China is increasingly decoupling from the global economy

Beijing, Berlin, Düsseldorf Mostly once a year, China’s head of state and party leader Xi Jinping gives a speech to high-ranking ministry and provincial leaders at the Central University of the Communist Party, which sets the course for the year. But this time it had a special meaning. Because the five-year plan is currently being finalized, which should set the course for the economy in the People’s Republic from March to 2025.

Foreign company representatives may not have liked what Xi said behind closed doors earlier this week. “The most essential feature of building a new development pattern is to achieve a high level of self-sufficiency and self-improvement,” says Xi. ”

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Merkel blames Trump for riots

Chancellor Angela Merkel does the incumbent US President Donald Trump for the Riots at the Capitol responsible. Trump “regrettably” still did not admit his defeat in the November election, said Merkel in Berlin. “That created the atmosphere in which such events, such violent events, are possible,” says the Chancellor. “I see this connection.”

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Iran is increasing its uranium enrichment – what that means for international diplomacy

Iran’s President Ruhani at a cabinet meeting

As part of the 2015 nuclear deal, Tehran had actually committed itself to enriching uranium to only 3.67 percent. Now the country wants to tackle an enrichment of 20 percent.

(Photo: dpa)

Berlin, Brussels, Düsseldorf A few days before the new US President Joe Biden takes office, Iran is escalating the nuclear dispute that has been raging for years. Although Tehran is betting heavily on Biden to change the Iranian course of his predecessor Donald Trump as announced, Iranian President Hassan Rouhani ramped up the controversial uranium enrichment this Monday.

The US government reacted with sharp criticism. “Iran’s enrichment of uranium in Fordo to 20 percent is a clear attempt to intensify its campaign of nuclear blackmail – an attempt that will continue to fail,” said a State Department spokeswoman in Washington on Monday.

The Iranian Revolutionary Guard also seized a South Korean tanker “MT Hankuk Chemi”. And a group of radical hardliners in the Iranian parliament demanded in a draft law that the government destroy Israel within the next 20 years.

Should this law actually get through, it would spark worldwide outrage. However, the hardline majority in the Majlis had previously forced the government to abandon the commitments in the nuclear deal. Government spokesman Ali Rabiei said on Monday that Rouhani had instructed the nuclear facility in Fordo to enrich uranium in up to 20 percent fissile material.

As part of the 2015 nuclear deal, Tehran had actually committed itself to enriching uranium to only 3.67 percent. The country kept to this until a year after Trump’s unilateral exit from the nuclear deal.

Then, however, because of the economic and financial sanctions imposed by Trump, which the vast majority of European companies were forced to join, the pressure on the Iranian government became so great that it increased uranium enrichment to 4.5 percent.

Iran – the second largest economy in the Gulf – had lost billions of dollars to the US ban on the trade in Persian oil and the ban on foreign investment.

Great concern in Brussels

The next step in the Iranian provocation comes at a time when the reform-minded Rouhani cabinet had repeatedly emphasized the hope that the US would return to the nuclear deal under Biden. The future US president had stated several times that he wanted to correct course in Iran policy. The three European states that were involved in the nuclear agreement had also called on him to do this: Germany, France and Great Britain.

Meanwhile, Iranian forces seized the South Korean tanker – allegedly because of oil pollution in the Persian Gulf, according to the semi-state news agencies Fars and Tasnim. The tanker was en route from Saudi Arabia to Fujairah in the United Arab Emirates, but was arrested in the Iranian port of Bandar Abbas.

In the past two years there had been repeated seizures or attacks on tankers and fishing boats – partly by Iran, but also on Iranian boats.

Meanwhile, there is great concern in Brussels about developments relating to Iranian uranium enrichment. “If the announcement is correct, it would be a very serious violation of the nuclear agreement,” said a spokesman for the EU Commission on Monday. “We absolutely have to avoid any step that undermines the nuclear deal.” Brussels called on Iran and all parties not to jeopardize the 2015 nuclear deal any further.

The spokesman for EU foreign affairs officer Josep Borrell also pointed out that the International Atomic Energy Agency (IAEA) had not yet confirmed the implementation of the announcement. Iran had informed the independent monitoring body, which operates under the umbrella of the United Nations, of its plans last week.

According to its own statement, the EU only wants to take further steps after it has been officially confirmed by the IAEA. In Brussels, however, it is assumed that the anti-nuclear authorities will inform the states in the course of Monday.

