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Trade

Will EU and China bond in Brussels amid growing belief that Europe’s future is in Asia?

The EU-China summit this week comes on the heels of German chancellor Merkel’s post-G7 remarks that Europe can no longer ‘completely depend’ on US and Britain

PUBLISHED : Thursday, 01 June, 2017, 10:20am
UPDATED : Thursday, 01 June, 2017, 11:05pm

Differences between China and the European Union over key issues, such as Beijing’s bid for market economy status, are likely to remain during the EU-China summit on Friday, Germany’s top envoy to Beijing said.

The two-day summit in Brussels, which will be co-chaired by Chinese Premier Li Keqiang and European leaders, comes as the EU is seen as pivoting to China and Asia amid uncertain relations with the US.

German Chancellor Angela Merkel warned after the recent G7 summit that Europe can no longer “completely depend” on the US and Britain, and now must “fight for its own destiny” in the face of questions surrounding the foreign policy of US President Donald Trump’s administration and Brexit.

Li’s European trip, which coincided with Indian Prime Minister Narendra Modi’s visit to Germany, Spain and France this week, is seen as supporting a growing belief that Europe’s future points towards Asia.

“There is much more attention being paid to Asia in Berlin and Brussels now,” German Ambassador to China Michael Clauss told the South China Morning Post.

Clauss said Li’s trip, followed by President Xi Jinping’s state visit in July for the Hamburg G20 summit, showed the importance both sides attached to their ties, despite remaining differences.

Chinese and European analysts said China and the EU both faced added urgency to build even stronger ties.

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Wang Yiwei, a former Chinese diplomat to the EU and currently a Renmin University scholar, said China believed strong EU ties could significantly bolster the Chinese leadership’s credibility ahead of a key party congress this fall.

Insa Ewert, a research fellow at the German Institute of Global and Area Studies, said China and India’s outreach to Europe presented “a great opportunity for the EU to develop a coherent Asia strategy, which it lacked.

“The summit will certainly seek to resolve economic and trade frictions, but positions remain far apart,” she said.

In particular, Clauss, the German diplomat, said both sides would continue to remain divided over such thorny issues as China’s bid for market economy status, the European Union’s demand for better access to the Chinese market, China’s overcapacity in steel, and human rights.

In addressing Beijing’s long-standing bid for Market Economy Status, the EU will table a new plan to abolish the existing differentiation between market economy and non-market economy, which Clauss said was a compromise among the 28 EU member states.

Instead, the EU would look into whether individual companies had violated market rules before imposing anti-dumping punitive tariffs on individual offenders, he said.

During the Friday summit, Clauss expects the EU to make a stronger push for creating a level playing field between Chinese and European companies.

“In some of the most dynamic sectors of the Chinese economy, such as hi-tech medical equipment or metro and high-speed railway, market access has further deteriorated,” the German envoy said.

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“We Europeans want to use more ambitious language and make tangible progress toward reciprocity.”

Clauss added that the envisaged EU-China investment treaty would improve market access but needed greater flexibility from the Chinese side.

The EU and China are also expected to further their discussion over the conditions under which the EU might join China’s massive trade plan, the Belt and Road Initiative.

European countries would like Belt and Road to be a joint project with co-ownership for all participants and China committing itself to observe World Trade Organisation standards while implementing the project, Clauss said.

“A successful summit would be a credible signal that China really supports a strong EU, and doesn’t prioritise regional sub-formats over Brussels,”‎ he said.