“China needs to convince the EU that it is worth having an investment agreement” but not the EU to convince China? China-EU Leaders’ Meeting 2020 calls for mutual “transparency, reciprocity and respect”

Last Monday, the very important China-EU Leaders’ Meeting took place through videoconference due to the COVID-19 pandemic, between China’s President Xi, the President of the EU Council Michel and the President of the European Commission Ursula von der Leyen. There is no doubt that after the wide criticism regarding the EU’s mistakes during June’s China-EU Summit, whereby the newbies EU leaders were abnormally steep and even unreasonably hostile with China, calling then the country “systemic rival”, this time the EU leaders ameliorated their stance. In short, this was overall a positive and fruitful meeting whereby the President of the EU Council and the President of the European Commission have learned their lessons enhancing thus constructively EU’s strategic strong relationship with China. Besides, China’s President Xi showed his satisfaction about the Meeting by describing it a “candid and productive summit”.

President Michel

President Charles Michel of the EU Council began his press conference by stressing that this has been a fruitful dialogue with mutual commitments and thus a step forward for a more balanced relationship with China needs to be forged based on reciprocity, responsibility and basic fairness. President Xi couldn’t agree more to that by saying that “China and the EU need to keep firmly to mutual support and solidarity, and commit to peaceful coexistence, openness and cooperation, multilateralism, dialogue and consultation”. Later President Michel added that there were areas where the EU side agreed with China and others where some disagreements were spotted. Overall, there were 4 key topics in the agenda discussed during the China-EU Leaders’ Meeting: climate change, economic and trade issues, international affairs and human rights, COVID-19 and economic recovery.

Climate change

Regarding the first topic (climate change), the President acknowledged that China is a key global partner in reducing global greenhouse gas and tackling climate change. For this reason the EU would like to encourage China to be even more ambitions, given that the EU is already setting the bar high with European carbon neutrality to be achieved by 2050.

Trade

Moving on to the second topic, trade, the Belgian politician reiterated the common knowledge, that the EU is China’s biggest trading partner and that the two parties trade every day goods and services valued over a billion euros. Mr. Zhang Ming, Head of the Chinese Mission to the EU, during a speech made at the aftermath of the Meeting added to that the following: “Despite the impact of COVID-19, China-EU trade in the first half of this year grew by 2.2% year on year, amounting to 275.6 billion euros. The share of China in the EU’s foreign trade rose to 15.6%. The report of the EU Chamber of Commerce shows that most EU companies in China continue to make profits, 30% of which have a profitability rate of 20%. Nearly 90% of EU companies choose to stay in China.” Michel also said that while the EU welcomes trade with China to boost the economy which has been hit by the pandemic, Brussels would like to have a more fair treatment, a more balanced relationship. reciprocity and a level playing field. Meanwhile, President Michel welcomed the signature of the China-EU Agreement on Geographical Indications (GI) and signalled that it is a big step in the right direction. According to China’s Ambassador to the EU Mr. Zhang Ming during a speech after the Meeting, “two hundred GI products have been included as the first batch”. Michel now didn’t omit to mention of course the comprehensive investment agreement between China and EU that is being negotiated in this period but he left Ursula von der Leyen to elaborate on that. In addition, he added that a free and safe cyberspace is to the benefit of all.

Particularly on trade, China’s Ambassador to the EU provided a very important contribution in a speech of his by highlighting: “We need to explore new areas of cooperation more proactively. In the coming decade, China’s service imports will reach 10 trillion US dollars. China and the EU need to seize this opportunity to expand trade in services to bring our economic and trade cooperation to a higher level. The two sides could, under the framework of the high-level environment and climate dialogue and the high-level digital cooperation dialogue, further unleash potential in these frontier areas and step up cooperation on technology, standards and rules-setting.”

Hong Kong and minorities

Later the EU Council’s President referred to Hong Kong stating that the national security law raises EU’s concerns. He underlined that all EU member states have agreed that the democratic voices in Hong Kong should be heard, the rights need to be protected and the autonomy preserved. Moreover, he mentioned the treatment of minorities in China, Tibet and in general human rights defenders and journalists. He aspires to visit Tibet if the pandemic allows it later in the year. Regarding the South China Sea, President Michel highlighted that China should refrain from unilateral actions, respect international law and avoid escalations.

China’s Ambassador to the EU view on EU’s stance on the matter

“There are no two identical leaves in the world. Given the breadth and depth of China-EU relations, it is inevitable for us to have different views or even divergences. We should not shy away from these differences. Yet we have to admit that as our culture, social system and stage of development vary greatly, some issues may not be resolved in the short term. What matters is to seek common ground while reserving differences, not to lose sight of the consensus just because of certain differences, and not to let differences in specific areas hamper cooperation on a broader scale. Otherwise, it would be like picking up a sesame seed only to lose a watermelon as an old Chinese saying goes.”

COVID-19

As for the crisis of our time, the COVID-19 pandemic, the President of the EU Council called for collective and transparent action to send the virus to the history books. He argued that there is only one way to find a vaccine and deploy it in all countries, global cooperation. He didn’t omit to mention the need to respect all countries to cooperate with impartial and support the WHO to identify the source of the virus. Mr. Zhang Ming, China’s Ambassador to the EU agreed in principle with President Michel and elaborated further on that during a speech of his: “We need to jointly fight the pandemic, step up cooperation on medical supplies, vaccine and medicine research, support the WHO, and conduct trilateral cooperation with Africa. We need to jointly push for economic recovery, strengthen macroeconomic policy coordination, resume travel flows in an orderly fashion, facilitate flow of goods, and keep the industrial and supply chains stable between China and the EU and at the global level”.

