There’s something increasingly ritualistic about the geopolitical standoff between the West and China. The Americans and Europeans wag their fingers at the Chinese for violating human rights in Xinjiang, democracy in Hong Kong, peace in the Taiwan Strait and so forth. The Chinese tell the Westerners to mind their own business and stop being hypocritical.
On it goes, tit for tat. Whenever Chinese diplomats feel slighted, they behave like the “wolf warriors” they think their president, Xi Jinping, wants them to be. That term comes from two action movies about Chinese hunks kicking sinister Western butts. Beijing’s message is: You can’t mess with us anymore.
Case in point: This month’s battery of mutual sanctions. In the West’s opening volley, the European Union targeted four Chinese individuals and one entity with travel bans and other restrictions. The Americans, Canadians and British imposed similar measures. Without blinking, the Chinese shot back with their own more brazen sanctions, hitting several think tanks, academics and even members of the European Parliament.
The goal of the Chinese in tussles like this is to show that they’re always ready to escalate — faster and more furiously than the West. The North Americans and Europeans, meanwhile, know that sanctions are little more than a symbolic gesture, but reckon that’s still better than no gesture at all.
And yet there’s another lever the EU could apply against China: the Comprehensive Agreement on Investment (CAI) between the two powers. Negotiated in December, this deal has yet to be ratified by the European Parliament on which China just slapped sanctions. The EP should instead take the agreement hostage.
I’ve always been against CAI. I felt German Chancellor Angela Merkel, who threw her weight behind the deal after years of stalled negotiations, was in effect snubbing Joe Biden just as he was preparing for a US presidency in which he wanted to renew the West’s alliances, not least to stand united against China. He didn’t appreciate the Europeans going off to do a deal with China instead just then.
Would the CAI be worth ratifying purely on its commercial logic? Hard to say. The agreement aims to create a level playing field between Chinese and European companies doing business with each other. And China did concede more than the EU. But that’s because Europe’s economy was already quite open toward the Chinese, whereas Beijing blatantly hobbled Western companies in China.
The CAI does address some of these problems. In several sectors, it prohibits existing requirements by Beijing that Western companies in China form joint ventures with local firms — arrangements which the Chinese have often used to pinch technologies and trade secrets. Beijing will also lift output caps on foreign makers of electric cars and some other goods. In other controversial areas, China’s promises are more blurry, notably on subsidies to its national champions.
The weakest part of the agreement, however, is a vague commitment by China to move toward — maybe, one day — ratifying the conventions of the International Labor Organization that ban forced labor. Why not just ratify? The issue here is Xinjiang, where Beijing brutally oppresses the large and mainly Muslim population of Uyghurs. Chinese equivocation on this point was a deal breaker for many members of the European Parliament even before the most recent sanctions.
As ever, the problem in the EU is that member states have diverging interests. Germany, in particular, cares a lot about its business and commercial links — for five years in a row, China has been its largest trading partner, ahead of the US (although America is still the biggest recipient of German exports).
Merkel has said she wants to avoid choosing between the US and China, lest the world revert to rigid blocs as they existed during the Cold War. In this respect, her goals overlap with Xi Jinping’s. His objective is to keep the US and the EU from ganging up against China. So he made a few concessions to get an investment deal he views as a gateway drug to other pacts. But this geopolitical motivation also means China has more to lose than the EU if the agreement fails — an asymmetry Europe can use.
Germany and the rest of Europe should remember what’s at stake: a conflict between value systems pitting Western notions about rule of law and open societies (however imperfectly those may often be observed in practice) against a Chinese model of overt autocracy. Europe cannot pretend to remain neutral in this contest. A good way to explain this to Beijing is for the EU to hold the investment deal to ransom.
Bloomberg
