Beijing has accused the EU of risking damage to world supply chains by throwing up regulatory and trade hurdles to foreign businesses, warning “discriminatory” practices could strain the global recovery from the coronavirus pandemic.
The Chinese ambassador to the EU said the European Commission’s drive to sharpen its trade toolkit was seen by some businesses as heralding “more inward-looking and unilateral measures” and the creation of “new trade barriers”.
“The moves taken by the EU will also have global consequences, and such moves might create further stress to the global supply and industry chain,” said Zhang Ming in an interview with the Financial Times.
The ambassador also attacked a recent EU-US deal on steel and aluminium tariffs that seeks to restrict imports from more carbon-intensive producers including China, saying it would “aggravate the tension” in industrial supplies and worsen inflationary pressures.
The EU is engaged in what some member states argue is a long overdue effort to bolster its economic self-reliance and respond to unfair trade and investment practices spearheaded by Beijing, such as preferential treatment for state-owned enterprises and forced technology transfers. Among the lengthening list of EU tools are an anti-subsidy instrument, sharpened trade defences and a proposed due diligence mechanism aimed at unearthing labour and environmental abuses in supply chains.
The EU also in September inaugurated a new Trade and Technology Council in a bid to deepen co-operation with the US in cutting edge sectors, such as semiconductors and green technology.
Zhang declared the EU’s current push for strategic autonomy was “in line” with the union’s status as a global power and said that Beijing supported the initiative. But foreign enterprises argue a number of EU policies could have unwelcome side-effects, he said. “They cannot help with the stability of global supply and industrial chain after the pandemic as well as the world economic recovery at large,” he added.
He called on the EU to stick to World Trade Organization rules, contending that unilateral measures would distort investment in Europe and increase prices. “Such moves deviate from the original goals of trade and economic policies and are also a distortion of market principles,” said Zhang.
In the view of some businesses, he said, “there has been an increasing amount of tailor-made tools targeting other countries and their enterprises. These tools are discriminatory and are also a violation of the market principle of fairness and justice.”
The EU has been divided over how hard it should push back against the Chinese Communist party’s aggressive model of state capitalism, as it seeks to position itself between the US and China.
After concluding an investment agreement last December, Brussels put it on ice this year after Beijing imposed sanctions on several members of the European parliament. That followed EU sanctions responding to the treatment of Muslim Uyghurs in Xinjiang.
Zhang said China was ready to implement the investment deal, accusing Europe of being the obstacle to ratification. The EU should not permit “political manipulation” to get in the way, he said. “We stand ready to co-operate with partners from the European side to explore possible approaches to achieve the ratification of the agreement.”
Nato has also hardened its rhetoric on China in recent months, describing the country as a “systemic challenge”. Its secretary-general Jens Stoltenberg has said countering security threats from China will be an important part of the western alliance’s future rationale.
Zhang said China hoped that Nato “can stay within its traditional areas of functions and geographical parameters”, adding: “Do not cross the boundary with China as an excuse.”
What the international community should worry about, he continued, is the Aukus defence pact between the US, Australia and the UK. “It has the potential to intensify the risks of nuclear proliferation and might lead to a new arms race,” he said. “It is not in the benefit of global and regional peace and stability.”
Asked about US analysis suggesting China is seeking to quadruple its nuclear arsenal, Zhang pointed to the huge size of the American stockpile, saying it was 20 times as large. He also dismissed reports of Chinese tests of a nuclear-capable hypersonic weapon, saying the tests were to verify reusable spacecraft. “We will not pour resources into an unnecessary arms race,” he said.