The Daily Update - China Fears

Later this week Xi Jinping, the Chinese President, will visit France and Italy amid growing fears within the EU of China’s influence over the region, with the EU also believing there remains a lack of reciprocal market access. The EU would like to see greater access for European companies, fewer subsidies for Chinese companies (from China), and probably the most important of all, curtailment of technology transfer from European firms to their state-owned joint venture partners in China.

The visit to the European countries comes ahead of the important annual EU-China summit in Brussels next Thursday, to be co-chaired by Li Keqiang, the Chinese Premier and after the EU released its ‘EU-China – A strategic outlook’ study. The study includes, after years of welcoming China with open arms, its toughest dialectal yet towards China. In the document, the EU for the first time has labelled China as a ‘strategic rival’ and proposed steps the EU could take to reset its relationship with Beijing. This overhaul, the EU believes, is especially needed in the areas of foreign investment screening and 5G security.

In the report, it stated that the EU now saw China as ‘an economic competitor in the pursuit of technological leadership, and a systemic rival promoting alternative models of governance’. And with reference to the ongoing Huawei 5G scandal, it went on to say ‘5G networks will provide the future backbone to our societies and economies, connecting billions of objects and systems, including sensitive information and communications technology systems in crucial sectors’ adding ‘To safeguard against potential serious security implications for critical digital infrastructure, a common EU approach to the security of 5G networks is needed’.

To achieve a consensus going forward the EU will try a unified policy towards China. However, how successful this will be remains to be seen. The countries that make up the EU see China largely through different eyes so trying to get everyone to buy into the same approach will be a lot easier said than done.

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