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China pledges expanded trade with EU but stops short on market access concessions

President Xi Jinping participates in a discussion with National People's Congress deputies from Hubei province on May 24, 2020 in Beijing. [Photo/Xinhua]. Sketched by the Pan Pacific Agency.

BEIJING, Sep 15, 2020, SCMP. Chinese President Xi Jinping on Monday pledged to expand agri-food imports from the European Union and cooperate on climate change – but he stopped short of making key concessions on the thorny issue of market access and hit back hard at EU criticism of human rights in China, South China Morning Post reported.

In a video call with three EU leaders aimed at patching up a relationship which has been strained by the coronavirus pandemic, Xi said he also hoped to sign a deal to protect European investors’ interests in China.

But, in a press conference after the virtual meeting, European Commission President Ursula von der Leyen could hardly conceal her disappointment – mirroring the bloc’s harder stance towards China on a range of issues. “I want to caution that a lot – a lot – still remains to be done,” she said, citing market access and sustainability.

“With market access, it is not a question of meeting halfway, it is a question of rebalancing the asymmetry and a question of openness of our respective markets,” she said. “China has to convince us that it is worth having an investment agreement.”

An agreement between the EU and China aimed at creating a level playing field and removing market access barriers for European investors in China is supposed to be concluded this year. Xi agreed to “expedite” treaty talks to get a deal completed on time and Von der Leyen confirmed that progress had been made on several other fronts, including state subsidies and state-owned enterprises.

But while the EU insists that its priority is still Chinese reform on restrictive market rules, there has been a tougher stance towards China elsewhere, with accusations that Beijing has been using the coronavirus to spread a form of “mask diplomacy”, as well as stepped up concerns over human rights violations with the new national security law in Hong Kong.

“Progress on the comprehensive investment agreement – even though there are still major obstacles to reaching a deal – is one of the only tangibly constructive developments between the two sides in the last couple of years,” Andrew Small, an EU-China expert with the US-based German Marshall Fund, said.

But he noted: “It feels less and less significant in the context of the wider shifts in the political dynamics between the two sides. The language and tone from the European side is continuing its shift into the new era, in which competition and rivalry are coming to the fore, and the areas of partnership look limited and difficult.”

The exception, Small said, was Angela Merkel, the German chancellor who also attended the summit, “holding out hopes for progress”.

“Overall, cooperation with China must be based on certain principles – reciprocity, fair competition,” Merkel said. “In the last 15 years, China has become much stronger economically and this means that the demand for reciprocity [and] for a level playing field is of course very justified today. We are different social systems, but while we are committed to multilateralism, it must be rules-based.”

Mikko Huotari, executive director of the Mercator Institute for China Studies, a Berlin-based think tank, warned European officials against focusing entirely on trade and investment while handling relations with China.

“I don’t think it’s enough to be proud of the fact that the EU is speaking out loud about what they want from China. What they lack is the action plans,” he said. “The structural focus on trade and investment is not enough – the EU needs to wake up from this.”

Without mentioning the US, Xi urged the EU, which refers to China as a “systemic rival”, to respect China’s “peaceful coexistence” with the rest of the world – the first of his four principles for the EU

“There are no two identical political systems in the world,” Xi told the summit, according to state news agency Xinhua.

Besides calling for multilateralism and dialogue, Xi also asked the EU to uphold openness when dealing with China, noting the bloc’s recent policies on foreign investment screening, next-mobile 5G technology and “competition policies” – a reference to the proposed restrictions on state-sponsored takeovers of EU assets and businesses.

In a tense exchange, the three EU leaders at the summit drew Xi’s attention to China’s human rights issues one by one – from Hong Kong, Xinjiang, Tibet, bookseller Gui Minhai and Canadians Michael Kovrig and Michael Spavor, who have been in detention in China since December 2018.

Xi hit back, saying “every country should first and foremost care about their own business”, according to Xinhua. “We believe the EU can properly resolve its own human rights problems. China does not accept ‘lectures’ on human rights and is opposed to double standards.”

The Wall Street Journal reported that Xi, at this point, began pointing out human rights issues in Europe, including anti-Semitism. EU leaders reportedly pushed back, saying China’s issues were “systemic”.

European Council President Charles Michel, who was also part of the summit, highlighted those issues during the press conference.

“The national security law for Hong Kong continues to raise grave concerns,” he said, repeating a similar point he made during his June summit with Xi. “We called on China to keep their promises to the people of Hong Kong and the international community.”

Michel said the EU “reiterated our concerns over China’s treatment of minorities in Xinjiang and Tibet, and the treatment of human rights defenders and journalists”. He asked Xi to arrange a “field visit” to Tibet for EU officials attending a Human Rights Dialogue in China later this year, while calling for access for independent observers to Xinjiang, where up to a million Uygur Muslims are reportedly incarcerated on anti-terrorism grounds.

The EU also requested that Xi release three “arbitrarily detained” foreigners: Swedish citizen Gui Minhai, as well as the two Canadians Kovrig and Spavor, whose arrests were widely considered to be in retaliation for Canada’s detention of top Huawei executive Meng Wanzhou.

Noah Barkin, an EU-China specialist at Rhodium Group, said: “The focus on Hong Kong and Xinjiang shows that values are playing an ever greater role in the relationship. European leaders face growing pressure to call Beijing out.

“In the past, human rights issues like these were discussed behind closed doors. Europe’s line on China is hardening.”

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