Europe is China’s largest trading partner, and China is now the EU’s second largest; trade between the two regions has doubled over the last decade to more than EUR 1 billion a day.
President Xi Jinping’s recent visit to Brussels was a game-changing event. It marked the first time an incumbent Chinese leader has visited the EU institutions since ties were established in 1975. The visit underlined the importance of the Bilateral Investment Agreement, currently being negotiated. A lot depends on this agreement—it can reshape bilateral relations like no other tool.
An ambitious agreement would tackle the problems of market access for our investors, level the playing field and curb discrimination against our companies, as well as provide effective dispute settlement provisions to protect our legitimate interests. The agreement would fill many of the gaps left by Chinese WTO commitments, as most of our Chamber’s working groups would testify.
This would reinvigorate EU activity in China, providing the sort of investments that China sorely needs to redefine its growth model and ensure stability. The same ambitious market access and investor protection rules would be fundamental to helping Chinese companies go global by investing in the market that offers them most promise: the EU.
An ambitious agreement would also show that China is able engage with the EU in the sort of deep and comprehensive free trade agreement (FTA) that the EU could envisage in the longer term.
Although liberalising reforms have certainly benefitted from a stronger tailwind since the Third Plenum, we must not kid ourselves that further liberalisation in China is no longer politically difficult. Given this reality, it is now time to strengthen our institutional bilateral trade cooperation.
EU-China relations thankfully do not suffer from the shrill, China-bashing, protectionist rhetoric found in the USA. To contain protectionism and incrementally open markets on both sides we must make full use of the institutional framework for bilateral cooperation. The wealth of bilateral dialogues (from research to environment, from transport to agriculture, from consumer welfare to finance, from information technology to competition, from urbanisation to innovation, from trade to investment), with the EU-China Summit at the apex, have worked with a clear goal in mind: genuine opportunities for our companies based on concrete market access, a level playing field and non-discrimination. We must harvest the fruits of this intense activity, which recognises that ‘trade’ and ‘investment’ are no longer isolated topics in our ever more complex China relations—but issues with myriad ramifications requiring a 360 degree contribution from many policy areas if success is to be ensured.
Institutional tools bring results when coupled with a political approach that is as savvy as it is solid. The unity and coordination amongst Member States and EU institutions in the run-up to President Xi’s visit (which also covered Belgium, France, Germany and The Netherlands) were key to the visit’s success—a showcase of the synergy between country-to-country relationships with China and collective EU-China trade relations. After all, trade policy is the quintessential area of EU external policy that is highly centralised, and headline trade-policy issues concerning China can only be dealt with at the EU level.
China’s rise, its growing integration with the global economy and its sheer unpredictability are all set to have a steadily growing impact on Europe, to which the EU must find effective responses. If Europe wants Beijing to take it seriously, it needs to start getting serious about China.
As you read this, the people of the European Union will have already elected a new Parliament who will set the tone for a new engagement cycle with China when they convene after the summer. Our established senior friends in Brussels, who are currently preoccupied by geopolitical developments nearer home, will also hand over to a new Commission in November. In this context, the Chamber’s Position Paper—to be released in September—may be more important than ever before. At that time, approximately one year after the Third Plenum and possibly in the midst of a slowing Chinese economy, questions will be asked about real changes on the ground in Beijing.
Europe will continue to need a clear and consistent diplomatic strategy that transcends the narrow interests of individual members and commands their united support. This will require consistent leadership by Europe’s political masters—in Brussels, Strasburg and in all 28 capitals.
For our part, the European Chamber will increase activity to provide content and information for Chinese and European leaders. We will provide practical recommendations that help strengthen this bilateral relationship and curb protectionist tendencies and which encourage the Beijing leadership to press ahead with WTO-plus reforms that would open up the Chinese economy and strengthen China’s standing as a responsible stakeholder in the multilateral system.
President of the European Union Chamber of Commerce in China