Rafael Mariano Grossi, Director General of the IAEA

Iran had informed the independent monitoring body, which operates under the umbrella of the United Nations, of its plans last week.

(Photo: AP)

Shortly before Christmas, the Foreign Ministers of Germany, France, Russia and Great Britain, chaired by EU Foreign Affairs Representative Josep Borrell, had a video conference with Iranian Foreign Minister Mohammed Jawad Sarif. In it, all participants reaffirmed their will to continue to preserve the nuclear agreement.

The important role of the IAEA in monitoring and verifying compliance with the commitments made by Iran was also highlighted. According to the Federal Foreign Office, the ministers agreed to continue the dialogue in order to ensure full implementation of the nuclear deal. The ministers particularly praised the prospect of a US return.

In contrast, there are voices in the European Parliament for a tough stance on Iran. “Precisely because Iran cannot be trusted, a binding agreement is needed, compliance with which is strictly monitored,” Austrian MEP Lukas Mandl (ÖVP) told Handelsblatt.

“Sanctions against Iran are the corollary of violating the agreement to a certain extent and for a certain period of time. This option must never disappear from the agenda and can be implemented at any time, ”added Mandl, who sits on the Foreign Affairs Committee of the European Parliament.

Mandl expects the new American administration under President Joe Biden to move in the direction of the EU. With greater unity, the West could then build up more pressure on the basis of strict controls to ensure compliance with the agreement.

His parliamentary colleague Reinhard Bütikofer (Greens) also has high hopes that the new US government will change course in Iran: “A full return of Iran to the nuclear agreement is only possible if the Biden administration in the US signals quickly and credibly that it is Trump Wants to correct course in Iran policy again. The EU should urge Iran not to gamble away the chance of such a reversal by escalating itself before Biden can even act, ”is his assessment.

Even under Biden there is no easy going back to the nuclear deal

The foreign policy expert also warned against Brussels going it alone. “The EU cannot work out a correct Iran policy on its own. This requires common ground with the USA, Russia and China. That is what the nuclear deal stood for. ”

Dietmar Köster, the foreign policy spokesman for the SPD delegation in the European Parliament, on the other hand, sees the danger that the nuclear deal can no longer be saved even under Biden. “Even under the new president, there will be no easy going back. The Iranian mullah regime is destroying these hopes with its announcement that it will expand uranium enrichment, ”he told Handelsblatt.

He also sees a great danger in the fact that the Iranian parliament no longer wants to allow IAEA inspections. “The Iranian regime is not only reducing the chances of a new agreement, it is also increasing the risk of war in the Near and Middle East. In particular, Israel’s security situation is affected. ”The EU’s foreign policy relationship with Iran will accordingly be under considerable strain.

More: The nuclear deal is also dead with Biden: Iran has long since created facts. A comment.

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Canada rejects acquisition of Arctic gold mine

Gold

With the acquisition of TMAC Resources, Shandong Mining would have got a gold mine and a port in Hope Bay on the Northwest Passage, the shipping route through Canada’s Arctic Islands.

(Photo: Reuters)

Ottawa The Canadian government has rejected the takeover of a raw materials company in Canada’s Arctic by the Chinese company Shandong Gold Mining. Apparently, security concerns led Ottawa to make this decision.

With the acquisition of TMAC Resources, Shandong would have got a gold mine and port in Hope Bay on the Northwest Passage, the shipping route through Canada’s Arctic Islands. China’s interest in TMAC also underscores the Arctic’s growing global strategic importance.

Canadian junior company TMAC announced Prime Minister Justin Trudeau’s government decision ahead of the Christmas holidays. TMAC is “disappointed” with the government’s decision. The transaction will not take place now, said company boss Jason Neal.

The Ministry of Innovation, Science and Economic Development, which under the “Investment Canada Act” examines applications for takeover of Canadian companies by foreign countries, did not itself publish a press release and did not want to comment because of the confidentiality required by law. Shandong Mining Co. Ltd. wanted to acquire 100 percent of TMAC Resources Inc. for 1.75 Canadian dollars per share.

That would have a market value between 200 million and 230 million Canadian dollars, the equivalent of up to around 150 million euros. The TMAC shareholders approved the takeover on June 26th with an overwhelming majority of 97 percent.

