Why the European Union nearly walked out on its talks with China
Apr 10, 2019
Photo: Reuters
Stuart Lau andKeegan Elmer

Two days before Chinese Premier Li Keqiang set off for Brussels to attend Tuesday’s summit with European Union leaders, Chinese diplomats were getting desperate.

They were struggling to get their EU counterparts back to the table to agree on a joint statement to be released at the end of the meeting between Li and EU leaders.

The two sides were able to draft a statement at the last minute, but not before European negotiators initially threatened to walk out from the discussions.

The rare show of hostility, diplomats said, reflected the EU’s impatience with China’s lack of solid promises or follow-through on when and how it would deliver the market reforms the bloc had been waiting for years to see.

Once an advocate for closer ties with China, the EU might have been inspired by Donald Trump in pressuring China to secure better trading terms, according to analysts.

Donald Tusk, president of the European Union, and Chinese Premier Li Keqiang arrive at the EU-China summit in Brussels on Tuesday. Photo: Geert Vanden Wijngaert/Bloomberg

A more assertive Europe began to show its face weeks before the summit.

The EU published “EU-China: A Strategic Outlook” on March 12, unprecedentedly slamming Beijing as a “systemic rival.”

The report was out just ahead of Chinese President Xi Jinping’s European tour, which China hoped would be highlighted by Italy’s grand entrance to Beijing’s infrastructure megaproject, the Belt and Road Initiative.

But China also got a dressing-down from France, the other country Xi was visiting.

“The period of European naïveté is over” when it came to handling China, President Emmanuel Macron said just a few days before hosting Xi.

Berlin is also increasingly regarding Beijing as a rival. Germany's main business lobby, the BDI, has also recently started describing Beijing as a “systemic competitor.”

“The east wind has been blowing quite strongly, and more recently, it’s been smelling a bit foul too,” said Reinhard Bütikofer, a member of the European Parliament who serves as a deputy chair of the European Parliament delegation for relations with China.

“Now we need a stronger west wind. This is what you will hear all around Europe these days.”

An official removes a stone from the red carpet ahead of the arrival of Chinese President Xi Jinping at the National Assembly in Paris in March. Photo: EPA-EFE/Francois Mori

This is not to say that China has no EU allies. For instance, the Greek deputy prime minister Yannis Dragasakis told the South China Morning Post that he hoped that the EU would build a better relationship with China.

Still, this time around the team responsible for China affairs in the European Council was determined to stay firm, at one point threatening to pull out of the negotiations.

They later decided to keep the talks going, with some European diplomats lobbying in favor of a joint statement, but pressed the Chinese delegation further on the timeline of its reform policies.

The Chinese team came back with three revised editions on Friday, Saturday and Sunday, the Post learned.

“If we can get a joint statement, why not?” a diplomat told the Post. “For the Chinese, having a joint statement is an important thing.

“For Europe, it doesn’t matter to us as much as to them, but it would be a good opportunity to cover the topics we’d like to.”

Another diplomat with knowledge of the negotiations said that the EU side insisted their Chinese counterparts secure approval from Beijing’s top leadership on revisions Europe would deem acceptable.

The east wind has been blowing quite strongly, and more recently, it’s been smelling a bit foul too
- Reinhard Bütikofer, European Parliament member

“The ability to get a deal has a lot of symbolism for China, especially at a time when China hopes to show partnership with the EU amid a trade war with the US,” said Mikko Huotari, deputy director of Germany-based think tank the Mercator Institute for China Studies.

While China gained the symbolism it wanted, Huotari said, Europe secured concrete timelines on Chinese reforms – timelines that Beijing for years had refused to offer.

At the heart of the European Union on Tuesday, Li, accompanied by European Council President Donald Tusk and European Commission President Jean-Claude Juncker, disclosed China’s timetable for reforms for the first time.

By the end of this year, China and the EU will agree on a list of geographical indications, a scheme EU has been pushing for to protect its farmers. Products whose qualities are linked to their specific geographical origin, for example Champagne or Parmesan, will be given special labels and protections.

Visitors inspect new Mercedes-Benz cars at the 2018 Beijing International Automotive Exhibition in April. China has agreed to sign an investment deal with the European Union by the end of 2020. Photo: Simon Song

More important to the EU, though, is China’s agreement to sign a long-overdue investment deal by the end of 2020.

Jo Leinen, chair of the European Parliament’s delegation for relations with China, regarded these promises as a consequence of the EU’s tougher stance.

“We see much clearer that the former win-win situation is turning into a win-lose situation,” he said. “China moved, in a few areas, and again made promises in other areas.

“So it’s a mixture of taking a step forward, and giving us the hope that other steps will follow,” Leinen added.

If the investment deal is implemented, according to the joint statement, “the high level of ambition will be reflected in substantially improved market access [and] the elimination of discriminatory requirements and practices affecting foreign investors.”

Guarantees aside, EU diplomats remained skeptical. “Whether it’s too good to be true – only time will tell,” one said.

Stuart is a contributor to Inkstone. He is a freelance journalist for the South China Morning Post and the BBC, and an analyst at the Lowy Institute.
Keegan is a contributor to Inkstone. He is a reporter at the South China Morning Post covering China in world affairs.