Mu­tual gains key to China-EU eco­nomic ties

Global Times US Edition - - FORUM - By Ge­orge N. Tzo­gopou­los The author is a lec­turer at the Euro­pean In­sti­tute in Nice, France. opin­ion@ glob­al­times.com.cn

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.

Il­lus­tra­tion: Liu Rui/GT

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