Europe can be persuaded to be a better trading partner and friend to China. Here’s how

Andreea Brînză writes that increased Chinese investment in Europe has set off alarm bells for those worried about seeing technology and production taken out of EU countries. China can still forge closer ties with Europe amid its trade war with the US, but it will need to ease those concerns

PUBLISHED : Monday, 23 July, 2018, 5:01pm
UPDATED : Monday, 23 July, 2018, 10:42pm

All European roads no longer lead to Rome, but Beijing, with Emmanuel Macron, Theresa May, Mark Rutte and Angela Merkel travelling to the capital of the European Union’s largest trade partner. But the European leaders didn’t go to China just to make a new friend; Europe has a few grievances for Beijing to address.

The rise of China and its actions in foreign and domestic affairs have transformed European capitals’ perspectives towards China. This emerging negative narrative has been strengthened by Xi Jinping’s actions, especially the abandonment of presidential term limits.

This negativity reverberated on the Belt and Road Initiative, with some calling it a tool for promoting illiberalism. A few months ago, 27 out of 28 ambassadors to China from EU member states criticised the belt and road plan.

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But 2016 witnessed a boom of Chinese investments in Europe, especially in Germany, one of the most important markets for Chinese investments. Starting with acquiring the German robot-maker Kuka and ending with a 10 per cent stake in Daimler, Chinese companies cast a shadow of fear in Europe, including that Chinese companies will appropriate German know-how, dismantle its factories and move production to China.

Scepticism extended to other Western European countries, with France, Germany and Italy calling for a policy on Chinese investments. To counter China’s buying spree, these countries lobbied in Brussels for stricter regulations and an agency similar to the Committee on Foreign Investment in the United States (CFIUS) to review of foreign investments.

In this context, recent visits to China by the most important European leaders illustrate the way China-EU relations might move forward. All are interested in strengthening economic ties to China, but also refused compromises on some positions.

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The French president started the wave of European visits in China. Betting on reciprocity, Macron went to China with the hope of improving France’s cooperation with China and of balancing EU-China relations. Macron was unable to secure important economic deals from China, though five months later, in the context of the Sino-American trade war, Prime Minister Edouard Philippe was a bit more successful, as China expressed interest in buying Airbus planes during Philippe’s Beijing visit.

Next came May. On her first official visit in China, the British prime minister adopted a most relaxed stance, limited to speaking about education, the environment and culture. Securing only £9 billion (US$11.8 billion) in deals – less than Xi achieved during his 2015 visit to the UK – May was scrutinised at home and abroad for her incapacity to attract more investments and weak stance towards China.

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Rutte, prime minister of the Netherlands, visited in April and spoke about the necessity to involve foreign companies, not only Chinese ones, in the belt and road plan.

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On her 11th visit to China, Merkel took a firmer line, also talking about human rights, but skirting the problems Germany faces regarding Chinese acquisitions. Kuka, Daimler, Deutsche Bank, KraussMaffei Group, Biotest, Putzmeister are only some of the most important German companies Chinese companies have bought or hold shares in. Kuka and Daimler were the most prominent because of the amount of money invested in them, but also because both were heavily publicised. After Kuka, Germany became more careful regarding foreign direct investment and mergers and acquisition, while Daimler created panic and stupefaction regarding Chinese companies’ ability to creep into European companies.

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Finally, on July 16, European Commission President Jean-Claude Juncker and European Council President Donald Tusk visited Beijing for the annual China-EU Summit. While China wanted the EU’s backing in the trade war, it only received a pledge of support for free trade and a call to reform the World Trade Organisation. Nonetheless, the two sides agreed on numerous points and ended with a joint statement, something that eluded them the previous two years.

All this shows that as relations with the US cool, Europe is interested in strengthening ties to China, but will not compromise on some issues. As the US-China trade war deepens, Beijing will be more inclined to win European help. While the summit strengthened relations, there are many issues to resolve. But the past six months clearly indicate that European leaders are interested in China. If China plays its cards well, it might win new European friends.

Andreea Brînza is vice-president of The Romanian Institute for the Study of the Asia-Pacific (RISAP). Her research focuses on the geopolitics and geoeconomics of China and especially on the Belt and Road Initiative