EU puts up guard to Chinese firms, cools on trade deal

The European Union took steps on Wednesday to guard against economic competition from China that it deems unfair, a sign of growing distrust after Western sanctions over rights abuses and Chinese retaliation.

The bloc’s executive arm, the European Commission, unveiled plans to cut dependency on Chinese and other foreign suppliers in six strategic areas, and to limit the ability of companies supported by foreign subsidies to buy EU businesses or take part in public tenders.

EU competition chief Margrethe Vestager told a news conference there have been rules controlling state aid from European governments for 60 years, but none to stop foreign subsidies being used to buy up firms inside the 27-nation bloc.

“Europe is open for business, but come and do it in a fair and transparent manner,” she said was the message.

The Commission is also pausing efforts to promote the China comprehensive agreement on investment (CAI), recognising that it will struggle to secure backing from EU lawmakers while Beijing maintains sanctions on five of their colleagues.

The EU executive still believes the deal, struck at the very end of 2020, will help redress unbalanced economic ties. But its prospects have dimmed.

“The ratification process cannot be separated from evolving dynamics of the wider EU-China relationship and in this context Chinese retaliatory sanctions,” EU trade chief Valdis Dombrovskis told a news conference

‘BADLY MISCALCULATED’

For now, the Commission is giving the agreement a legal review and translating it into EU languages, but the European Parliament is only likely to evaluate it in 2022.