European Union calls for united trade and tech front against ‘rival’ China

‘Landmark’ paper appeals for more reciprocal economic relationship with bloc’s biggest trading partner.

Document is a wake-up call for those in Beijing banking on EU ties offsetting trade war pressure from the US, analyst says.

The European Union is urging its leaders to take a tougher stand on mounting China-related trade, technology and geostrategic concerns, a major step that could overshadow the country’s relations with Europe for years to come, analysts said.

Following Washington’s lead, the European Commission, the EU’s executive, released a paper on Tuesday which for the first time labelled China an “economic competitor” and “a systemic rival promoting alternative models of governance”.

The paper urged EU leaders meeting in Brussels next week to adopt a 10-point action plan that would establish a more balanced and reciprocal economic relationship with China while solidifying the resolve of the 28 EU member states to counter the Asian country’s influence, the bloc’s top trading partner.

The call comes just over a week before Chinese President Xi Jinping’s planned visit to Italy and France and ahead of the annual China-EU summit in Brussels on April 9 that Chinese Premier Li Keqiang will co-chair. In Beijing on Wednesday, Chinese foreign ministry spokesman Lu Kang acknowledged competition existed with the EU, but termed it healthy in nature. “I want to emphasise that we should take a correct attitude toward such benign competition and avoid treating each other as an adversary,” Lu said.

Analysts said the EU’s move was an attempt to put pressure on Beijing ahead of the high-profile European appearances of Xi and Li, and to bridge divides within the bloc over China’s massive infrastructure strategy, the “Belt and Road Initiative”, and Chinese tech giant Huawei’s role in the networks of European telecoms firms. Pang Zhongying, a Beijing-based international affairs specialist, called the paper a landmark document that shared some of the US administration’s concerns about China.

“[It also] highlighted the EU’s strong desire to find a new way to manage a fast-changing relationship with Beijing,” Pang said. “To some extent, it is also a wake-up for Beijing because it could upend the prevailing thinking among Chinese political elites who have pinned their hopes on close ties with Europe to offset the pressure from deteriorating relations with the United States amid the trade war.”

The EU paper said China’s growing political and economic clout underlined its global ambitions. There was “a growing appreciation in Europe that the balance of challenges and opportunities presented by China has shifted”, it said. “China can no longer be regarded as a developing country … China’s publicly stated reform ambitions should translate into policies or actions commensurate with its role and responsibility,” the paper said. “Neither the EU nor any of its member states can effectively achieve their aims with China with full unity.”

Europe has voiced its frustration over China’s lack of progress in granting foreign companies greater access to its markets and in cutting subsidies and the forced transfer of technology by foreign firms to Chinese state-owned joint venture partners. European countries are also under pressure from Washington to ban Huawei over espionage fears. But the EU’s calls for a collective response to a surge of Chinese takeovers in critical sectors under the Belt and Road Initiative have long been hampered by divisions within the bloc.

Italy has said it plans to become the first G7 country to join a number of central and eastern European countries that have already endorsed the initiative. If backed by EU leaders, the bloc would urge China to abide by World Trade Organisation rules, particularly on subsidies and forced technology transfers, and conclude a deal with the EU on investment rules by 2020.

The paper urged EU nations to revive a stalled proposal known as the international procurement instrument, which would require foreign countries to open up their public tenders in return for access to Europe. The paper also criticised what it called Beijing’s diplomatic assertiveness in the South China Sea, its deteriorating human rights environment and oppressive policies in the far western region of Xinjiang. In addition, it raised concerns over the future of Hong Kong autonomy amid Beijing’s continued political meddling.

“The document is an extension of the EU’s previous China policy from 2016, which emphasised equality and fairness. In the past it focused on trade, but now it has been expanded to issues like infrastructure and 5G,” said Cui Hongjian, a senior fellow with the China Institute of International Studies. “Different EU countries have different relationships to the US. So the EU wants to unify these issues, but the issues that have been raised to the EU level [in the document] have definitely been influenced by the US.”