Brussels - China has launched a
charm offensive with the European Union since US President
Donald Trump took office, shifting its stance on trade
negotiations and signalling closer cooperation on a range of
other issues, European diplomats say.
European envoys in Brussels and Beijing sense a greater
urgency from China to find allies willing to stand up for
globalisation amid fears Trump could undermine it with his
protectionist "America First" policies.
"Trump is pushing China and Europe together," said one
Beijing-based diplomat, citing Chinese support for trade,
combating climate change and the United Nations, all areas where
the new US president is seeking a change of tack.
Four senior EU diplomats and officials in close contact with
the Chinese told Reuters they also see a chance for a
breakthrough on business issues that have been moving slowly for
years, including a special treaty to increase investment flows.
EU business groups are more sceptical, expressing growing
dissatisfaction, like their US counterparts, with limited
market access in China and pressing for a firmer response.
Diplomats say one of the clearest outward signs of a change
in tone in private diplomatic meetings has been China's decision
to drop its public campaign to be recognised by the European
Union as an economy directed by the market, not the state.
The case is now being dealt with out of the limelight at the
World Trade Organisation in Geneva, in what the diplomats said
was a recognition by Beijing that too much pressure could
provoke a protectionist backlash in Europe.
Market economy status would make it harder for the European
Union to impose punitive tariffs on Chinese imports that
Brussels judges as unfairly cheap.
"The market economy status issue, if it is raised at all
now, is being discussed at a very low working level," the
diplomat said. "That is part of the charm offensive."
Chinese Foreign Ministry spokeswoman Hua Chunying said the
issue was still a priority for Beijing, while also noting
China's interest in having the EU as a strong partner.
Read also: China prepares to retaliate on trade
"We hope that the EU can genuinely place an importance on
China's reasonable concerns and interests," Hua said.
China has told European officials it wants to bring forward
its annual summit with the European Union from its usual July
date, Reuters reported in February. The diplomats
said efforts to find a suitable early date were continuing.
The summit is a way, they said, for China to press home
President Xi Jinping's message at the World Economic Forum in
Davos in January, a vigorous defence of open trade and global
ties.
Investment test
European companies doing business in China say they have yet
to see the change of style translating into less protectionism
from Beijing.
But it contrasts sharply with a tense 2016 in which an
EU-China summit, overshadowed by an international court ruling
that China's claims to the South China Sea were unlawful, ended
without the usual joint statement.
Trump has changed China's calculations, diplomats said.
During his presidential campaign, Trump frequently accused
China of keeping its currency artificially low against the
dollar to make Chinese exports cheaper, "stealing" American
manufacturing jobs.
He also aims to reverse former President Barack Obama's
anti-fossil fuel strategy that China backed as it seeks to deal
with a devastating smog crisis at home.
The Trump administration has said Xi is expected to meet
Trump on April 6-7 at the U.S. leader's Mar-a-Lago resort in the
United States, although Beijing has not confirmed the talks. A
Chinese diplomat said Beijing was looking for "predictability"
from Trump.
The European Union remains cautious about the direction of
its second-largest trading partner, concerned by China's massive
steel exports, its militarisation of islands in the South China
Sea and a turn towards greater authoritarianism under Xi.
But it is looking to a bilateral investment treaty to make
it easier for European companies to do business in China and
remove onerous rules forcing them to share know-how.
Chinese direct investment in the European Union jumped by 77
percent last year to more than 35 billion euros ($38 billion),
compared to 2015, while EU acquisitions in China fell for the
second consecutive year, according to the Rhodium Group.
That illustrates the imbalance in investment between the
world's two largest markets, including, on the EU side, Britain,
where the government is pinning its hopes on a free trade deal
with China as it splits from the rest of the bloc.
An investment treaty would go some way to quiet criticism in
Europe of such unequal ties but the talks, which started in
2013, require Beijing to open sensitive sectors like technology
and financial services to private firms free of the state.
China's central bank governor Zhou Xiochuan indicated on
Sunday a substantial number of sectors would be opened up while
adding "we want China to get fair treatment
overseas".
One Chinese diplomat said the European Union was being "too
ambitious". Formal mention of the proposed China-EU treaty has
been struck from Premier Li Keqiang's work report this year,
which diplomats said risked confusing Beijing's message.
"We had hoped President Xi's speech in Davos would elevate
us from rhetoric about equal treatment towards a tangible
commitment to walk the talk," said Joerg Wuttke, president of
the European Union Chamber of Commerce in China.
Duncan Freeman, a China expert at the College of Europe
university in Belgium, said the treaty touched on the
fundamentals of how the economy worked. "That makes it very,
very difficult for the Chinese side to discuss," he said.