Where EU-China relations are now, explained

What the EU decides to do will likely signal how hard of a line they’re willing to take going forward.

Why is trade the big-ticket item?

• Trade between the European Union and China hasn’t always been such an important issue, but because of the ongoing trade war between the United States and China, China has turned to the EU for help with filling the space the US has left behind.
• In January, as the US transitioned from the Trump to the Biden administration, the EU and China wrapped up seven years of negotiations around a trade investment deal.
• But after the trade deal was agreed to between Chinese and European leaders, a tit-for-tat sanctions battle took place between the two powers over the treatment of Uighur Muslims in China’s Xinjiang province.
• Critics of the trade deal brought up the poor treatment of Uighurs in Xinjiang as a reason for opposing it, but as part of the agreement, China said it would work toward ending forced labor. Some critics weren’t entirely convinced, with many claiming that China tends to make big promises but take little action.
• Most recently, the European parliament voted overwhelmingly to freeze the trade deal, saying that it wouldn’t even consider the bill until China lifted the sanctions on individuals in the EU and that even that wouldn’t necessarily guarantee passage.

What does that mean for China and the EU?

• This was not the outcome that Chinese President Xi Jinping had hoped for, said Craig Singleton, an adjunct China fellow at the Foundation for the Defense of Democracies, in a TMS exclusive.
• “This decision represents a major setback for China, which invested more than seven years in marathon negotiations aimed at securing the trade pact’s passage,” he said. “It is also a rare public rebuke of Chinese leader Xi Jinping, who had hoped to use the pact to drive a wedge between Brussels and Washington.”
• According to Singleton, with German Chancellor Angela Merkel set to step down later this year, it doesn’t really look like the agreement has a chance of passing any time soon.
• Tensions have also been rising around the world over whether to proceed with the 2022 Olympic Games in Beijing or whether to boycott them based on China’s treatment of the Uighur minority.
• What the EU decides to do will likely signal how hard of a line they’re willing to take going forward.

What about everyone else?

• For some other countries, the failing EU-China trade deal might open the EU up to other players. Just after it was announced that roadblocks might appear in the EU-China deal, India stepped in and agreed to restart trade talks that had ended eight years ago.
• According to Singleton, there’s a chance for the US to step in and capitalize on the tensions, “to reinvigorate economic cooperation and integration with Europe.”
• According to Singleton, we can also expect to see some pressure put on the World Trade Organization (WTO) to make reforms related to “China’s distinctive economic model and nonmarket practices, including its reliance on forced labor.”

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