Europeans value the double-edged sword of trade with China

EU exports to China have grown at a double-digit rate since the pandemic a year ago, a rare bright spot as dark as the European economic boom.

But actions in places like China’s Xinjiang and Hong Kong have made it clear to European companies that it could be a double-edged sword of trade with China, reassuring some of their ties to the world’s second-largest economy and calling on their governments. with human rights and unfair competition with Beijing a tougher line.

Since the first pandemic, China has become the EU’s largest trading partner in goods, the source of nearly a quarter of the goods imported in the bloc last year, and 10% of EU exports went the other way. Two-way trade has grown by 67% over the last decade, compared to 19% growth between the EU and other countries.

The only credible companies are the ones that leave [Xinjiang]

Therefore, China has a rapid rebound in the virus Europe has contributed to a much heavier economic blow. Data released on Friday will confirm that the eurozone plunged into a double recession in the first quarter of this year, as new blockades halted activity.

It is likely that trade, and especially trade with China, will be one of the sections of the bloc economy that is strengthening the trend.

But despite the “success story”. . . not only [in] Germany but also the rest of Europe, ”said Wolfgang Niedermark, a member of the board of directors of BDI (Germany’s main industrial association).

“It’s time to treat China as a competitor and cooperate with it and deal with such human rights when we disagree,” he said.

The incarceration of Uyghurs, Kazakhs and other Muslims in the Xinjiang region has led to US, EU, UK and Canadian sanctions, which has led to revenge Beijing did it and left some European companies in the face of discussion above their dealings. This is how the repression in Beijing took place in Hong Kong.

Niedermark said Beijing was more courageous in asserting its interests, which is, “China’s tone is different, so we need to take a different approach.”

“We no longer allow China to present itself as an emerging market that is not ready. . . to play by the same rules, ”he said.

Earlier this month, three pressure groups and a Uyghur woman interned in Xinjiang filed a lawsuit against four European and U.S. clothing manufacturers in Paris, alleging crimes against humanity for buying cotton made using forced labor in the region. about one-fifth of the world’s cotton.

“Getting cotton from that region is inherently a problem and the lack of information also makes it difficult for companies,” said Deputy Director Miriam Saage-Maass at the European Center for Constitution and Human Rights. supported The Paris case. “The only credible companies are the ones that are leaving the region.”

The ECCHR is working on similar issues in other countries, including Germany and the Netherlands.

The campaign has an impact. Hamburg-based clothing and coffee maker Tchibo has already told ECCHR that it will stop buying cotton from a Chinese company accused of using forced labor.

The dilemma is particularly serious for German companies, as increasing trade relations is largely a German story.

More than 40% of EU goods imported into China came from Germany between February and 12 months ago.

Exports to China from Germany rose 26 percent in February compared to the same month last year, when the pandemic closed a large part of China’s economy. In the same period it compares with a 1.2 per cent drop in all German exports.

The commitment of German companies will be greater; It’s Berlin organizing a law which would make them responsible for human rights violations or environmental regulations in global supply chains.

“This creates a headache for strategic departments in many companies,” Niedermark said, adding that many have asked the BDI to talk about human rights. “We should address it with our Chinese friends and we haven’t removed that.”

Volkswagen in particular is growing its face examination, As one of the only western automakers with a factory in Xinjiang. It is a sensitive issue for VW because of the use of forced labor in World War II and China’s largest market.

VW has denied that any of its employees are “forced to work”, adding that “they do not award contracts to suppliers who do not meet our requirements”. The automaker is integrating human rights into its “compliance management system” and this year “will conduct internal evaluations of entities controlled by Volkswagen in China,” he said.

The broad geopolitical environment could take these decisions into the hands of European companies, says Janka Oertel, head of the Council of Europe’s European External Relations program. Change in China autonomy in key industries He said it should be a “concern for European companies” targeting the Chinese market.

Oertel warned that it was a “dangerous opportunity” for Beijing to continue to open up the economy after the EU-China trade agreement agreed in December was suspended.

“This is bigger than individual companies,” he said. “It’s a political issue and it needs to be addressed at the European level and not at the company or country level.”

There are signs that Brussels is tightening its stance on China. The European Commission plans to announce it next week legislative powers in response to subsidies from foreign governments to distort the market, it is well known as a response to Beijing’s support for state champions.

The BDI is pushing the EU and Germany to use government procurement and investment analysis to open up China’s economy to fairer competition.

“It seems like protectionism and we don’t like it because we’ve always tried to be open,” Niedermark said. “But if no one is following us we need to increase our toolkit.”