EU-CHINA KEY ISSUES

Key Issues

• Unbalanced trade and investment relationship
• Negotiations on an investment agreement
• Unfair subsidies to state-owned enterprises
• Limited market access for European companies for automobiles, computers, telecommunications and biotechnology
• China’s demands for one-sided technology transfers
• Chinese investments in key infrastructure and potential Chinese takeovers of strategically important companies
• Proposed changes at the World Trade Organization
• Disagreements over ways to settle disputes
• China’s commitments to reduce carbon emissions and climate change
• Proposed security law in Hong Kong
• China’s crackdown against the Uighurs
• Cooperation on combating the new coronavirus
• Cooperation on the Iran nuclear deal
• Cooperation on Afghanistan
• Cooperation on North Korea

Note

1. The EU should make it clear that it will not wait for China, but will act to protect its interests.
2. The EU should start putting the EU first —and rethink its approach in terms of its own interests and priorities. Similarly, a more compact, longer-term strategy regarding China need not imply an aggressive posture, but it does imply awareness of the challenges that the Chinese authoritarian model represents for both business and politics. 
3. European countries need to demand more from China, especially when Beijing pushes for access to crucial EU markets and technologies while giving too little in return. They must stand firm against violations of international norms, rules, and human rights, and insist on reciprocity. Issues as diverse as technology, BRI-related infrastructure, human rights, climate change, and security cooperation all need to be on table. And the EU needs to do so through in a single strategy. In other words, what the EU needs to better handle China is unity in diversity. A stronger EU will lead to stronger individual members --, and that is most crucial in managing relations with China.
4. If European leaders put their relationships with China into perspective and address some of the concerns raised by European nations, their foreign policy could become more coordinated. If not, Europe will become even more divided than before.
5. The EU is a late bloomer in dealing with increasing Chinese influence globally, and it still has a long way to go to craft an effective response that all member states will follow. A good start would be to reconcile the old and new Europe by ensuring that the interests of the less-powerful and newer EU member states are reflected in a united European policy on China.
6. There is growing skepticism in Europe about Beijing’s rhetorical commitments to opening its markets and following international rules. The EU now more clearly sees the geopolitical and security dimensions of its relationship with Beijing.
7. The EU has adapted to counter China’s competition and undue influence. For instance, it has adopted an EU-wide investment screeening mechanism to protect Europe’s strategic sectors. It is also consolidating European nations’ security requirements for ICT companies involved in the rollout of 5G networks.
8. For the EU, China is not only an economic competitor and systemic rival but also a partner on global issues ranging from climate change to safeguarding the Iran nuclear deal.
9. The risks associated with China’s practices are real, and European countries should increase their knowledge of China and independently assess the opportunities and challenges that come from cooperating with Beijing.
10. To further European interests when dealing with China, EU countries must be united and determined. Perceptions of and knowledge about China vary significantly across Europe, crippling efforts by Brussels, Paris, and Berlin to coordinate European policies towards Beijing. To address these differences, more intra-European debates about China will be necessary.
11. To build and project a unified front, the EU must offer a credible economic alternative to Chinese investment.
12. The EU and China have been economic strategic partners, relying on each other for trade and investment. However, the relationship appears unbalanced, with China creating roadblocks for EU companies while enjoying an open EU market and un-scrutinized technology transfer. Chinese companies have not only thrived in this market but have also started to outpace EU companies in some emerging technologies.
13. The EU has deployed strong language, it has not yet formed an effective China strategy: now is the time to do so. Why is an effective strategy lacking? Because the EU is divided, and its members seem to lack the political will to coordinate their actions.  Additionally, instead of leading the way in redefining EU-China relations, many of the most powerful EU economies are still doing business as usual with China. Germany and France, two of China’s two largest EU trading partners, have been the most critical of China trade relations. But it seems unlikely they will sacrifice that economic benefit for a common strategy. This has led to a dissonance of talk versus action. 
14. To enact an effective strategy, the EU needs to come together: A united EU market can provide the leverage to make China comply with demands for a more balanced economic relationship.