cheaper goods by these Chinese companies, thus hitting hard innovative European companies, which could go bankrupt in the context of a Communist virus pandemic. Moreover, European companies lacking capital are vulnerable to being bought by Chinese sovereign funds.
The asymmetries between Europe and China in terms of administrative and judicial mechanisms will hinder the implementation of the EU-China agreement if seen from the perspective of its implementation. For example, there is no guarantee that European companies in China will be treated equally with Chinese companies, especially when the Beijing government intervenes in them.
Matos noted that despite EU pressure, Beijing has never implemented the signed UN agreement on the protection of human rights, nor has it achieved its goal of protecting intellectual property rights within China, where 85 percent of the pirated and counterfeit products seized by the EU originate. China’s (CCP) commitments are purely political declarations that only buy more time for the future.
The economist cautioned that the EU should not be fooled by the past behavior of the Chinese Communist authorities. Observations over the past 30 years or so have shown the opaqueness of the CCP’s operations and that its model of seeking hegemony is diametrically opposed to the European model of freedom, which Beijing has pursued and which can only make the world more unstable. That is why, according to Matos, it is all the more important for the European Union to strengthen its cooperation with its allies at this moment and to respond together in order to protect the European model of freedom and values.
European political and business circles question the EU-China investment agreement
In fact, even before the deterioration of the relationship between Europe and China, which led to the shelving of the EU-China investment agreement, the European political and business sectors had already raised doubts about the agreement. Reinhard Bütikofer, a German Green member of the European Parliament and head of the China Relations Group, said in an interview with Deutsche Welle on March 18, four days before the mutual sanctions that led to the deterioration of relations between Europe and China, “People are becoming more and more aware as the details of the agreement become public. This agreement will not make competition fairer and will only improve the investment environment for European companies in China”. He said at the time that even if we put aside the political issues, Europe would still be at a disadvantage in the economic and trade field alone in the face of Chinese companies receiving large amounts of government subsidies, and that the monitoring mechanism introduced by the agreement was not strong enough.
Liu Wanxin, a European-Chinese trade expert at the Institute for World Economic Research (IfW) at Kiel University in Germany, noted that most of the market access commitments made by Beijing to Europe were “already in the list of China’s plans to gradually open up”, and that the EU-China Investment Agreement was actually “not very relevant “.
And Woodcock, president of the European Union’s Chamber of Commerce in China, is concerned about the extent to which China will actually follow through on its commitments in the text of the agreement and its annexes, “commitments that China also made when it joined the WTO two decades ago. We are now seeing that China’s [the Chinese Communist Party’s] attitude will be very different when it comes to fulfilling international treaties.”
After the Communist Party introduced counter-sanctions against the EU on March 22, Bao Ruihan, who is at the top of the sanctions list (due to the alphabetical order of his last name), said a Chinese proverb: “[The Communist regime] lifted a stone to smash its own feet.” On May 4, the European Commission said the EU had stopped pushing for ratification of the China-EU investment agreement because of deteriorating diplomatic relations between the two countries.
U.S., Europe Join Forces to Hold China Accountable for Distorted Trade Policies
U.S. Trade Representative Katherine Tai, U.S. Commerce Secretary Gina M. Raimondo, and European Commission Executive Vice President Valdis Dombrovski issued a joint statement on May 17, saying that in addition to suspending retaliatory tariffs against each other, the two sides would also discuss “In addition to suspending retaliatory tariffs on each other, the two sides will also discuss the “global surplus of steel and aluminum products” and will hold countries like China (the Chinese Communist Party) responsible for “distorting trade policies.
According to Deutsche Welle, the U.S. and Europe agree that the global overcapacity of Chinese steel has an impact on the industry and poses a serious threat to the market-oriented EU and U.S. steel and aluminum industries and workers in these industries.
The statement mentioned that the U.S. and Europe, as democratic market economies with similar national security interests, could cooperate to promote high standards, address common concerns and hold “countries like China accountable for supporting trade-distorting policies.
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