China’s growing economic presence in EU causing concern

Neither is the China’s monumental, Belt and Road Initiative (BRI) much to German taste. That is a modern replica of ancient overland and maritime routes connecting East Asia with Europe and Africa. China, Germany claims, has too much control over the whole project. The German ambassador to Beijing says that his country’s companies should be able to participate as equal partners.

Interestingly, German companies don’t seem to have the same reservations. A BRI study published last February by two German business associations — Germany Trade & Invest and Association of German Chambers of Industry and Commerce — highlights “cooperation opportunities between German and Chinese businesses in sectors of infrastructure, energy and consulting.”

More seriously perhaps, German complaints about Chinese control have much broader implications. Media reports, for example, quote German authorities’ statements that the BRI serves as an instrument to establish a Chinese world order (“pax sinica”), where even the terms “free trade” and “the rule of law” have meanings different from what’s commonly understood.

China is strongly denying any such intentions. At the Boao Forum for Asia last week, China’s President Xi Jinping said that the BRI was “neither the Marshall Plan after World War II nor an intrigue of China.”

Beijing, he said, seeks “shared growth through discussion and collaboration,” advocating “inclusiveness” and opposing a “zero-sum game … mentality.” More to the point, Xi pledged that “China will not threaten anyone else, attempt to overturn the existing international system, or seek spheres of influence.”

It would not be surprising if Germany begged to differ. At any rate, Germany correctly wants to see real and meaningful measures of China’s opening up to world commerce and finance. Like some other Europeans, Germans are talking of China’s “promise fatigue,” arguing that Beijing has to reciprocate — after having greatly benefited from a fairly liberal access to German and other EU markets.

Here are the numbers.

The China’s share of EU trade has almost tripled so far this decade to 15.3 percent, slightly below America’s steadily declining share of 16.9 percent.

Last year, China ran a whopping 176 billion euro trade surplus with the EU, while the U.S. took a 120.8 billion euro deficit. In the first two months of this year, China’s EU trade surplus was running at an alarming annual rate of 213.6 billion euro, a 21.4 percent increase over last year.

Germany, by comparison, has much less to complain about: Its goods trade deficit with China remains on a steeply declining trend, falling last year to 14.2 billion euro, a 21.5 percent drop from 2016.

Still, Germany, a powerhouse of world exports, does not seem to like that. Berlin is also very worried about China’s buying spree in the heartland of its top technologies — a recent allegedly stealthy purchase of a 9.7 percent stake in Daimler (which owns the Mercedes Benz brand of cars), an 8.8 percent ownership of the Deutsche Bank, the purchase of the robotics firm KUKA and the energy management company ista.

Germans are now tightening the rules and reviews of incoming direct investments, prompting the adoption of the same procedures at the EU level.

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