Time for Brussels to Re-Think Stance on Beijing

Time for Brussels to Re-Think Stance on Beijing

With Brussels lawmakers preparing to reconvene this month after a long summer recess, much attention has already been directed toward an explosive bid by UK PM Boris Johnson to suspend British Parliament ahead of the 31 October Brexit deadline. Another summer flashpoint, however, is waiting in the wings. 

European lawmakers have begun to raise concerns about rapidly deteriorating relations between Hong Kong authorities and anti-China protesters amid months-long civil unrest in the city. EU governments, however, face a diplomatic tightrope: they must balance popular support for protesters at home with the very real risk of a costly retaliation from Beijing. 

A Diplomatic Tightrope

Last month, Danish opposition lawmaker Rasmus Nordqvist called on Denmark’s foreign minister to clarify domestic support for Hong Kong protesters’ demands that Chief Executive Carrie Lam formally withdraw her controversial extradition bill. Nordqvist also made a bid for an independent investigation into allegations of police violence against demonstrators. 

In response to Nordqvist’s request, Danish Foreign Minister Jeppe Kofod called on the Hong Kong government to engage with the city’s discontents, while respecting freedom of speech and assembly. While he cited a European Parliament resolution calling for civic dialogue, Kofod’s response, and that of the Danish government, to rising tensions was lukewarm at best. 

According to Andreas Bøje Forsby, researcher at the Nordic Institute of Asian Studies in Copenhagen, opposition members of the Danish parliament are far more likely to voice criticism of China. “While China-critical voices have been more widespread in the past couple of years,” he told Hong Kong media, the Danish government… will still generally refrain from criticising China publicly.”

Beijing, on the other hand, has been far less concerned with maintaining a neutral tone. After Brussels adopted a July resolution calling on the Hong Kong government to withdraw its extradition plans, the response from China’s foreign ministry was immediate, and scathing. 

“[The EU motion] is full of ignorance, prejudice and double standard hypocrisy,” the ministry claimed,”Do these parliament members have no sense of what’s right and wrong. Do they have minimum moral conscience, and do they have the basic concept of the rule of law?”

Europe’s Appetite for Chinese Capital

European leaders’ reluctance to rock the boat on the issue of Hong Kong independence is tied to the bloc’s long-time strategy of Beijing appeasement, especially when courting a seemingly limitless flow of Chinese capital. 

There can be no doubt that China has proved an economic windfall for Europe: the two sides of the continent exchange some €1 billion in goods and services per day, and Chinese foreign direct investment (FDI) has increased by almost 50 times in less than a decade. From China’s perspective, Europe is a paradise of new technologies, high-tech assets and entrance to third markets via European networks; for many European economies still struggling to recover from the Eurozone crisis, Chinese cash has been manna from heaven. 

Throughout Southern Europe, Chinese investors have successfully leveraged economic strife to secure a piece of the region’s large privatisation of major assets and post-crisis restructuring efforts. In Italy, Chinese FDI is fast approaching €5 billion, akin to ten percent of China’s total investment in the European stock market. In Greece, the Beijing-owned enterprise giant COSCO Holdings Company now sits on a 67 percent stake in the port of PIraeus, shortening shipping times for Chinese goods by one week. 

Still, perhaps no European country has welcomed Chinese cash as enthusiastically as Portugal. Inflows to the former maritime empire will soon exceed €9 billion, with Beijing investing in a broad range of strategic assets such as transportation, oil, electricity, health and insurance, and real estate in the wake of the 2010 financial crisis. 

But Is It Worth It?

Impressive economic metrics aside, China’s ascension in the region has been watched with a growing sense of unease by both public and private actors. Issues include concerns over subsidised dumping, unequal market access conditions, intellectual property concerns and alleged discrimination against EU companies in Chinese state tenders. 

Indeed, the issue of reciprocity is nothing short of a political time bomb for Brussels: the European finance, telecoms, public procurement and logistics industries have been left wide open to Chinese buyers, but their counterparts in China remain restricted to foreign investors. 

At the same time, there is a growing sense globally that Beijing may be biting off much, much more than it can chew: China’s ambitious Belt and Road Initiative is a largely debt-fuelled investment by both Chinese investors and recipient countries, and a depreciating Chinese yuan is raising alarms over the very real possibility of another debt-induced Asian Financial Crisis. Meanwhile, the true value of much-lauded logistical links between East and West are starting to look dangerously overstated

European leaders have, as yet, failed to chart a satisfactory course for the bloc’s future dealings with Beijing. While there have been some encouraging developments- Beijing was labelled a “systemic rival” earlier this year, the European Commission crafted a new framework to scrutinise Chinese investments in Europe, and reports have emerged of a new European fund to boost the homegrown technology sector- implementation is still relegated to individual states. 

Beijing might have a sharp tongue, but Brussels should be wary of kowtowing to an emperor with so dubious a wardrobe.

Joanna Eva is a London-based analyst and contributor with a range of clients in the risk consulting industry. She specializes in Asian political and economic analysis, having lived and travelled extensively in the region for close to a decade. She holds a Master of Law from the University of New South Wales and received her Bachelor of International Studies from the University of Sydney. She is proficient in English and Mandarin Chinese.

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