Editor’s note: Has China become a giant of proportions that should worry humanity? In a series of analyzes to be read until Monday, our columnist and expert political scientist on China, Loïc Tassé, attempts to answer this question.
On December 30, China and the European Union signed an investment agreement. This agreement has been presented by the Europeans as the counterpart of the trade agreements that China and the United States have reached to rebalance the trade balance between the two countries.
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It is true that the trade balance between China and the European Union has been in general deficit for European countries for decades. In 2020, this deficit reached 181 billion dollars, in favor of China.
For its part, the Chinese government makes no secret of seeking to detach Europe from American economic influence.
The agreement had been under negotiation since 2013. The policies of Donald Trump, who wanted Europeans to contribute more to NATO spending and who did not hesitate to apply new tariffs to European companies, made European leaders realize that ‘they couldn’t rely on the United States forever. This awareness probably accelerated the negotiations.
File photo, Reuters
A freighter is unloaded of its cargo and loaded with containers at the port of Ningbo-Zhoushan in eastern China, which is seeking to expand its trade agreements with Europe.
The agreement has two years to be ratified. But the more time passes, the less certain it will be. Fortunately for Europeans.
Some inequalities
This is because the agreement poses several important problems.
First, it is asymmetric. While European countries are widely opening their industrial sectors to Chinese investment, several Chinese economic sectors remain closed to European investment.
Second, the agreement gives the Chinese government access to information that is at the heart of the strategic plans of European companies. In theory, European investors should have access to the same information for Chinese companies. But it is doubtful, given the opacity of the Chinese regime and the hidden accounting system that still seems to exist in China.
More importantly, the agreement does not govern the activities of the Chinese Communist Party. However, the Chinese Communist Party is not only the heart of China’s political system, but also the brain of its economic system.
Pressures from Germany
The investment agreement was signed thanks to pressure from Germany. The big German automakers fear losing the Chinese market. Other countries, such as France and Italy, had much less interest in signing such an agreement.
The agreement is also in danger because of the aggressive policies of Xi Jinping: the crushing of the democratic movement in Hong Kong, the genocidal policies against the Uighurs or even the behavior of the Chinese authorities in the “trials” of Michael Kovrig and Michael Spavor have considerably cooled European leaders.
Irresponsible behavior
The irresponsible behavior of Chinese authorities in the COVID-19 pandemic has somewhat opened the eyes of European leaders. Emmanuel Macron even said recently that the era of naivety towards China is over.
Perhaps. But it is undoubtedly the new diplomacy of Joe Biden against China which incites the Europeans to ally with the United States against China. It is also this renewal of Euro-American alliances which constitutes the greatest obstacle to the ratification of the investment agreement between Europe and China.