Relationship between Canada and China strained

The Chinese embassy said in a statement that Canada should “offer fair, open and non-discriminatory market conditions for companies from all over the world including China”. TMAC mines the precious metal in Hope Bay not far from the community of Cambridge Bay in its Doris gold mine.

The value of the transaction is rather low compared to other acquisitions in the raw materials sector. But the deal was politically explosive for several reasons. Canada’s relations with China have been strained since the chief financial officer of the Chinese telecommunications group Huawei, Meng Wanzhou, was arrested at Vancouver airport in December 2018 on a US extradition request.

Extradition proceedings against Meng are pending in a Canadian court. Immediately after Meng Wanzhou’s arrest, Canadians Michael Kovrig and Michael Spavor were arrested in China on charges of espionage. Canada regards this as retaliation, while China rejects any link between the two proceedings.

In addition, Shandong, which the Canadian media describe as controlled by the Chinese state, would have received a base with the takeover of TMAC in the middle of the Northwest Passage. It is expected that with advancing climate change the Northwest Passage will become navigable and thus gain in importance for international shipping.

In the narrow shipping route through the Arctic archipelago of Canada, a base could be of great strategic importance for China. It could therefore also have international significance. For Canadians, whose claims to sovereignty over the waterways in the far north are repeatedly questioned – also by the European Union and the USA – sovereignty over the Northwest Passage is a very sensitive question.

Protest

Protesters demand the release of Michael Spavor and Michael Kovrig, in Vancouver.

(Photo: Reuters)

The USA is critical of China’s Arctic policy

Therefore, even without official confirmation by the government in Ottawa, it is plausible that security and sovereignty considerations have influenced the balance between economic and national interests. This balancing must be made in accordance with the “Investment Canada Act”.

The daily newspaper Globe and Mail also reports on “pressure from the US government”. The US embassy in Ottawa initially did not comment on Canada’s decision. The US has been warning for some time that China could use civil research in the Arctic, investments in raw materials and expanding shipping as vehicles to gain a strategic foothold in the Arctic and ultimately strengthen its military presence.

US Secretary of State Mike Pompeo pointed this out in a very confrontational speech on the sidelines of the Arctic Council’s deliberations in the spring of 2019 in Rovaniemi, Finland. Pompeo sees “a new age of strategic engagement in the Arctic, with new threats to the Arctic and to all of our interests in this region”

In 2013 the Arctic Council granted China observer status. In 2018, China formulated its Arctic policy and, despite the distance between China and the Arctic, referred to itself as the “near Arctic State”. The self-designation underlines China’s interest in the region.

China wants to use the shipping routes and is interested in the raw materials of the Arctic, which include not only oil and gas, but also precious metals and technology raw materials. China sees shipping through the Arctic as the “polar silk road”.

Northwest Passage

For Canadians, sovereignty over the Northwest Passage is a very sensitive issue.

(Photo: dpa)

China’s new role in the Arctic

It is intended to help diversify trade routes and create a possible alternative to the southern maritime Silk Road through the Strait of Malacca, the Indian Ocean, Suez Canal and the Mediterranean. In its “Arctic Strategy” from June 2019, the US Department of Defense speaks of an “era of strategic competition” in the Arctic.

While China was mentioned rather marginally in earlier Pentagon documents on the Arctic, the relationship between economic initiatives and the possible resulting military presence is now described. In March 2020, Russia also underlined the importance of the Arctic for the socio-economic development of the country with a decree signed by President Putin “On the basis of the state policy of the Russian Federation in the Arctic for the period up to 2035”.

The Russian government makes it clear that the Arctic is of central geo-economic and geo-political importance for the country. Russia relies on the energy resources, metals and minerals that lie in the Arctic floor and in the sea near the coast. Investments should be made in the economic infrastructure, which is becoming even more expensive due to the thawing permafrost soil. The expansion of the military infrastructure is also a high priority.

The Canadian political scientist Rob Huebert from the University of Calgary therefore speaks of a new “strategic triangle” that is formed by the USA, Russia and China and for which he has found a handy abbreviation: NASTE, which stands for “New Arctic Strategic Triangle Environment” stands. Tensions in the Arctic are not caused by conflicts over Arctic issues, but by the rivalries of the great powers.

He sees the strained relationship between the US and Russia with the simultaneous rise of China, which challenges the US and possibly also Russia on the world stage, as a reason for new strategic and military activities in the Arctic.

