Since the end of 2020, the United States and China have been vying for political and economic favor with the European Union. In December 2020, the EU and China agreed in principle to the Comprehensive Agreement on Investment (CAI). And although CAI was several years in the making, the timing of the agreement was surprising because it appeared the PRC and EU deliberately rushed to finalize a deal before then-President-elect Biden could assume office.
The European Union’s push to conclude a deal with China as quickly as possible was widely viewed as a reflection of a desire among many European Union leaders’ desire to craft trade and foreign policy more independently from the United States.
Back in February, when Biden announced “America is back” during his first address to the European Union as President, German Chancellor Angela Merkel responded tepidly by stating, “[US-EU] interests will not always converge.” During the same conference, French President Emmanuel Macron emphasized his own conception of “strategic autonomy” from the United States.
Needless to say, the United States wasn’t thrilled about the EU rushing to seal an investment deal with China, a country increasingly solidifying its position as the United States’ top geopolitical rival. US officials view CAI as being “mainly designed to please a handful of German multinational companies.”
EU leaders aren’t necessarily unified around the idea of forging closer economic ties with China either. Within the EU, the main arguments in opposition to a China investment agreement center around a fundamental mismatch in values between China and the west. Much of the western world has accused China of either genocide, crimes against humanity, and/or serious human rights violations for its repressive policies toward Uyghur Muslims in the Xinjiang Autonomous Region.
So to oversimply, in the EU, there’s essentially a pro-trade camp that views closer ties with China as strategically essential to maintaining EU political and economic interests, and there’s the anti-China camp which believes close ties with China will undermine European liberal democratic values such as human rights. Moreover, the anti-China camp argues China will eventually use its trade ties as a geopolitical weapon to undermine the EU’s foundations.
Events transpired today which revealed more mounting evidence of the EU’s schizophrenic China policy. Earlier in the day, reports surfaced that EU leaders finally agreed to suspend the CAI, and only hours later, contradictory reports emerged that the deal had not yet been suspended.
Either way, we can view the uncertainty surrounding EU-China relations as more beneficial for the US. But it also seems closer ties between the United States and EU will be underpinned more by a shared opposition to China’s rising influence than a renewed and genuine reflection of shared values between the US and EU.
Previous Notes
Current Events and Additional Reading
EU-China
China Tensions Spill Over as Europe Moves Toward Biden’s Side
A major investment deal reached in December between the European Union and China — after seven years of painful negotiations — may end up being the high-water mark for ties that are quickly deteriorating again.
Since then, the EU’s executive branch and Germany have each formulated legislation that would make life harder for Chinese entities to invest, while joining the U.S. in swapping tit-for-tat sanctions with Beijing. Italy’s government has turned from an enthusiastic backer of President Xi Jinping’s Belt and Road Initiative to blocking planned acquisitions by Chinese companies. And in France, China’s ambassador didn’t even show up when summoned in March, citing “agenda reasons.”
EU trade chief says efforts to ratify China deal ‘suspended’
The European Commission has temporarily put on hold efforts to ratify the investment agreement with China, EU Trade Commissioner Valdis Dombrovskis told Agence France-Presse Tuesday.
"We have ... for the moment suspended some efforts to raise political awareness on the part of the Commission, because it is clear that in the current situation, with the EU sanctions against China and the Chinese counter-sanctions, including against members of the European Parliament, the environment is not conducive to the ratification of the agreement," Dombrovskis told the French news agency.
EU denies it has suspended efforts to ratify China investment deal
The fate of the European Union’s investment deal with China fell further into doubt after an EU spokeswoman was forced to deny a report on Tuesday saying it had suspended the treaty’s passage to ratification.
The French news agency AFP quoted EU trade chief Valdis Dombrovskis as saying in an interview: “We have … for the moment suspended some efforts to raise political awareness on the part of the Commission because it is clear that in the current situation, with the EU sanctions against China and the Chinese counter-sanctions, including against members of the European Parliament, the environment is not conducive to the ratification of the agreement.”
US-China
The World Might Want China’s Rules
At the risk of oversimplifying, China’s preferred world order is essentially Westphalian. It emphasizes territorial sovereignty and noninterference, embraces a world where many different political orders exist, and privileges the (supposed) needs of the collective (such as economic security) over the rights or freedoms of the individual. As political scientist Jessica Chen Weiss recently put it, China seeks a world order that is “safe for autocracy,” where universalist claims about individual rights do not jeopardize the authority of the Chinese Communist Party or inspire criticism of its internal policies.
China Is a Paper Dragon
China was mentioned only four times in Joe Biden’s first address to a joint session of Congress, but it shadowed almost every line of the speech. “We’re in a competition with China and other countries to win the 21st Century,” Biden said. His aides describe the president as preoccupied with the challenge from China. “It informs his approach to most major topics and the president regularly raises it in meetings, whether he is discussing foreign policy or electric bus batteries,” CNN’s Jeremy Diamond reported. “And aides say Biden believes it is a key test by which historians will judge his presidency.”
Biden administration considering changes to China securities ban following lawsuits
The Biden administration is considering changes to Trump-era rules aimed at barring China-based companies with links to that country's military from U.S. stock exchanges, according to comments from a Justice Department lawyer in court on Monday.
The remarks from DOJ lawyer Joseph Borson came during D.C. District Court arguments over a challenge to the Pentagon's move last year to impose a prohibition on securities transactions in companies found to be affiliated with China's communist government and military. Two of the listed companies targeted by the action have sued in response, and the lawsuits have become a growing problem for Biden's Justice Department.
It's US vs. China in race to build chip technology of tomorrow
Even as the world's leading chipmakers scramble to solve critical supply bottlenecks, a new wave of semiconductor startups has been quietly lining up massive sums of venture capital in their quest to design the next generation of chips.
Startups in China and the US have been subject to a venture capital land grab from investors who believe nascent chip designs will propel a future ruled by artificial intelligence and machine learning.
Global VC investment in semiconductor companies set a quarterly record for deal value at $2.64 billion in the first three months of 2021, with 70% of the funding going toward Chinese companies, according to PitchBook data.
Photo by Christian Lue on Unsplash