On the 22nd China-EU Summit: “negotiating partner, economic competitor and systemic rival”; is this the right EU approach to address your 2nd biggest trading partner?

On 22 June 2020, the European Union and China held their 22nd bilateral summit via videoconference. Ursula von der Leyen, President of the European Commission, and Charles Michel, President of the European Council, held the Summit meeting with Li Keqiang, Chinese Prime Minister, followed by exchanges with Xi Jinping, President of the People’s Republic of China. View of the screen with Xi Jinping, on the top , Charles Michel, on the bottom left, and Ursula von der Leyen, on the bottom right. Co-operators: Photographer: Etienne Ansotte European Union, 2020 Source: EC – Audiovisual Service.

Yesterday was the day that the much anticipated 22nd China-EU Summit took place. As this year marks the 45th anniversary of diplomatic relations between China and the EU, the EU-China Summit had been initially scheduled to take place earlier in March but was postponed due to the coronavirus pandemic. Yesterday, the Summit took place through videolink between China’s President Xi Jinping, the Chinese Premier Li Keqiang and the President of the EU Council, Charles Michel, as well as the President of the European Commission, Ursula von der Leyen.

The truth is that there are a number of statements and frames used by the EU leaders at their regular press conference following the Summit that utterly give away that for the freshman and freshwoman EU leader it was just their first China-EU Summit. How can someone else justify the overly critical and aggressive tone in their language about China, describing the country as a “competitor”, “rival”, a “challenging relationship”, having “intense discussions”, or “we disagree with many issues”? Meanwhile, at the end of the first global wave of the coronavirus pandemic and the global economic crisis one would anticipate a more balanced language used by our EU leaders who take in their hands the future of the relationship with the block’s second biggest trade partner. All in all, the used attitude and framing which is outlined below, especially by the President of the EU Commission, is not considered to be very balanced during the China-EU negotiations.

Nonetheless, the agenda of the Summit was rich, particularly in the post pandemic era. Given that this is the first official high level discussion on China-EU cooperation since the coronavirus outbreak, the world expected a strong mutual engagement for the future of the China-EU relations. According to the President of the European Council, four axes defined the agenda for the EU side: COVID-19 and economic recovery, EU-China relations, the Hong Kong issue and human rights as well as international issues.

COVID-19 and economic recovery

First of all, the pandemic was naturally positioned high in the Summit’s agenda and the two sides were expected to discuss the course of the outbreak in the EU, China and the world, the reopening as well as the close cooperation with the World Health Organization to prevent a second wave of the pandemic. Subsequently, in a global economy under crisis, the two of the largest world economies would touch upon the oxygen of the economy, investment.

Particularly, President Michel stated that during the discussions he asked for transparency regarding the international reaction to the outbreak. He also stressed the need for a vaccine which will be affordable by all people in the form of a public good trough a low price. Further, he discussed with the Chinese counterparts the commitments of the EU budget to strengthen the EU economy in order to sustain its prompt support and recovery from the pandemic’s lockdowns.

What is more, President von der Leyen didn’t omit to mention that at the beginning of the COVID-19 outbreak in China the EU offered 56 tons of emergency medical supplies and later when the pandemic reached Europe China reciprocated through mutual solidarity.

EU-China relations

The President of the EU Council said that the two sides need to express their commitment on the progress of the work done at the 2019 China-EU Summit. On trade, he called the relationship with China “dynamic”. He supported his claim by stressing the average daily trade between the two economies of €1bn and by stipulating that China is the EU’s second biggest trading partner and respectively the EU is China’s first. Actually, for the sake of fairness, the diplomatic language to be used for such a partner is not “dynamic” but “strategic” or “crucial” instead. Nonetheless, as it was already said at the beginning of this article, the language used by the EU side gives away that the new EU leaders are still rookies in office.

Further, the former Premier of Belgium said that progress is required in the trade relations and he outlined the EU’s side concrete “problems”: market access, subsidies, unilateral issues, public procurement, fourth technology transfers, level playing field and WTO reforms. The latter clearly refers to the EU undergoing a formal process of enforcing new strict rules against foreign subsidies investing in Europe. Apparently, this measure is targeting for some reason China. The new rules can result in companies influenced by foreign subsidies getting fined or stopped from public tendering. Evidently, investments in Europe will be harmed from this measure as investors (e.g. China) will need to think twice regarding the greater risks that the EU market will pose from now on. Already during the past preparatory week of the Summit, the EU Commission launched antidumping duties against glass fibre fabrics originating from China, up to the extreme 99.7%.