It is obvious to him that for the US and Russia, the Arctic is the best starting point to strike at each other. This is one of the reasons the Arctic became “a region of overwhelming strategic importance when the US and Russia began to challenge each other’s interests in the international system”.

China is complicating the situation in the Arctic

It is not about the conflict “over the Arctic, but the use of military power from the Arctic, which gave this region its geopolitical significance”. According to Huebert, the fact that China is now calling itself the “near-Arctic state” in this strategic field and is competing with the USA and, in the longer term, with Russia as well, makes the situation even more complicated.

The historical bipolar system is now shaped by the appearance of three powers, and this makes the region “more important and more dangerous”. For TMAC, after the broken China deal, it is about securing the continued existence of the Doris mine.

It went into production in 2017, but is struggling with technical and structural problems. TMAC needs cash inflow to continue operations and repay loans. “The Hope Bay Gold Belt has considerable value,” said TMAC President Neal.

In an interview with the Nunatsiaq News published in Iqaluit, the capital of the Arctic Territory of Nunavut, he assured that the mine would not be “mothballed”. He had hoped that with the takeover by Shandong he would be able to put the mine on a secure financial basis.

He did not want to speculate about the reasons for Canada’s government rejecting the transaction, but admitted that this shows “that relations between Canada and China are currently not at all good”. The region’s Inuit organization is also counting on the Doris mine to attract the interest of domestic investors and financial institutions in view of the gold price, so that the mine can continue operations and jobs are secured for the people of Nunavut.

More: EU and China agree on investment agreements

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Portugal focuses on geopolitics

Antonio Costa in Brussels

“It is very important to develop relations with India.”

(Photo: POOL New)

Brussels, Madrid It will not be boring for Portugal when the country takes over the biannual rotating EU Council Presidency in January. His predecessor Germany inherited a number of unfinished and difficult issues – from the migration pact to the EU accession negotiations with the Western Balkans. Lisbon and Berlin have therefore been in close contact for months.

Holding the EU presidency means having enormous influence in Brussels: the respective country organizes and leads all meetings of the EU council, in which the ministers of the member states vote on legislative proposals and positions, and ensures compromises.

Each presidency also sets its own priorities, which it puts up on the political agenda. In Portugal this is geopolitics – Lisbon wants to develop economic relations with Asia and Africa. Social policy should also play an important role.

“The geopolitical agenda is at the heart of the Portuguese Presidency,” said Portuguese MEP Paulo Rangel. “It is very important to develop relations with India.” In order for the EU to become a global power, new alliances are needed, the politician demands of the conservative Partido Social Democrata. Portugal has a special relationship with the Indian subcontinent: In Goa on the Indian west coast, the country once created the first European colony.

Nicola Beer (FDP), Vice-President of the European Parliament, spoke positively about the geopolitical ambitions of the Portuguese in an interview with the Handelsblatt. Unfortunately, during the past six months of the German Council Presidency, the self-formulated geopolitical claim had not been precisely defined. Relationships must be strengthened, especially with value partners like India, in order to build a counterweight to China.

Market in Jammu, India

Talks are currently underway on a free trade agreement between Brussels and New Delhi.

(Photo: dpa)

India is the world’s largest democracy. Talks are currently underway on a free trade agreement between Brussels and New Delhi. A high-level meeting between the EU and India is planned for May.

Even Africa, where Beijing is expanding its influence with generous loans, should no longer be left to Chinese influence. Many African countries pay their debts in the form of raw materials such as copper. “The dependencies are increasing,” warns Beer. The Portuguese have not yet presented an official program, this is only to take place shortly before the start of the takeover from Germany.

It is clear, however, that social policy is a second priority. Lisbon’s goal is to strengthen Europe’s resilience and confidence in the European social model. To this end, Lisbon is proposing a social summit.

The expectations of the Portuguese Presidency are high in Brussels. However, the major European responsibility hits Portugal at a delicate time: In his own country, Prime Minister António Costa’s socialist minority government is under considerable pressure. His partners increasingly refuse to obey him.

When Costa won the elections in 2015, he caused an international rise: He ended the austerity measures of his conservative predecessors earlier than planned, but combined the lower austerity with strict budgetary discipline. Lisbon started the pandemic with a balanced budget, and unemployment halved during Costa’s first term in office. His then Finance Minister Mario Centeno became head of the Eurogroup in 2018 – that was also recognition of Portugal’s achievements.

