The China Thread

[Sheilbh]

So it is agreed in principle - hopefully the European Parliament takes a stern look at this (althought I imagine that's unlikely because it's likely to have strong support from EPP and governing parties):

Ursula von der Leyen
@vonderleyen
The EU has the largest single market in the world. We are open for business but we are attached to reciprocity, level playing field & values.

Today, the EU & China concluded in principle negotiations on an investment agreement.

For more balanced trade & business opportunities.

It'll be interesting to see quite where they got to on reciprocity, level playing field and values - I mean the New Zealand - China trade agreement has both parties reaffirming their commitment to and obligations under the ILO's declarations. If it's weaker than that I think the EU would probably have underplayed its hand.

It was apparently concluded on parallel conversations or what the Chinese are calling "four party talks" because, for some reason, on the call were Xi, Michel and vdL, plus Macron and Merkel. It's not clear yet if member states have a copy of the text (this was an Italian complaint) so things might shift once they've had a chance to look it over.

[Monoriu]

I am glad that cooler heads prevailed.

[Zanza]

Is there any indication that Biden plans to stop the trade conflict the US started under Trump against Europe?
https://www.washingtonpost.com/opinions/biden-europe-trade-war-negotiate/2020/11/11/1e7e87c6-2440-11eb-8672-c281c7a2c96e_story.html

The US signed its own deal with the Chinese earlier this year and did not align that with the Europeans either.
https://www.nytimes.com/2020/01/15/business/economy/china-trade-deal.amp.html

As the US often acts without consideration of European interests, there seems to be little argument that Europe should not do the same.

We don't know the content of the deal, so maybe there is something to criticize on its content. The questions asked above are of course relevant. That's something that needs lots of scrutiny by the European Parliament.

[Zanza]

The legal text will be worked out in 2021 with ratification planned in 2022. Ample time for analysis and reflection.

[Tamas]

On why the EU is doing it - the corrupt fucktards of Hungary have been making INSANELY disadvantageous deals with China the last couple of years, including tax payers paying for a Belgrade Budapest railroad to be built and used by China, and 16 000 respirators bought for 3x the market price, two thirds which have still not been delivered.

What this is telling me is that China is not shy to grease hands on an epic scale to get their projects done. I am sure they can find willing ears and hands on an EU level as well.

[Zanza]

That's just conjecture or do you have anything to support your claim? This has been in the works for seven years and is a committed common interest of the EU. I am not saying that there is no corruption in the EU, but I doubt that's a relevant driver for this policy.

The corruption of the Orban government is not China-specific, so maybe it has more to do with Orban than with China. 

[Sheilbh]

Is there any indication that Biden plans to stop the trade conflict the US started under Trump against Europe?
https://www.washingtonpost.com/opinions/biden-europe-trade-war-negotiate/2020/11/11/1e7e87c6-2440-11eb-8672-c281c7a2c96e_story.html

The US signed its own deal with the Chinese earlier this year and did not align that with the Europeans either.
https://www.nytimes.com/2020/01/15/business/economy/china-trade-deal.amp.html

As the US often acts without consideration of European interests, there seems to be little argument that Europe should not do the same.

Biden's NSA said, in reference to ths agreement that the new administration would welcome early consultations with European partners on common issues. Biden has criticised that deal that Trump did (though not totally repudiated it). And the Biden team have made it very clear that they want to work closely with the EU. I think there's plenty of indications that Biden wants to work with the EU which will definitely involve talking about Trump's trade war stuff with Europe.

I think my bigger point would be that we've had several of worsening human rights abuses in China and the wolf warrior diplomacy which seems to be getting a reward or at least not considered relevant by the EU - a values superpower in my view. And it's obvious that one of the key reasons China's making last-minute concessions now is precisely because it's between administrations to hopefully divide Europe and the US before Biden's even taken office. It'll take work by the European and American diplomats to avoid that risk.

We don't know the content of the deal, so maybe there is something to criticize on its content. The questions asked above are of course relevant. That's something that needs lots of scrutiny by the European Parliament.

Yes but we do know that vdL has said of it:

We will improve the status quo for a fairer treatment of our companies:
Transparency on subsidies & disciplines on  state owned enterprises
More market access, certainty & predictability for EU businesses
No more forced technology transfers & other distortive practices
This Agreement will uphold our interests & promotes our core values. It provides us a lever to eradicate forced labour. We are engaging with China to:
Protect our climate under  #ParisAgreement
Promote rule-based multilateralism

I think a lever to eradicated forced labour is exceptionally unlikely. And I think there is something on climate because Xi has made very ambitious goals for China on energy transition which are essential.

But on SOEs, on market access and on technology transfers what vdL is talking about here and what the EU will want goes against Xi's stated policy agenda (which I think will work - I think his autocratic capitalist model is going to succeed). It's the triumph of hope over experience to not take Xi at his word at this stage.

[Zanza]

The current US administration was actively hostile to European economic interests. For all we know, we might get a four year reconvergence with the next administration, but the Democrats pivoted towards protectionism as well. Let's see. But in case this agreement is actually concluded in 2022, half of that time is already up. Who knows if the next administration is again hostile to Europe?

The US concluded its own China agreement that contains e.g. provisions on IP and technology transfer in 2020, so obviously Europe should do the same.

If the new EU-China agreement does not change China's behaviour due to Xi's policies, it would not matter anyway whether or not we have an agreement. Unless the argument is that some kind of concerted action with the Americans would somehow yield better results? But if the argument is that it violates Xi's core policies, even concerted action seems unlikely to be effective.

