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EU sours on China, investment deal appears frozen over Beijing’s sweeping Xinjiang counter-sanctions

By Lucas Niewenhuis for SupChina

Published May 4, 2021

Here is a News item from SupChina’s newsletter of interest to us in Europe as they report that the proposed investment deal between the EU and China has been “suspended”. The negotiations were originally reported in full on our website earlier this year by Theresa Fallon for the Diplomat.

Here is the link:

This article begins as follows:

When the EU joined the U.S., Canada, and the U.K. in coordinated condemnation and targeted sanctions over China’s human rights abuses in Xinjiang in March, Beijing responded with a sweeping show of force.

· Many individuals — from scholars to members of the European parliament — and their family members, plus organizations ranging from Europe’s largest China-focused think tank to the EU’s Political and Security Committee, were hit by broad counter-sanctions from Beijing.

· The scope of China’s retaliation was widely seen as a significant escalation, so much so that

Chinese officials have recently “tried to downplay the significance of its sanctions and tried to prove the policies were less forceful than they appear,” according to the South China Morning Post.

But the damage to EU-China ties may be done: After Agence France-Presse reported last week, “EU suspends efforts to ratify China investment deal,” citing EU trade chief Valdis Dombrovskis, an EU official denied that the deal was “suspended” — but confirmed that it is on extremely thin ice because of the counter-sanctions.

The “suspension” could become official if, as German MEP Hannah Neumann suggested will happen, the European parliament votes later this month to put the investment deal “in the freezer” as long as Beijing keeps its sanctions in place. The deal is already “on its last legs,” says the South China Morning Post, “as MEPs unite in opposition.”

A “perfect storm” of China skepticism

While the Xinjiang sanctions and counter-sanctions may have been the catalysts for the current downward slide in EU-China relations, they are far from the only areas of increased tension.

· The “EU is now increasingly pessimistic about keeping business interests separate from political concerns over what it calls Xí Jìnpíng’s 习近平 ‘authoritarian shift,’” according to a “high-level internal report,” Politico reported last month.

· The “EU and China have fundamental divergences, be it about their economic systems and managing globalization, democracy and human rights, or on how to deal with third countries,” an April 21 letter from European Commission president Ursula von der Leyen and foreign policy chief Josep Borrell said.

· Europe’s pessimism comes from a “‘perfect storm’ of China’s assertiveness toward Taiwan, its move to impose political control over Hong Kong, and international sanctions over alleged human-rights abuses in the Xinjiang region, overlaid by the fact that China hasn’t followed through on its promises of opening up economically,” according to Joerg Wuttke, president of the European Chamber of Commerce in China.

Here is the link to the article on the SupChina website:

European Commission trade chief Valdis Dombrovskis, who told AFP that the EU-China investment deal was effectively “suspended,” before an EU spokesperson walked it back. REUTERS/Yves Herman/Pool/File Photo

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