Slovenia takes over in July

Costa was re-elected in 2019, but in the midst of the pandemic, one of his previous partners, the populist left bloc, no longer wants to support any further budget discipline. Costa only narrowly won the vote on the new budget.

But the country cannot afford a political crisis now of all times. “I don’t think there will be a government crisis during the EU presidency. That would be political suicide, ”says Isabel David, political scientist at the University of Lisbon.

Success at European level may also help at home. In any case, the self-imposed claim is great. “Portugal wants to lead a presidency that acts positively, that is flexible and able to build bridges and achieve concrete results in the economic recovery and to lead us out of the crisis”, announced the future Council Presidency in Brussels. Portugal’s presidency ends on June 30th. Then the small Balkan country Slovenia takes over.

More: Interview with Wolfgang Ischinger: “Europe must become more crisis-proof after the pandemic”

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+++ US elections 2020 +++: Trump push for higher corona aid practically hopeless: objection from the Senate

The voted out US-Präsident Donald Trump has before the turn of the year the Praised the achievements of the country under his leadership. Be there “Truly historic victories” and the US must be remembered for what it did, Trump said in a video message released Thursday. In particular, he praised the rapid production of vaccines against the coronavirus and thanked scientists, doctors and members of the military. The vaccinations would end the pandemic once and for all, Trump said.

The president went on to say that the country had coped with the corona pandemic “dramatically better” economically than experts had predicted. “Nobody can keep up with us” in terms of the less severe downturn and the rapid upswing, Trump claimed. “Whenever America is challenged, we are always up to the situation.”

Trump did not talk about the dramatic proportions of the pandemic, which continues to affect the US economy. Within a week, hundreds of thousands of Americans again applied for unemployment benefits, and according to the latest figures, around 19.6 million people in the United States receive some form of unemployment benefit. A year earlier it was only around 1.8 million.

Trump also did not mention the presidential election in his message. He emerged from it as a loser, but does not recognize the victory of his Democratic challenger Joe Biden.

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USA announces further punitive tariffs on products from Germany

Lufthansa Airbus A320

The Franco-German aircraft manufacturer Airbus and its US competitor Boeing are said to have received subsidies from their governments.

(Photo: dpa)

Washington In the dispute over subsidies for the aviation industry between the USA and the EU, Washington has announced additional punitive tariffs on products from Germany and France. Aircraft components from both countries, certain wines as well as certain cognacs and other alcoholic beverages are affected, the US trade representative said on Wednesday (local time).

In response, the aircraft manufacturer Airbus called on the European Union to act. Airbus trusts that Europe will respond appropriately to the US initiative and defend its interests, the group announced on Thursday. This also concerns the interests of all companies and industries from Europe that are affected by the unjustified and counterproductive tariffs of the USA.

The EU Commission said it regretted the announcement from Washington. With the unilateral action, the United States disrupted the ongoing negotiations to settle the subsidy conflict, a spokesman said. The EU will contact the new US administration as soon as possible to continue negotiations and find a permanent solution to the dispute.

In November, the European Union announced additional taxes on certain US products. This was preceded by a decision by the arbitrators of the World Trade Organization, according to which the EU is allowed to impose punitive tariffs on US imports amounting to almost four billion dollars (3.4 billion euros) per year because of illegal subsidies for the aircraft manufacturer Boeing.

The US government has now accused Brussels of taking unfair decisions when imposing the tariffs, which is why its own measures have to be adjusted. For example, the EU based its decision on punitive tariffs on the trade volume of the 27 EU states excluding Great Britain, which has resulted in higher retaliatory measures against the USA. “The EU must take action to redress this injustice,” said the Trade Representative.

The EU hopes that Donald Trump’s successor in the White House, Democrat Joe Biden, will agree to talks about a settlement of the subsidy dispute that has been going on for years.

More: EU welcomes Joe Biden with new punitive tariffs.

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Comment: The neglected French friend

France becomes Germany’s neglected friend

German diplomats spoke of a “Franco-German moment” that we experienced this year: together, both countries have achieved a lot in the EU. But the couple is more reminiscent of a community of convenience in which the German side in particular only invests a minimum.

Sure, there were mutual successes in 2020. The biggest was the agreement on a European fund for economic reconstruction after the Covid recession. The federal government and the French executive proposed it and enforced it against much opposition, including from the populists in Hungary and Poland. For the first time, the rule of law can be claimed in the EU.

