Status: 04.07.2021 11:04 a.m.
The investment agreement between the EU and China should become a milestone in trade relations. Now it is on hold and creates new conflicts. Whether the contract would be a big hit is controversial.
It is actually supposed to be a great success on the way to more freedom of movement and legal certainty in trade with China. With the “Comprehensive Agreement on Investment”, CAI for short, the EU wants to improve the competitive conditions for European companies in China. Even if the ratification of the treaty has been postponed indefinitely due to the current differences, the business associations can certainly see advantages, but also dangers.
No more “forced technology transfer”?
The BDI is pleased about “the ban on forced technology transfer”, it says in a written communication. This is currently still a permanent problem that can hardly be avoided – because companies that invest in China are currently forced to use a Chinese partner. For the industry association, it is also positive that “state-owned companies in China will have to comply with the market in the future”. China accounts for 40 percent of the global chemical market and around 35 percent of the global auto market. No export-oriented company can get around this.
Nonetheless, the business associations fear that the said “forced technology transfer” could continue to occur: NGOs, political foundations, civil rights initiatives or business associations could be forced to manage an office with a Chinese passport – via a contract annex formulated by Beijing.
The Chinese authorities could still obtain confidential information via this detour. “When the European Union signs the investment agreement with China, it also ticks the problematic appendix. German industry sees this very critically,” says Friedolin Strack, Head of International Markets at BDI.
Everything for the party
For Heribert Dieter from the Science and Politics Foundation (SWP), everything in the Chinese leadership is currently subordinate to maintaining the Communist Party. Many well-known German entrepreneurs are very concerned about this. For him, this also includes China’s increased striving for self-sufficiency. If there are still problems with the national production of certain products such as semiconductors, China will open the door wide to European companies. But as soon as China achieved a high level of self-sufficiency, these companies would only be tolerated, said Dieter.
China’s new anti-sanctions law is also causing European companies more than stomach ache. With the new law, the political leadership in Beijing will in future be able to punish foreign companies if they comply with sanctions such as those imposed by the EU or the USA, which are used, for example, for human rights violations in China. “The problem is that the Chinese anti-sanctions law leaves completely open when the law should take effect. The law only formulates China’s specific national security interests very vaguely,” said Friedolin Strack from the BDI. The priority in China is maintaining the regime’s power, according to WSP expert Dieter. Foreign influence is generally considered difficult.
And so there is currently little movement between Europe and China. The EU does not want to be demonstrated by agreeing to an imprecise text of the treaty. And the Chinese leadership wants to keep all the strings in hand.