EC adopts a strategy on cooperation with China in the upcoming 5 years

The European Union increasingly encourages China to open its market more broadly for European companies, tempting Beijing with the prospect of concluding an investment agreement, or even a free trade agreement in the future. Last Wednesday the European Commission adopted a new strategy regarding the Middle Kingdom.

China are EU’s second trade partner. Europe is indisputably the most important destination for Chinese foreign investment. In the last ten years, when the EU carried out its previous strategy towards China, the country changed a lot, more strongly defining its presence on the international arena both economically and politically. The document adopted by the College of Commissioners is a framework within which the EU outlines its expectations towards Beijing.

„The European Union and China are already cooperating on many fields related to such current global and political issues as the situation in Iran, Syria, Afghanistan, migration and climate change. However, we may and have to do more to connect the European Union and China” – declared the chief of European diplomacy Federica Mogherini, quoted in an EC communication.

The European Commission hopes that through intensifying relations with China it will be possible to boost economic growth in the”28” and also to create new jobs. “Vigorous promotion of opening the Chinese market to European companies” was also defined as an objective.

In the published report of the European Commission on an increase of economic protectionism in the world it was highlighted that China, excusing themselves with national security considerations, particularly regarding cybersecurity, limits for example access to its public procurement market and direct foreign investments.

As a result, countries from the EU do not have an opportunity to grow profits from public procurement. Of course, the EU promises benefits for changing the current approach, that is conclusion of a master agreement on investment. “Looking further into the future, one may think of more ambitious goals, such as a deepened and comprehensive free trade agreement, when an ambitious investment agreement between both of the parties is concluded and reforms levelling out chances for domestic and foreign companies are adopted” – promises the EC.

Certainly, there are still some conditions: Brussels counts on reducing excess industrial production capacity, especially in steel industry. The aim of this would be to prevent negative effects of unfair competition.

European smelting industry is presently in deep crisis due to the European market being flooded with subsidized steel from China. The EU appears to have a serious dilemma on whether to regard the country as a market economy in keeping with the WTO standards.

This December a part of China’s Access Protocol to the WTO, which enables the EU and other members of the organization to use favourable for them mechanism of calculating duties in anti-dumping proceedings towards Beijing, will expire.

According to the EC analyses, if China receives the status of a market economy without any protective measures, even 60 to 200 thousands jobs in the EU may be cut. According to predictions – in Poland this could affect 11 thousands employees.

However, the Commission have not yet made a decision on the strategy it will adopt towards the challenge. Yet, the commissioners stressed that further strengthening of trade protection instruments is key. Consent of the member states will be crucial for this.

The strategy also includes a possibility of joint actions of China and the EU on research and innovation, as well as connecting the Eurasian continent via physical and digital networks. The actions would aim to facilitate trade, investments, and human relations.

The document also contains a provision about the possibility of closer cooperation and partnership on foreign affairs and security. No one forgets the positive experience the negotiations on nuclear issues with Iran was. The EC declares pragmatic approach on this issue, but also a need for the EU to stay true to its treasured values, especially regarding international law and respect for human rights.