But the Franco-German engine – the French prefer to speak of a couple, this difference speaks volumes – is head-controlled. Reflexes, as one would expect in a close partnership, are no longer there.

We experienced this more clearly in 2020 than ever after the war: During the first Corona wave in the spring, German interior ministers introduced controls at the border to France and Luxembourg without prior consultation, barred most of the crossings completely, and banned French cross-border commuters on their way back from the Work shopping in German stores. The friends had mutated into virus carriers for her overnight.

Helmut Schmidt’s deep feeling of solidarity has been lost

Federal Minister of the Interior Horst Seehofer covered the action, the oh-so-European-friendly Foreign Office looked strained in a different direction and did not feel responsible. “Minister, we never want to experience something like that again!”, A Conservative MP threw at Seehofer at a public meeting of the Franco-German Parliamentary Assembly.

The meeting started this year, and the fact that a French politician can publicly criticize a German minister shows that it opens up new leeway. One would have liked a happier occasion for this demonstration.

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Boris Johnson promises national fulfillment

British Prime Minister Boris Johnson

We are now starting a new chapter in our national history, ”said Johnson of the trade deal with the EU.

(Photo: AP)

London British Prime Minister Boris Johnson wants to promote the Brexit trade deal as a historic opportunity and national fulfillment in front of Parliament in London. The central purpose is “to achieve something that the British people in their hearts always knew that it could be done,” Johnson will say this Wednesday, according to previously published excerpts from the speech. It is a matter of working on friendly terms with our European neighbors and doing business, but at the same time maintaining sovereign control over laws and “our national fate”.

“We will now open a new chapter in our national history,” Johnson will say. “This law shows how Great Britain can be both European and sovereign at the same time.” The Prime Minister wants to emphasize the close friendship with Europe – a complete separation was never an option. “What we were looking for was not a break, but a solution – a solution to the old and annoying question of Britain’s political relations with Europe that weighed on our post-war history.”

According to the speech excerpt, Johnson also wants to address the difficult relationship with the EU. “At first we were far away, then we became a half-hearted, sometimes obstructive member of the EU,” it says there. “With this law we will now be a friendly neighbor – the best friend and ally the EU could have – working hand in hand when our values ​​and interests coincide.” At the same time, the desire of the British people will be fulfilled, among their own Laws to live. “That is the historical purpose of this law.”

The approval of the two chambers of parliament is considered certain. Late on Wednesday evening, the head of state Queen Elizabeth II is supposed to seal the trade pact with her signature.

More: Relief rally after the Brexit deal: These stocks could become big winners now

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Investment deal with China is on the home stretch

China and the EU

The EU and China intend to announce their agreement this year.

(Photo: Reuters)

Brussels, Berlin After almost seven years of negotiations, the EU and China have agreed on the text of an investment agreement, according to Handelsblatt information. “A political agreement is possible before the end of the year,” said a confidante of Commission President Ursula von der Leyen the Handelsblatt. The agreement is expected to be announced by the EU leaders this Wednesday. Commission vice Valdis Dombrovskis had achieved the breakthrough in talks with Beijing.

The Comprehensive Agreement on Investment (CAI) is intended to create improved market access for European companies in China – and thus new business opportunities in the world’s second largest economy.

The automotive and telecommunications industries, among others, benefit from this, as do banks and insurance companies as well as investors from the health sector. “The result of the negotiations is the most ambitious result that China has ever agreed with a third country,” said the commission.

“Better competitive conditions in the state-run China are of great benefit to German, European and Chinese companies,” said Managing Director Joachim Lang from the Federation of German Industries (BDI) to the Handelsblatt. However, the ability to enforce the new rights is crucial. It will probably take several months for the agreement to enter into force. Among other things, the European Parliament still has to agree.

EU Commission Vice Valdis Dombrovskis had cleared the last obstacles out of the way with China’s Vice Prime Minister Liu He. A spokesman for the Chinese Foreign Ministry spoke of “great progress”. On Monday, the EU ambassadors gave the green light for the agreement. “The work on the technical level has been completed,” said MEP Bernd Lange (SPD), chairman of the trade committee.

According to information from the Commission, the decisive factor in the agreement between the EU and China was that Beijing made commitments in the area of ​​climate protection, including the implementation of the Paris Agreement.

