After the 27-member European Union on January 24 unveiled a series of steps to de-risk itself from China, in an attempt to protect key sectors and emerging technologies from any possible security threat, Beijing, upset with the move of the 27-member bloc, has voiced its concern that it will have “profound implications for a wide range of areas, including investment, trade and technological cooperation.”
But while in the expression of its frustration towards the EU’s de-risking strategy, China’s Foreign Ministry appears to be relatively restrained with spokesperson Wang Wenbin terming it as “protectionist and unilateral” move, Global Times which is mouthpiece of the Communist Party of China, has been indisputably harsh in its comment against the 27- member bloc’s stand.
“The EU’s plan could have profound implications for a wide range of areas, including investment, trade, and technological cooperation. Such a move also shows that the EU is becoming increasingly aggressive and hostile in its de-risking strategy aimed at China,” Global Times said, maintaining “China needs to prepare a feasible plan to respond (to the 27-member bloc’s decision).”
What adds to China’s worries is the far, long-term implication of the EU’s de-risking strategy and countries like France and Germany which are powerhouse of technology, giving no clear-cut assurance to Beijing about their stand on engagements with the world’s second economic power.
On January 25, Chinese President Xi Jinping and French President Emmanuel Macron delivered video speeches, commemorating 60 years of bilateral relations between the two countries. As per media reports, in those video speeches the two leaders talked about global challenges and their willingness to promote the resolution of international crisis. There was no mention of trade or investment in those speeches.
However, it was Chinese Foreign Minister Wang Yi who in his speech at an event (to mark 60 years of diplomatic relations between the two countries) at the Beijing-based National Centre for the Performing Arts, urged France to “take a clear-cut stand against the Cold War mentality and camp confrontation.” But it failed to elicit any response from Paris which is also a part of the EU’s de-risking plan with China.
France was the main sponsor of the EU probe into industrial subsidies in China’s electric vehicle sector. In response, Beijing launched a probe into subsidies in the French brandy industry, bringing a chilling effect in the two countries’ trade. In this background, how China remains successful in its renewed effort to woo France back to its camp, has to be seen.
But given that all EU members are on the same page on reducing their reliance on China and limiting its investments and access to key areas like semiconductor and dual-use technologies, it does not appear that Paris will try to torpedo the EU’s united move for de-risking with Beijing, feel some analysts. “We do not want them (dual-use goods that can be used for both civil and military purposes such as advanced electronics) to get into the wrong hands and ultimately undermine EU or global security,” EU trade chief Valdis Dombrovskis was quoted by The Japan Times as saying.
There are concerns among western countries that China could use EU technologies for its military aggression in the East and South China Seas, or against Taiwan. In the recently adopted European Parliament resolution, such concerns were widespread. The European Parliament had also voiced its concern over Chinese students studying in the fields of dual-use technology and risk of espionage, while China’s growing capability in AI, cloud computing and other fields was seen as a security risk.
The EU’s de-risking plan which, as per Reuters, will take three years to come into force, includes measures to strengthen export controls, identify potentially risky foreign investments in the tech sector, enhance the security of sensitive research and screen foreign investments. It should be noted that more than one-fifth of the 180 Chinese companies surveyed recently said that they planned to expand their presence in Europe over the next one to three years and to increase their investment, merger, and acquisition activities.
However, the EU’s plan seems to have sent chills down Chinese firms. China Chamber of Commerce to the EU(CCCEU) which represents more than 1,000 Chinese companies in the EU said its survey of Chinese firms showed that 52% were concerned about the negative impact of the EU’s FDI screening mechanism, while 47% expressed concerns about the possible effects of the “European Economic Security Strategy.”
In view of this, a few days back Chinese Prime Minister Li Qiang held a meeting with the European Commission President Ursula Von den Leyen at the World Economic Forum in Davos and urged her, as per Reuters to “uphold justice, compliance and transparency in economic and trade matters” and “to treat Chinese enterprises fairly.”
Besides, worried by the EU’s de-risking move and its consequences on the Chinese economy which is still not in good shape, President Xi Jinping as per South China Morning Post, plans to visit France and other European nations in coming months. Whether such measures remain effective or not, has to be seen as the EU appears determined to call spade a spade in its trade and investment engagements with China.