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EU-China after brexit

Event report - EU-China relations after Brexit

3 October 2016

Opening the panel discussion on 27 September, Fraser Cameron, Director of the EU-Asia Centre, recommended the book, The Politics of EU-China Economic Relations, written by John Farnell and Paul Irwin Crookes which covered a wealth of valuable material and provided very useful insights into the complexity of EU-China relations. Brexit was another complication to the relationship.

John Farnell, Senior Advisor at the EU-Asia Centre and the European Studies Centre in Oxford, said that the EU and China had an uneasy strategic partnership. The economic relationship was more equal including in terms of investment. Despite some new initiatives like AIIB and OBOR the relationship had possibly reached the limits of cooperation unless there were changes in China. The current negotiations for a bilateral investment agreement were proving difficult to conclude. Both the EU and China faced a number of common challenges including an aging society, achieving sustainable growth, coping with innovation and new technology. There were four major four major political obstacles on the Chinese side: absence of the rule of law; a nationalist view of economic management; state control of major economic sectors and uncertain commitment to economic reform. There were also obstacles on the EU side including an inability to agree on economic policy and differences in the approach of member states towards China.

 

Paul Irwin Crookes, Lecturer in international relations of China, Oxford University said there were still many uncertainties about Brexit. But it was already clear that it would impact on at least four key areas. First, the impact on investment into the UK – many Chinese companies wanted to invest in the UK to take advantage of access to the single market. Second, the impact on China and the EU, especially on trade and investment. Third, the impact on UK-China relations. How easy would it be for the UK to deal with Beijing on sensitive issues including trade and human rights? Four, the impact on transatlantic  relations, especially if there were to be rising tensions affecting US interests in the South China Sea.

 

Norbert Wunner, Acting Head of Unit, DG Ecfin, said that China’s economic progress was one of the most amazing stories in recent history. He agreed it was an uneasy relationship between the EU and China. Without domestic reforms in China it was difficult to envisage a further deepening of relations. The current growth model based on construction and high debt had to change if China wanted to avoid the middle income trap. Changes might bring about some volatility but China simply had to change. The EU had a major stake in a successful transition.

 

Counsellor Yang Xiaoguang, Chinese Mission to the EU, referred to the MES issue and said one should talk more about article 15 of the WTO protocol of accession. One should also look more at the big picture – less than 1.3% of trade was affected by anti-dumping measures. But if the EU did not grant China MES it would damage its image and lead to counter measures. It would also damage the overall relationship. China considered EU-China relations as having four major parts: peace, growth, reform and civilization. The EU and China were working together in international hot spots such as Iran, Syria, Afghanistan as well as climate change and anti-terrorism. Trade was still rising and investment booming. There were more than 2,000 Chinese companies now operating in the EU employing over 70,000 people. The EU and China were cooperating on OBOR, connectivity, digital, etc.. China was fully committed to implementing the 13th plenum reforms. The EU and China were two ancient civilizations with growing people to people ties. More than six million tourists were visiting in each direction.

In the discussion there were questions about trade, Brexit, research and development, and the investment agreement.

Fraser Cameron concluded that the relationship had developed enormously in the past decade. Now both the EU and China faced major internal challenges and these challenges had to be met before the relationship could move to the next level.