Speaking in an interview with the website of the Strategic Council on Foreign Relations, Abbas Sarvestani said that economic relations between the EU and China have become firm and stable in recent years, noting: China is now the second largest trading partner of Europe after the United States and the European Union has become China’s largest trading partner. This position has led the two sides to sign a strategic cooperation agenda in 2020 to expand cooperation, in which the EU’s approach to China is based on three key facts.
China, a strategic economic partner of the EU
The expert on Europe affairs explained: First of all; China is a strategic economic partner for the European Union; secondly, it is also an economic competitor to the European Union. The country’s GDP has grown fivefold since 2000, while the European economy has grown by only 20% over the same period.
Sarvestani described the third reality as Europe’s systemic rivalry with China and the differences in values and governance models, while explaining the factors that make China and Europe diverge, he said that China is a strategic partner for the EU in addressing and resolving international challenges.
New restrictions on Chinese companies operating in Europe
The expert on Europe affairs, referring to the European Commission’s plan to block the activities and investments of that group of foreign companies which take advantage of government credits, said: European companies that are more likely than Chinese companies for having access to government loans and export credits with preferential terms and use of different corporate and labor standards, have less competitive advantage.
Sarvestani continued: This has led the European Union to increase the competitiveness of European companies in the domestic arena and later in third countries, as well as the use of economic tools, both positively and negatively, in terms of economic incentives and for imposing economic sanctions to protect human rights, political and democratic development, as well as good governance in other societies, and enact laws that would prevent government-backed companies from operating in Europe.
EU strategy for relations with China in Biden era
Regarding the EU strategy for relations with China, despite Biden coming to power and efforts to revive and strengthen transatlantic relations, he stressed: The end of the honeymoon of nostalgic EU-US relations during Trump era and the EU’s fear of being sacrificed by him in order to win further trade advantages, led the union to pursue an independent solution to its economic problems with China, as such that the European Union sought to pursue pragmatic policies towards both world powers without engaging in strategic rivalries between the United States and China.
According to the expert on Europe affairs: The EU-China comprehensive investment agreement was in line with this divergence, and Brussels assessed that China would be a more reliable partner for the EU if Trump won. However, convergence and divergence in EU-China relations can be seen as largely the opposite of transatlantic relations.
At the same time, he stressed: The two sides of the Atlantic, unlike the Trump era, see China more as a rival than an enemy and greater cooperation between the United States and the European Union can mitigate its malicious behavior in the areas of security, economy and human rights.
Sarvestani, explaining that the change in the EU’s position could not be interpreted as strategic confusion, added: The EU’s current tough stance on China is more due to China’s performance in opening up digital technology markets, agricultural products and control of industrial subsidies and preferential support for state-owned enterprises than to the US position.
He added: The European Union, in line with its policy of multilateralism and strategic independence, is trying to ensure that the Union is not so close to one of the two major powers of the world by drawing a third way and establishing a strategic balance in its relations with Beijing and Washington.
Prospects and future of Europe-China relations
Regarding the prospects and future of EU-China relations, Sarvestani said: Theoretically, the emergence of China may seem to provide significant opportunities for the EU, as China is in fact an important market for low-cost exports and imports for consumers and companies, but in reality the situation is more complicated than one might think.
He reminded: In 2004, the European Union became China’s largest trading partner, and China became the EU’s second largest trading partner after the United States. But Europe’s imports from China have grown faster than exports to China. This led to a growing deficit that was largely offset by Europe’s surplus with the United States due to the booming US market in recent years. However, the future of Europe looks much more fragile in this regard because of the threat of a US economic recession.
According to the analyst of Europe affairs, the EU lacks a unified approach to economic relations with China, despite a significant trade deficit with China and EU member states also have conflicting interests in dealing with China, especially some member states such as Germany, which have benefited from its long-standing trade relationship with China.
Sarvestani stated that one of the most important concerns of the European Union regarding China is the principle of non-interference by China in the approaches and internal affairs of the countries and continued: The triangle relations between the European Union, the United States and China is remarkably influential on the future of Euro-China relations. The EU, unlike the United States, has no significant strategic security interests in Chinese-influenced areas and has developed its relationship with China without the strategic and security responsibilities of the United States.
He concluded: The European Union seeks to maximize economic opportunities by adopting a pragmatic economic policy based on the separation of economic and political interests and a correct understanding of China, and by removing non-tariff barriers, especially in the strategic goods and services sector and domestic standards, need of the Chinese companies to protect intellectual property rights and eliminate the preferential protections of the Chinese state-owned companies, minimize the risks for European companies while assisting China in the transition and reform process.