And it is noticeable that the US likes to e.g. pressure countries or sanction companies that deal with Huawei, but then grant exceptions to American, but not foreign companies, so that they can deal with Huawei after all. That's not increasing confidence in American good faith with regards to concerted action on China.

[Zanza]

For what it's worth, I find some of the alleged content questionable. We should be able to scrutinise and block Chinese investments in the EU more, not less.

[Sheilbh]

The current US administration was actively hostile to European economic interests. For all we know, we might get a four year reconvergence with the next administration, but the Democrats pivoted towards protectionism as well. Let's see. But in case this agreement is actually concluded in 2022, half of that time is already up. Who knows if the next administration is again hostile to Europe?

But again I don't quite get this from a European perspective. Europe relies on America for defence and the way to address this is to rely more on China commercially and economically. That doesn't address the risk of American hostility (because Europe still relies on them for defence) but it increases the risk of Chinese hostility, especially as we know China uses its commercial ties for political ends. How does this address the risk of another Trump administration? It just seems to make Europe more potentially vulnerable and Europe in less of a position to say "no" to China. Or it exposes Europe to risk around American security guarantees.

And China's goal in dealing with Europe is to reach a point where they are politically neutral between the US and China.

The US concluded its own China agreement that contains e.g. provisions on IP and technology transfer in 2020, so obviously Europe should do the same.

An agreement the incoming President has repeatedly criticised (though not repudiated).

If the new EU-China agreement does not change China's behaviour due to Xi's policies, it would not matter anyway whether or not we have an agreement. Unless the argument is that some kind of concerted action with the Americans would somehow yield better results? But if the argument is that it violates Xi's core policies, even concerted action seems unlikely to be effective.

Yeah my argument is that concerted united action and a common strategy with Europe, the US, Japan, Korea, India, the UK, Canada, Australia working together (and practically speaking led by and cobbled together by the US) has a better chance of dealing jointly with China's distortions of the market economy and their political strategy of making the world safe for autocracy. It won't change Xi's core policies but it can limit their impact globally and their effect on us.

And it is noticeable that the US likes to e.g. pressure countries or sanction companies that deal with Huawei, but then grant exceptions to American, but not foreign companies, so that they can deal with Huawei after all. That's not increasing confidence in American good faith with regards to concerted action on China.

Again it might be worth waiting to see whether that lasts or whether that's a feature of America First politics.

The other side of this is how this agreement will affect the tech race - can China take advantage and increase their leadership (especially in relation to Europe) to become stronger. Again we know China uses its commercial relations for strategic, political ends. I think this is a particular risk for Europe because in key tech sectors like AI it is light-years behind China and the US (it's not clear if Europe can catch up) and I think those may end up being the alternatives for Europe to choose. A Chinese government advisor commented that this agreement will give China leverage in European rule-making for new industries, which I think is definitely a risk.

There is competition emerging in the world right now between a liberal, market rules based order and a state-led, autocratic rules based order and this agreement needs to be assessed in that context. In 2019 the EU said that China is a "systemic rival" and "economic competitor" as well as a "partner". How does this fit in with that?

I suppose the bigger issue is I think Xi has a policy agenda and a strategy - which I think may well succeed. It is easy to see how this fits into that. Europe's policy and strategy is less clear but there is something around values and the liberal, market rules based order, there is an awareness in EU work in tech of how far behind the EU is in comparison to the US and China in cutting edge  like AI and a desire to fix that in some way. I don't get how this fits with Europe's strategy, as opposed to just commercial interests and business as usual.

[Crazy_Ivan80]

I don't get how this fits with Europe's strategy, as opposed to just commercial interests and business as usual.

might be better if you accept that the EU doesn't have a strategy other than pretending it is a meaningful player on the world stage instead of a potemkin village...
Cause that is what it looks like currently.

[Zanza]

Europe relies on the US for defence because thats in American interests, not because of altruism in America. Those interests will not change even with the investment pact. It's not like the Americans align with us when they unilaterally decide to scrap the Iran treaty or withdraw from Syria or Afghanistan.

How does an investment protection agreement increase economic dependency and why is that apparently just a one-way dependency?

By the way, in economic terms, the EU already is the neutral third pole between America and China.

common strategy with Europe, the US, Japan, Korea, India, the UK, Canada, Australia

Japan, Korea, and Australia signed the RCEP recently with China, which is deeper than this agreement. So if agreements preclude working together, I guess they are out. India is often doing its own thing, is itself very protectionist, and is close to warfare with China in the Himalayas. I fail to see the common ground there. Leaves the UK and Canada, both already in the US sphere.

But lets assume we all work.together. What are the concrete steps that these countries should take towards China and how would these be successful, when they supposedly conflict with China's strategy?

There is competition emerging in the world right now between a liberal, market rules based order and a state-led, autocratic rules based order and this agreement needs to be assessed in that context.

Yes. How does this agreement lessen Europe's clear position for a market based order and how do international obligations that China enters to uphold market based rules not contribute towards it? Is the assumption that China acts in bad faith whenever they promise something? If so, why engage with them at all? Also related to the concrete steps taken as a group together above.

By the way, on the tech gap, the reason China could build rivals to the US tech companies is very severe protectionism. Are you arguing for European protectionism here, a great firewall around Europe? That would rightfully be considered extremely hostile by the US as right now, the US has a massive lead there in the European market. If we want emulate China's approach, we would have to scrap GDPR and other privacy related legislation and pool the data of European consumers. Hardly what we want either.

[Eddie Teach]

Europe relies on the US for defence because thats in American interests,

How so?

[Zanza]

Europe relies on the US for defence because thats in American interests,

How so?

It furthers American influence and interests globally and allows America to project both soft and hard power.

[Eddie Teach]

At a higher cost than the benefits gained by those interests.