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Chinese tensions spill over as Europe heads to Biden

(Bloomberg) – A major investment deal struck in December between the European Union and China – after seven years of painful negotiations – could end up being the culmination of rapidly deteriorating ties again. and Germany each formulated legislation that would make life harder for Chinese entities to invest, while joining the United States in trading tit-for-tat sanctions with Beijing. The Italian government has gone from enthusiastic support for President Xi Jinping’s Belt and Road initiative to blocking planned acquisitions by Chinese companies. And in France, the Chinese ambassador did not even show up when he was summoned in March, citing “agenda reasons”. Taken together, these measures signal a hardening of the European position on Beijing. And the biggest change could yet be to come, with polls showing the German Green Party is on track for a major role in government after the September election, hinting at the prospect of a more skeptical cooling of the share of the largest economy in Europe. Premier Li Keqiang last week, and the two pledged closer cooperation on Covid-19 vaccines and tackling climate change. Still, the rhetoric in Berlin is that optimism around the relationship has faded, and a Chinese official called relations with Europe on a downward trajectory. Whether the Greens rise to power in Germany or not, EU-China relations are at a critical juncture, the official said, asking not to be identified when speaking on strategic issues. The multiple signs of tension suggest that the biggest players Europeans are approaching the views of President Joe Biden’s administration in its standoff with China. As Secretary of State Antony Blinken holds talks with his Group of Seven counterparts in London this week, a Europe more aligned with Washington would mean redressing the damage done to transatlantic relations by the Trump administration, with implications for the United States. trade, tariffs and access to “There has been a change of mood,” said Joerg Wuttke, president of the Beijing-based European Chinese Chamber of Commerce and a board member of the Mercator Institute of China Studies in Berlin, one of the entities sanctioned by China in March. He cited the “perfect storm” of China’s assertion towards Taiwan, its decision to impose political control over Hong Kong and international sanctions for alleged human rights violations in the Xinjiang region, covered by the fact that China has not followed through on its It is certain that Europe is not uniform in its outlook, with EU members like Hungary still keen to engage with China. And while Biden said China can expect “extreme competition” from the United States while also seeking to work with it on global issues such as climate change, Europe faces more. in a dilemma as she struggles to forge her own path. crucial since China is the EU’s largest trading partner, with a total volume of some $ 686 billion in 2020, exceeding US-China trade by $ 572 billion. Yet even the Netherlands, which is among China’s top 10 trading partners, is increasingly suspicious, shielding its tech companies from takeovers and adopting a dedicated Chinese strategy. According to the Chinese official, the United States has forced the EU to take sides. The sentiment was different just four months ago, when Merkel helped lead the bloc to seal the comprehensive EU-China investment deal, which Commission President Ursula von der Leyen said “A important milestone in our relations with China. ” Still subject to ratification by the European Parliament, it would offer better access to the Chinese market for European investors while committing China to respect “ambitious principles”, in particular on forced labor. Yet by the end of March the EU had joined the United States, Canada and the United Kingdom. by imposing sanctions on China for the alleged mistreatment of Muslim Uyghurs in Xinjiang, including forcing them to work. Beijing has responded with its own sanctions, while a public backlash has seen Swedish fashion retailer Hennes & Mauritz AB be the subject of an unofficial boycott. “The EU recently added other agenda items related to human rights, ideology and democracy,” said Zhang Monan, senior researcher. at the United States-Europe Institute at the China Center for International Economic Exchange in Beijing. “This kind of opposition and friction is expected to continue.” She added that the EU should formulate its policy independently as it does not want to be subordinate to the United States.The European Commission is now proposing rules to impose fines and block deals targeting foreign state-owned enterprises, while the cabinet de Merkel approved additional powers on foreign investment last week aimed at high-tech sectors, including artificial intelligence and quantum computing. China had hoped to separate economic issues from political issues and link Europe to its huge consumer market, but that’s increasingly impossible now, said an academic from a think tank affiliated with the Chinese government. Ratification of the CAI has become more difficult, said the person, who is not allowed to comment publicly due to rules on communicating with foreign media. Signs of tensions were seen during virtual talks led by Merkel and Li. Contrary to usual practice, the opening remarks were not broadcast live and there was no final press conference. A transcript released hours later by Germany showed Merkel touched on human rights, claiming there were differences of opinion especially over Hong Kong. “China and Germany have different views on some issues, that’s a fact,” Li told Merkel, urging Germany not to do so. interfere in internal affairs, according to a statement from the Chinese Foreign Ministry. Li said he hoped they could “eliminate unnecessary distractions” to maintain “healthy and stable” bilateral relations. The change in Europe has not been lost on Washington. An official in the Biden administration said there had been a dramatic shift in European thinking, rallying to the U.S. stance on China. There has also been real development in Germany, the official said. While all coalitions involve political compromises, the Greens have a harsher line on China than the current administration, calling for an end to Beijing’s “gross human rights violations” and for European and transatlantic coordination. closer on China. as the polls suggest, there would be continuity in German foreign policy, but with “different nuances” on China, said Jana Puglierin, head of the Berlin office of the European Council on Foreign Relations. “The Greens would clearly advocate a less mercantilist policy than the one we saw under Merkel,” she said. For now, Europe is determined to avoid any decoupling from China. French President Emmanuel Macron and Merkel held a joint appeal with Xi in April, and an April 28 report from China’s Global Times referred to “optimism and confidence in Sino-German cooperation” despite the risk of “some impacts ”after the elections. Merkel’s future successors and business leaders know the “great potential” of Europe working with China, “so they must ensure that healthy ties are not severed by a third party or internal conservative forces.” Still, Wuttke facing the European trade chamber said China underestimates the human rights concern in Germany. Especially after the departure of Merkel, who has favored engagement with China, this “will probably translate into perhaps a more assertive policy in Berlin,” he said. trusted source of business information. © 2021 Bloomberg LP


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