Mutual gains key to China-EU economic ties
China and the EU will continue with their economic cooperation after the German election on September 24.
Be that as it may, the engagement will lead to skepticism of some European leaders on China’s growing economic dominance in the Old Continent.
German Chancellor Angela Merkel, who is likely to win a fourth consecutive term, and French President Emmanuel Macron agree that they need to be more careful on takeovers of European companies by Chinese firms as well as privatizations of critical infrastructure in Europe by Chinese State-owned enterprises. Even US President Donald Trump is occasionally on the same page on Chinese threat perception. For instance, a few days ago he blocked a Chinese-backed investor from buying Lattice Semiconductor Corporation.
While Merkel’s cautious position visà-vis China was realized last autumn, when German authorities withdrew approval for the takeover of a domestic semiconductor firm by a Chinese bidder, Macron is the latest European heavyweight leader to harbor similar views.
During his official visit in Athens at the beginning of the month, he tried to put pressure on Greek Prime Minister Alexis Tsipras to be cautious while accepting Chinese money for infrastructure projects. Tsipras defended Greece’s position by criticizing the inordinate delay and inability of European companies to submit similar lucrative offers such as their Chinese counterparts.
It is evident that the months to come will not be necessarily harmonious for Chinese investors prepared to pump money into several European countries.
Negative media coverage – with American publications leading the spin – has further worsened the situation. Harsh criticism on China seems like a routine affair and portends to be an evolving sign of a stereotype.
This leads to the big questions for the EU: whether the suspicious treatment of Chinese investors – and China on the whole – will serve its interests or not. One doesn’t need to be an expert to argue that Chinese cash is welcome with pleasure at a time when the EU economy is struggling and is falling back on its past glory to bolster its own image.
The EU – mainly its powerful economies such as Germany and France – can, of course, formulate a joint strategy on how to approach Chinese investments, which are being rapidly rolled out in the framework of the Belt and Road initiative. However, the strategy shouldn’t get play at the expense of synergies. The cooperation between China and the EU, which started to coalesce since 2015, must act as a force multiplier, despite growing fears about Beijing’s perceived political agenda to dominate Europe and divide the fragile EU.
This is the main message derived by a report of the European Bank of Reconstruction and Development (EBRD) that has been prepared by leading German economist Dr Jens Bastian.
Focusing on the Balkan Peninsula, a region where China heavily invests, Dr Bastian explored how the EBRD can better collaborate with China. While he does not downplay the importance of the EBRD to set priorities in its negotiations with Chinese companies, he believes that it’s a win-win situation for both sides.
Specifically, Chinese companies have participated in some EBRD tenders in the Balkans, for instance in Serbia, and might increase their business footprints in the future. In addition, they will have the opportunity to use the European expertise as a model to more effectively contribute to the economy in several Balkan states.
The EBRD, too, can become a key stakeholder in significant Chinese projects. China’s investments in EU and non-EU member-states are creating a healthy ecosystem for acquisitions and infrastructure innovation on an unprecedented scale.
Hurdles to Sino-European ties should not prevent dialogue on how to overcome them. In his study, Dr Bastian mentions, for example, some debt dependency on Chinese investors in the Balkans but asserts that the region remains firmly anchored in Europe. Consequently, it is a “win-win” concept for both sides as they may share the same vision of transforming Western Balkans together.
More importantly, the attention can go beyond this peninsula with the EBRD showing the way. The deepening of cooperation between EBRD and the Asian Infrastructure Investment Bank and the signing of a protocol between the EBRD and the Silk Road Fund has sprung new hopes for a broader cooperation of like-minded forces.