An attendant walks past EU and China flags ahead of the EU-China High-level Economic Dialogue at Diaoyutai State Guesthouse in Beijing on June 25, 2018. Photo: Reuters
An attendant walks past EU and China flags ahead of the EU-China High-level Economic Dialogue at Diaoyutai State Guesthouse in Beijing on June 25, 2018. Photo: Reuters
Phar Kim Beng
Opinion

Opinion

Phar Kim Beng

Why the EU-China investment deal exposes European weakness

  • The agreement has shown the European Union, ravaged by the pandemic, to be the weaker economic and geopolitical actor. It must now hold China to its pledge to conform to International Labour Organization rules

An attendant walks past EU and China flags ahead of the EU-China High-level Economic Dialogue at Diaoyutai State Guesthouse in Beijing on June 25, 2018. Photo: Reuters
An attendant walks past EU and China flags ahead of the EU-China High-level Economic Dialogue at Diaoyutai State Guesthouse in Beijing on June 25, 2018. Photo: Reuters

All agreements involving the European Union, a supranational entity comprising 27 member states, are bound to be complex and laborious. However, China managed to cut through the complexity and concluded an investment agreement with the EU in the last days of 2020.

Will the agreement, which follows the Regional Comprehensive Trade Agreement (RCEP) in Asia, lead to a stronger and more coherent EU-China relationship or a more fractious one?

Despite the deal, the European Commission has in the past referred to China as a “systemic rival”, suggesting that some degree of trade and other tensions with China are to be expected.

The United States has called China a “strategic competitor” in the past, and said it was in “strategic competition” with China in its Indo-Pacific security document released on June 1, 2019, weeks before the Asean summit in Bangkok.

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Nevertheless, with Poland, Austria, Hungary and potentially Italy slowly swinging to the far right of the political spectrum, and Germany and France also hoping to have a good relationship with China, it does seem that China has key EU members on its side.

(Clockwise from top left) Chinese President Xi Jinping, European Council president Charles Michel, European Commission president Ursula von der Leyen, French President Emmanuel Macron and German Chancellor Angela Merkel take part in a video conference to approve an investment pact between China and the European Union on December 30. Photo: AFP
(Clockwise from top left) Chinese President Xi Jinping, European Council president Charles Michel, European Commission president Ursula von der Leyen, French President Emmanuel Macron and German Chancellor Angela Merkel take part in a video conference to approve an investment pact between China and the European Union on December 30. Photo: AFP

As I argued previously in the Post, China appears to be addicted to free trade agreements and, by extension, globalisation. For its part, the EU has long struggled with how to work with China without being tainted by the accusation that it has put profit above China’s questionable labour practices.

Around 2024, when the European Parliament elections are due to be held, the institution’s rhetoric is likely to be pro-left and anti-market. The optics then could be in sharp contrast to the friendly face the EU and China have presented on the trade front.

Parts of the Balkans, such as Serbia and Montenegro, are enthralled not so much by what Russia can offer, financially and otherwise, but by what a juggernaut like China can provide.

There is also the possibility of a split between the EU and China, as the EU expands further into Eastern Europe. Serbia and Montenegro could use China as leverage to get more EU aid.

By concluding its investment agreement, Beijing appears to be striking while the iron is hot, having just helped push the RCEP agreement through.

But unlike the RCEP, the EU deal requires Beijing to ratify four International Labour Organization conventions, which would entail abolishing forced labour. By March 2021, China is expected to accede to the International Covenant on Civil and Political Rights. This will be a tall order.

A day after the RCEP was signed, Chinese Premier Li Keqiang urged all countries to speed up their domestic approval procedures to allow the pact to take effect as quickly as possible.

In May, Li had expressed China’s interest in joining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the agreement which replaced the Obama-era Trans-Pacific Partnership, which US President Donald Trump pulled his country out of as one of his first actions on taking office. Days after the signing of the RCEP, Chinese President Xi Jinping said China would consider joining the CPTPP.

Exact details of the EU-China investment agreement remain unclear. The quiet negotiations may have been the result of lessons learned from the World Trade Organization meetings in Seattle in 1999 and Hong Kong in 2005, which saw large-scale protests.

The agreement – sound as it may seem – has exposed the EU, ravaged by the pandemic, as a weaker economic and geopolitical actor.

Had the EU waited for US President-elect Joe Biden to consolidate his administration first, the strength of transatlantic relations would have served as a counterweight to the emergence of transpacific ties, which China seems to want to dominate and control.

However, having signed the agreement, the EU must now pressure China to comply with ILO provisions. This might lead to an EU-China confrontation or dialogue over the treatment of Tibetans, Uygurs and other Muslim minorities.

Phar Kim Beng is founder and CEO of Strategic Pan Indo-Pacific Arena (Strategicpipa.org). He is a former Harvard head tutor and Cambridge Commonwealth Scholar