There has also been progress on the subject of forced labor. China has agreed to undertake “continued and sustained efforts” to promote the ratification of the fundamental International Labor Organization (ILO) convention on forced labor.

graphic

However, there was already criticism of such compromises on Tuesday: “That Europe is satisfied with such a formulation, when the Chinese leadership has just demonstrated in Hong Kong that international agreements are worth nothing to them, is a strategic own goal,” said for example Thorsten Benner from the think tank Global Public Policy in Berlin. Beijing’s concessions in the area of ​​labor rights will also be central to the required approval of the EU Parliament.

The agreement opens up new market access for EU companies, for example for electric and hybrid cars, cloud and financial services, and for investments in private hospitals in cities with more than ten million inhabitants. The agreement aims to ensure that there is no discrimination against EU companies by Chinese state-owned companies. In addition, China will be prohibited from linking the approval of investments and other benefits to the transfer of technology.

The President of the EU Chamber of Commerce in Beijing, Jörg Wuttke, spoke of a “robust agreement” that one could live with: “There is never a perfect agreement.”

That is why it was good that the German Council Presidency put so much pressure on to get a deal. And MEP Lange also praised: “The progress that has been made will improve investment opportunities, level the playing field and, above all, create more legal certainty.”

“As the first actor, EU brings China to concessions”

Michael Hüther, Director of the Institut der Deutschen Wirtschaft (IW), on the other hand, warns: “Berlin and Brussels must not be fobbed off with commitments that do not change the actual business practices.” If this change succeeds, the investment agreement would send an important signal against them many protectionist tendencies in world politics.

In addition to the central agreement with Great Britain on a follow-up agreement after the final exit from the EU, the investment agreement could mean a second breakthrough at the end of the year. “The EU is the first actor in the world that has brought China to concessions on questions of social standards,” said BDI General Manager Lang. This is a decisive step towards a “Union that is also closed on investment issues and is a strong player in shaping global rules”.

Nevertheless, it is clear on the European side: The agreement is only one building block in relations with China. CAI does not offer comprehensive investment protection outside of the existing bilateral agreements. European companies can also continue to be excluded from public tenders – this point is also not covered by the investment agreement.

graphic

Many business representatives, economists and politicians are calling for it to be further developed in close coordination with the new US administration under Joe Biden.

Beijing’s concessions on market access and on the subject of distortion of competition are of great economic importance, especially from a German perspective. Germany alone exported goods worth almost 100 billion euros to the People’s Republic this year up to and including November.

China ranks third among the largest German export destinations, just behind the USA and France. China is the EU’s most important trading partner after the USA. While trade with the US has declined significantly over the past 19 years, China’s share tripled in the same period to almost 16 percent of total EU trade.

Among other things, the conclusion of the “Regional, Comprehensive Economic Partnership” (RCEP) between 14 Asia-Pacific states, including China, gave momentum to the negotiations between the EU and Beijing. “With the conclusion of the RCEP, the USA and the EU are under pressure,” said Veronika Grimm.

Both sides have been negotiating since January 2014. Even after the political agreement, it will likely take a long time for the agreement to come into force. The translation and legal examination of the text alone should take six months to a year. The agreement then has to be discussed and adopted by the European Parliament.

EU parliamentarians criticize the haste in talks for the final deal

Above all, the sustainability chapter and employee rights are likely to be central. “The ratification of ILO core labor standards, especially against forced labor, must be binding and linked to specific steps,” calls for MEP Lange.

In Brussels, MEPs criticize the rush in reaching an agreement on the investment agreement. “For geostrategic reasons, I think it is unwise, now, shortly before Joe Biden becomes president, to implement the investment pact with China quickly,” said MEP Reinhard Bütikofer (Greens), chairman of the EU Parliament’s China delegation. “I thought we wanted to work on leaving the time of going it alone behind us.”

China will remain a system rival even after an investment agreement, said Bütikofer. He announced a detailed examination of the contract text. Non-binding promises on workers’ rights were not enough for approval: “I use our free trade agreement with Vietnam as a benchmark.” There, a step-by-step plan was agreed for the ratification of the ILO standards.

The relationship between the EU and China is anything but relaxed. Shortly before Christmas, the European Parliament brought sanctions against China because of the human rights violations there. Beijing’s attack on Hong Kong’s autonomy in particular had aroused outrage and criticism not only in the European Parliament but also in numerous member states.

More: The agreement could drive a wedge between Europe and the US.

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