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EU must be united on trade with China

March 26, 2019

China is trying to divide the European Union on the issue of trade. It must not be allowed to succeed, says DW's Christoph Hasselbach. By presenting a united front, the bloc can win far more concessions from Beijing.

French President Emmanuel Macron, Chinese President Xi Jinping, German Chancellor Angela Merkel and European Commission President Jean-Claude Juncker pose before a meeting at the Elysee Palace
Image: Reuters/P. Wojazer

If he had his way, Chinese President Xi Jinping would prefer to negotiate with each European government individually, to try to get a better deal for his country. But on Tuesday in Paris, he had to settle for  dealing with the European Union trio of French President Emmanuel Macron, German Chancellor Angela Merkel and European Commission President Jean-Claude Juncker. Presenting a united front, they showed Xi that the EU speaks with one voice when it comes to trade.

That's the idea, anyway. Before Paris, Rome rolled out the red carpet for Xi with promises to participate in the Belt and Road Initiative, China's vast infrastructure project that would link the country with Africa, Europe and beyond.

Italy is the first major Western industrialized country to take this step. Italian companies are expecting to benefit, but the real winners will be Chinese firms in Italy. With its long-planned state-led strategy, Beijing wants to establish another toehold in Europe; in Italy, it plans to invest and expand the ports of Genoa and Trieste.

Read more: Can the EU control China's connectivity in Europe?

Increasing concerns

Christoph Hasselbach
Christoph Hasselbach comments on European affairs for DWImage: DW/M.Müller

More and more governments (and not just those in the West) are growing critical of Chinese investment in their countries — and not only over concerns about developing an overreliance on foreign funds and losing out on technological leadership to Beijing.

Security experts fear that if Chinese tech supplier Huawei is involved in the expansion of ultrafast 5G telecom systems, Beijing may use that network for espionage. That's why, for example, the United States, Australia and New Zealand have already excluded Huawei from developing their 5G infrastructure.

Merkel criticized Italy for going it alone at the EU summit in Brussels last week, saying that the bloc needs a unified stance. But for years, Germany has been too naive in its dealings with China, allowing Beijing to restrict European access to Chinese markets while continuing to open the door to Chinese trade in the EU.

The reason is simple: The Chinese market is so important for Germany, a country that relies heavily on exports, that Berlin has tended to tread lightly when it comes to criticism of Chinese policy, for fear of trade reprisals.

But the mood has now changed, even in Germany. The decisive wake-up call came in 2016, when China's Midea took over Bavarian industrial robot maker Kuka; the inverse, a German firm buying out a Chinese enterprise, would have been impossible.

Since then, the German government and the European Commission have been looking into ways that European firms can protect themselves from being sold off to Chinese interests, and what role political policies should play in that effort.

China wants hegemony

But it's not about pulling up the drawbridges and rejecting China's Belt and Road Initiative outright. Rather, it's all about ensuring fair business conditions and equal market access.

When US President Donald Trump and his "America First" agenda moved into the White House in 2017, Berlin and Paris were delighted for China to step forward as the savior of multilateralism. And yet, China does not have multilateralism in mind; instead, Beijing favors bilateralism, and ultimately hegemony.

Interestingly, it has been the much-disliked US president and his trade war who has shown that Beijing can be persuaded to make concessions when it comes to trade talks. Lacking the necessary global influence, no single European state would be able to follow suit — but the EU as a unified whole could accomplish what the smaller countries could not. And on Tuesday, the joint effort of Macron, Merkel and Juncker in Paris with Xi sent the right signal.

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