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E.U. Shields Up Against Chinese Power

THE European Union (EU) is seeking to forge a defensive strategy towards China and is intensifying diplomacy to limit Beijing’s ability to buy foreign firms in the bloc, its top trading partner, diplomats and officials say.

Despite an agenda dominated by Britain’s imminent departure from the EU, leaders will use a March 21 summit to discuss China policy, a first for many years.

It is part of a flurry of high-level meetings before President Xi Jinping travels to Italy and France, and the bloc holds a summit with China on April 9.

The acceleration of diplomacy, including special councils of EU envoys, experts and foreign ministers, marks a collective re-evaluation of Sino-EU ties after decades of rising trade and a feelgood factor towards Beijing that contrasted with the United States’ more aggressive stance.

European optimism has turned to frustration over China’s slowness to open up its economy, a surge of Chinese takeovers in critical sectors, US pressure to shun China over espionage fears and an impression here that Beijing has not kept its promise to stand up for free trade and globalisation.

Four senior EU diplomats and officials in close contact with the Chinese said they were losing hope on business issues that have been limping on for years, including almost a decade of talks on a special treaty to increase investment flows.

“The Chinese say all the right things, but when it comes to taking a decision, they delay and delay,” one senior EU official said, citing a missed October deadline for China to finalise a deal to recognise the EU’s system of protecting food names. China has also backed out of an agreement to invest in a multibillion-euro EU infrastructure fund.

With over a billion euros a day in bilateral trade, the EU is China’s top trading partner, while China is second only to the US as a market for European goods and services.

However, Chinese trade restrictions are more severe than EU barriers in almost every economic sector, according to the New York research firm Rhodium Group and Germany’s Mercator Institute for China Studies.

Chinese investments into the EU far outweigh those of EU companies in China in most industries, they said.

In 2017, US President Donald Trump’s “America First” policies appeared to push China and Europe together after Xi’s defence of open trade at the World Economic Forum in Davos.

But Europeans say the change of style has not translated into less protectionism from Beijing.

The EU says a high-tech industrial development push, dubbed “Made in China 2025”, relies on illegal state support and subsidies that threaten European industries, including telecoms and aerospace. China has repeatedly denied such allegations.

At this month’s summit, EU leaders are likely to discuss whether it might be feasible to effectively ban Huawei Technologies Co equipment for next-generation mobile networks, although the debate in EU capitals is at an early stage. – Reuters.

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