On his recent trip to Europe, President Xi Jinping emphasized the importance of Chinese investment to global trade. However, the European Union's relationship with the bloc's No. 2 trade partner is more complicated than ever. Xi has made a simple calculation: He has signed bilateral agreements with the governments of EU member states that are dissatisfied with the European Union as a whole, thus preventing the bloc from presenting a united front when making demands of China.
Italy, for example, has become a boon for a China. It is the first great EU industrial nation to break with its fellow EU member states. In Xi's presence (pictured), Prime Minister Giuseppe Conte signed an agreement pledging Italy's participation in China's Belt and Road project. Economic Development, Labor and Social Policies Minister Luigi Di Maio gleefully announced that Italy had inked deals with China that could be worth €20 billion ($22.5 billion). This concerns German officials. "If some countries believe that they can do clever business with the Chinese," Foreign Minister Heiko Maas told a newspaper, "then they will be surprised when they wake up and find themselves dependent." But Italian officials are apparently happier to be dependent on faraway China than on the EU bureaucracy in Brussels.
As a goodwill gesture, French President Emmanuel Macron invited German Chancellor Angela Merkel and European Commission President Jean-Claude Juncker to his talks with Xi, though that made little difference to EU officials. Macron said he expected China to "respect the unity of the European Union and the values it carries in the world." And then his government signed 14 cooperation agreements worth €40 billion. About €30 million of that will go to Airbus, an EU company, but the rest will go to France, for strategic ventures such as air and space technology and atomic energy.
The German government also has its own agenda. Last year, companies exported goods worth €93 billion to China — way more than France's €21 billion and Italy's €19 billion. The Italian government now wants to catch up, however. Merkel has said she would find it better if the EU were to present a united front, but she also knows full well that the member states that were forced to introduce austerity and privatization measures to preserve the value of the euro have come to see cooperation with China as more of an opportunity than a threat. She also knows that China made the most of the European Union's failure to invest in ports, railways and roads. And the "16-plus-one" summit has allowed China to engage with governments in Central and Eastern Europe. Johannes Hahn, the European commissioner responsible for enlarging the bloc, recently said the EU had "overestimated Russia and underestimated China" in responding to rival influences in the Balkans.
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'Basis for discussion'
Distracted by the financial crisis, by Brexit and the crumbling trans-Atlantic relationship with the US under President Donald Trump, the European Union forgot to take care of its less-satisfied member states and will now struggle to develop a common China strategy. Moreover, the situation has not been made easier by the fact that some European commissioners view intra-EU competition as more important than safeguarding the bloc's position as a whole vis-a-vis powerful rivals such as China. Otherwise, the European Union would never have rejected the merger of Siemens and Alstom, which could have provided a counterweight to China's state railway giant, CRRC.
EU officials have finally understood that state and businesses work hand in hand in China. But the bloc can still stand up to China. Last week, the European Commission issued a draft "common declaration" ahead of the upcoming EU-China summit on April 9 stating that the bloc would take a "more realistic" and "assertive" approach to a "systemic rival." EU officials say they intend to examine China's investments more closely, especially when it comes to adhering to environmental and labor standards. The paper, however, is just a "basis for discussion" and not legally binding.
The European Union will not be able to convince the governments of dissatisfied member states such as Hungary, Greece and Italy to toe a "common" line by wagging the finger and imposing paralyzing bureaucratic measures. If EU officials want to prevail over China, they will have to react to challenges faster and invest more funds. They also must show their counterparts in Beijing that a united EU can be an important partner in disputes against countries such as the US when negotiating trade agreements, dealing with Iran or in the fallout over reports that the Chinese company Huawei, the world's biggest telecoms network specialists, had spied on users. Preaching is not enough, however. Negotiations and a decisive common political agenda could convince the Chinese that they are better off dealing with a strong European Union than they would be with a weakened one.
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At the meeting in France, for example, all parties present agreed on measures to shift the agenda of the World Trade Organization and adhere to the 2015 Paris climate change agreement. On these issues, EU officials have more in common with their Chinese counterparts than they do with the Americans at the moment. But EU politicians have not really capitalized on this. To cooperate with China would not mean to turn away from the United States completely, but simply to choose a partner that will help defend the EU's interests. This should be obvious, but that seems to be difficult for EU officials to grasp.