President Michel ended his speech by endorsing an economic recovery for China for greener and more sustainable economy, support Chinese investment in Africa for the people’s economic relief. He also reaffirmed his commitment to forge a fair relationship with China based on respect. reciprocity and transparency. The Chinese Ambassador had a useful address on the latter during his speech after the Meeting: “We need to conduct trilateral cooperation with African countries, on the basis of full respect for their wish, to help them address development bottlenecks in terms of infrastructure, manpower and financial resources. China already made specific proposals to the EU on trilateral cooperation with Africa. We hope to see them come to fruition sooner rather than later, in order to benefit the relevant countries and peoples, and to further strengthen the strategic and global dimensions of the China-EU relations.”

Angel Merkel

Germanys Chancellor reiterated Europe’s satisfaction with the meeting. She commended the signage of the Agreement on Geographical Indications which will protect German products like beer. A posteriori to that comment, the Ambassador of China’s Mission to EU added that “the agreement means not only better protection of such EU agri-food as Bavarian beer and parma ham in the Chinese markets, but also higher-quality trade between China and the EU.” Moreover, Ms. Merkel repeated the key words of “reciprocity” and “fair competition” in the China-EU cooperation.

The Chancellor continued her speech by devoting a sizeable part of it to climate change and particularly the China-EU cooperation in this regard. She stressed the fact that both the EU and China welcome the Paris agreement. In view of the Glasgow climate conference at the end of the year a high level dialogue is much needed. Since the EU will step up its 2030 climate goal, a dialogue is important to be established about China’s ambitious climate targets in order to reach climate neutrality. Alternative to coal sources of energy can be a key for this matter. Germany has a special interest in the emissions trading system (ETS), which will be the largest in the world. Europe has already an ETS and there can be an interesting possibility for collaboration in this aspect. What is more, the German leader talked about the importance of biodiversity.

Finally, she also made reference to difficult topics where the EU and China don’t always agree like Hong Kong and minorities. Therefore, a good and honest dialogue is needed while she noted that an EU-China summit in physical format should take place asap once the pandemic allows.

Ursula von der Leyen 

The President of the European Commission had the last word during the press conference and characterised this “quatrologue” as frank and open, constructive and intense. A broad spectrum of topics were discussed from human rights to climate to digital trade. She did acknowledge that since June’s summit there has been progress on trade, climate and digital.

Comprehensive Agreement on Investment

In particular, she discussed the comprehensive agreement on investment and said that in June it was requested to President Xi that China remains committed and results-oriented with concrete results. Currently, there is an agreement on the negotiations of 3 important issues: a) the behaviour of state owned enterprises, b) on forced technology transfers and c) transparency on subsidies. She recognised that this is an important step forward already but there is work still to be done in other important and difficult chapters of the agreement.

Two are the most important areas in the agreement: the one is market access and the other one is sustainable development. The EU side anticipates that the market access barriers with China will be removed, especially for future and emerging digital technologies at the core of Europe’s economies: telecommunication, computer sectors, health, biotechnology and the new energy vehicles and transport. According to Ursula, the EU investors face too many barriers in China, but she didn’t mention the barriers that Chinese players meet in the EU. She argued that market access is not a question of meeting half way but rebalancing the asymmetry and openness of EU’s respective markets and thus China needs to move on these two issues. The German President of the European Commission underlined that if the two parties are to achieve the commonly shared objective of finalising negotiations this year, China needs to convince the EU that it is worth having and investment agreement. Naturally, one would say though that the EU needs also to convince China about the latter.

The second topic was the Chinese overcapacity which is important for traditional sectors like steel and aluminium but also in high tech. Ms. von der Leyen argued that there are no concrete steps forward so far and this needs to change. Thus, she called China to join the global forum and eliminate state subsidies, something to be followed up bilaterally between China and the EU. On market access, she stressed the importance in the area of telecommunications, given that the European market is open. She didn’t hesitate to say that the European companies must have fair and equal access to the Chinese market. At the same time Presidents Xi committed to look into these matters.

Further, there is also importance of the networks to be secure. Since the first ever China-EU High-Level Digital Dialogue, which took place last week, it was agreed with president Xi that this dialogue will be continued and broadened.

WTO reform

Moreover, on WTO reform, Ursula von der Leyen said that China is committed to WTO and that the country negotiates to strengthen existing rules on industrial subsidies in the context of the World Trade Organisation’s reform and in line with the commitment it made back in 2019.

The pandemic

Finally, China and the EU had a discussion regarding the coronavirus pandemic and the required global solidarity on this matter. It is very important to engage not only to find the vaccine but also to make it accessible to low income countries, she said. A global framework is needed to ensure that and this is why the EU invited China to join this COVAX facility. It is also important to continue to understand the origins of the pandemic. Therefore, it is very important to give all possibility to WHO to lead investigations on the origins of COVID-19, in order for the investigations to be successful. In sum, this was a very concrete meeting with tangible actions discussed.

Conclusion

All in all, last Monday’s China-EU Leaders’ Meeting was a great improvement in the stance of the newcomers EU leaders compared to the summer’s China-EU summit whereby they were paradoxically steep and harsh with China. In global crisis times that we all live in the smooth collaboration and growth of the relationship between two of the world’s biggest economies, China and EU, is a sine qua non for international safety and prosperity of the peoples.

Besides, the comment of China’s Ambassador to the EU, Mr. Zhang Ming, during his speech after the China-EU Leaders’ Meeting is able to sum it all in a couple of lines while leaving an optimistic view for the way forward: “In the post-COVID-19 era, a more stable and mature China-EU relationship will be crucial for prosperity and stability on both sides and beyond. China stands ready to work with the EU to turn the leaders’ commitment into actions, push forward the political and economic agenda, and take the relations to a higher level.”