EUROPEAN FOREIGN POLICY SCORECARD 2016

Trade and economic relations

62 - Trade and investment with China

Grade: C-
Unity 1/5
Resources 3/5
Strategy 1/5
Impact 1/5
Total 5/20

EU member states competed fiercely and openly for Chinese investment and attention

In terms of EU unity on trade and investment with China, 2015 was a bad year. The UK led the disunity, showing little restraint in its statements and bilateral initiatives. But it was not alone in this, and the case of the AIIB showed how hard it still is for the EU to build a coordinated response when China is involved.

There is a risk that the competitive atmosphere between member states could hinder the development of a collective approach towards possible investment in Europe through China’s “One Belt, One Road” (OBOR) initiative. However, Beijing announced at the EU–China summit that it would contribute to the European Fund for Strategic Investments (EFSI) via OBOR. The partners made a series of other agreements in the framework of the initiative, including on an EU–China Connectivity Platform.

There was evidence in 2015 that China has concluded that it can stall the EU on key negotiations, while moving ahead with member states either bilaterally or in groups of its choosing. For example, China once again hosted the 16+1 forum (with the countries of Central and Eastern Europe – CEE), which produced a series of investment announcements, including proposals to include the forum in the OBOR initiative and to set up a $3 billion fund to finance projects in the region. This came on top of frequent bilateral meetings between CEE and Chinese officials, and the signing of agreements with Hungary and Poland on OBOR. Beijing is reportedly lobbying for similar formats with Nordic and Mediterranean countries.

Meanwhile, China’s excess capacity in some industrial sectors had consequences for Europe. At the end of the year, the Commission again set in motion an anti-dumping action on solar panels – this time on the grounds of state subsidies rather than low prices. The EU also finally won its anti-dumping case against China on steel tubes. The coming year will be key for EU competition policy towards China, as the debate on market economy status will have consequences for anti-dumping actions and government subsidies.