Nevertheless, President Michel was positive to continue discussions for the investment agreement (BIT). In addition, he mentioned that part of the Summit’s agenda was the agreement on the geographical indications, the climate action and the 2030 targets, disinformation, the digital agenda and cybersecurity.

On the other hand, the President of the EU Commission was overtly critical about the trade relations of the two economies. Although she was also positive about the signage of the geographical indications agreement, she clearly put it out there that the EU-China investment and trade relationship is “unbalanced” and asymmetrical. Von der Leyen went on by stressing that the progress since last year’s EU-China summit is not satisfactory e.g. market access barrier. She even advised the Chinese side to show bigger ambition if it wants to conclude the Bilateral Investment Treaty (BIT) by the end of 2020, in line with the initial goal. Particularly, the first female President of the EU Commission opines that for the BIT to be concluded more transparency for the state owned enterprises is needed as well as transparency of subsidies and fourth technology transfers. As von der Leyen sees it, the conclusion of the BIT until the end of the year will depend on the “ambition” of China’s President Xi and Premier Li. However, one might argue adopting a more balanced approach that the investment agreement’s conclusion depends on the ambition of both parties instead. In addition, the EU Commission’s President said that China needs to engage seriously with WTO, industrial subsidies which is a “difficult” topic, establish binding rules, manage the Chinese overcapacity e.g. in steel and technology and come back to the negotiation table. Nevertheless, to the best of our knowledge China is known to not leave the negotiation table with the EU but instead discuss all issues one by one.

Interference with Hong Kong

The President of the EU Council started to touch this topic by saying that the EU maintains grave concerns about Beijing’s new national security law on Hong Kong. He went on by saying that the EU promises to the people of Hong Kong autonomy and guarantees their freedoms under the one country two systems principle. He also added that 50% of the EU investment in China passes through Hong Kong anyway. He insisted that he had during the Summit some “intense” dialogues on the matter. Later von der Leyen took the floor and underscored the importance of the Hong Kong issue and the respect to human rights. She added that fundamental freedoms are not negotiable and raised her concerns. She highlighted that Beijing’s new national security law undermines the one country two systems principle. What is more, the EU side threatened that China risks very “negative consequences” that “we have made our position very clear”, with that “being our very clear standpoint”. To be noted here that all that was timely said during the Summit as last week the European Parliament last week called the EU to file a lawsuit against China over Hong Kong at the International Court of Justice.

At the same time though, the Chinese side had already made very clear its position on the matter on a number of occasions before the 22nd EU-China Summit. In a recent interview of China’s Ambassador to the EU, Mr. Zhang Ming, he stated clearly that national security is a sine qua non for any country and that the new law’s intent is only to close some loopholes in the national security of Hong Kong. At the same time, the Ambassador underlined at all costs that China respects and maintains the one country two systems principle, which is exactly what the EU side defended during the China-EU Summit. Since both sides’ interest is to respect and maintain the one country two systems principle, why is there such a major point of disagreement and animosity from the EU side? Is it democracy then? Again, China’s Ambassador to the EU had clarified that this security law doesn’t aim at democracy but instead China wants to preserve democracy in Hong Kong. He had also added that Hong Kong is ruled by the “Constitution of China and the Basic Law of Hong Kong, not the Sino-British Joint Declaration”. Consequently, a balance should be pursued by the EU and China side between observation of changes in other countries’ laws and the interference in another country’s internal affairs.

Conclusion

All in all, the President of the European Commission, Ms. Ursula von der Leyen, wisely stated towards the end of the Summit’s conference: “it is not possible to shape the world without a strong China-EU relationship”. Indeed, the world absolutely needs the latter; now even more than ever before. However, in order to succeed this, one party shouldn’t corner the other but should refrain from negative and “hostile” words when negotiating with each other.

Surely, the frames “competitor” and “rival”, which were used by von der Leyen, cannot succeed a balanced approach towards China. The reason for that is simply that China cannot be always the one to clean up the negotiation table by making compromises, like it was the case in the recent case of the WTO dispute with the EU about the Market Economy Status (MES), where China allowed to lose this time.

Thus, the EU citizens anticipate very high level of negotiating skills and language by the EU leadership, despite the fact that this is their first year in office. Especially in the tough times that the world faces due to the “cold war” that the US has launched against China, the EU should step up as an extra leg that supports the chair of the world’s peace and economy. Definitely, the 45th year of the EU-China relations is absolutely the time to do so, especially post the COVID-19 crisis.