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It is common knowledge that the European Union and China have always had a strong and heterogeneous economic bond. The Communist Republic, indeed, is the EU’s second-biggest trading partner, right after the USA. However, many showed astonishment on 30th December 2020, when Brussels and Beijing agreed on the CAI draft – which stands for EU-China Comprehensive Agreement on Investment.
The EU has always considered trading relations with China as strategic. In 2013, the European Commission conducted an impact assessment with Beijing, which lead to negotiations on the CAI between the two actors in 2014. They aimed to provide investors on both sides with long-term access to the Chinese and European markets and protect investors.
On the final day of 2020, the year nobody wants to remember – slightly before the formalization of Biden’s win over Trump – the EU and China ended the protracted negotiations on the CAI. The agreement was finally reached after a videoconference between Xi Jinping – Chinese President; Ursula von der Leyen – European Commission President; Charles Michael – European Council President; the German Chancellor Angela Merkel, on behalf of the Presidency of the EU Council, as well as French President Emmanuel Macron.
According to the official draft – not yet voted by the European Parliament and EU Council – China has made significant manufacturing commitments. The just mentioned sector makes up more than half of the total EU investment, with 22% for basic materials and 28% for the automotive sector. Other investments in service economy are included, such as financial services, international maritime transport and air transport-related industries. This means that European business will gain predictability in all the aforementioned areas. Moreover, China will no longer be able to introduce new discriminatory practices.
It is interesting to note how sustainability has been included in the CAI since it will bind the parties to follow specific values and sustainable development principles. Both sides still need to finalize the CAI draft: it needs to be legally reviewed and translated before being submitted for approval by the European Parliament and the EU Council.
Surely the CAI will not convert China to Western values in terms of society and political governance, but it represents a significant step forward for the regulated globalization, highly promoted by the EU. It is even a strategic move for East Asia, especially geopolitically speaking. However, not everyone sees it positively. Many people are privy to the on-going persecution of Muslim Uighurs taking place in the Xinjiang province – mistreatments spearheaded by Chinese authorities. Thus some have rightly complained about the reluctance of the Communist government to sign any clause against forced labour. However, there are subtle indicators they may be willing to sign the International Labour Organization Conventions that prohibit these abominations in the future.
European leaders have always claimed to remain neutral in the US-China conflict. Even so, making a few remarks on the matter is needed. Someone already talks about a (possible) victory of Mr Xi in his attempt to divide the West. President-elect Biden, indeed, did not take part in the negotiations. Concerning this latter issue, Paul Taylor – the editor at Politico Magazine – claimed that “Europe doesn’t need US approval to manage relations with Beijing”. Moreover, one shall not forget that “Washington did not consult with Europe before President Donald Trump launched his unilateral trade war against China.” On the other hand, some Americans expressed the will for Biden’s administration to push back against China behaviour on human rights, so that the EU governments will “accommodate US requests to some degree” – Henry Olsen, from the Washington Post. It is certainly true that the post-World War II era was characterized by US economic dominance, but isn’t this era over? If not, should we be talking about a Kennan-style containment policy revival then?
Frankly speaking, this agreement could probably represent relief for European economies, mostly stagnant and reeling due to the pandemic. But are we sure that China will comply with the rule of law? We must not forget that it has broken its promises to maintain Hong Kong’s separate status, not to mention that the government arrested at least 53 activists in early January 2021 for alleged subversion.
Different opinions on the CAI
President of the European Commission, Ursula von der Leyen showed all her positivity on the CAI, stating that: “[…] the agreement is an important landmark in our relationship with China and for our values-based trade agenda. It will provide unprecedented access to the Chinese market for European investors, enabling our businesses to grow and create jobs. It will also commit China to ambitious principles on sustainability, transparency and non-discrimination. The agreement will rebalance our economic relationship with China”. By contrast, Bernard Guetta – European deputy for Renew Europe – stated that it is “une error économique et politique”, since “it is always dangerous to lead a dictatorship to believe that it can do anything and not be punished but rewarded” (Libération, 13th January 2021).
Who will be right? We shall wait to say, and in any case, dealing with Mr Xi Jinping is always a leap in the dark.