The EU-China non-summit and the way forward

Alicia Garcia Herrero, Natixis Asia Pacific Chief Economist, Bruegel Senior Fellow

Anxiety about the EU-China summit, which ended on Monday, had been growing for some time. First, the eruption of Covid-19 was reason to cancel the physical summit -the so-called Leipzig Summit — and opt for a video conference. The reality, though, is that there was not much was there to agree upon anyway. Since the EU- China High Level Trade and Economic Dialogue ended last July without any relevant agreement and not even a communiqué, it has become clear that China’s economic policies were diverging further from the EU’s expectations.

Still, the Leipzig Summit was just too important a meeting for Chancellor Merkel; not only was it taking place under the German Presidency of the European Union, it would probably be the last EU-China Summit she would chair, having been a tenacious China fan within the EU. The Leipzig summit, summoning the 27 heads of State of the EU, could not be a better platform to finally sign a deal on the Comprehensive Agreement on Investment (CAI) between EU and China, after 7 long years of negotiations. Even more so given the previously agreed target for the CAI’s completion was 2020.

The reality though, is that the CAI was not ready for the EU and Chinese heads of State to seal, nor were there any other relevant agreements at hand, either on climate change, standards or Covid-19 cooperation. Nothing concrete worth calling this video conference an EU-China Summit. As if this were not enough of an embarrassment for Merkel as its digital host, EU institutions, both through the President of the European Council, Charles Michel, as well as the President of the Commission, Ursula von der Leyen, had to refer in their introductory statements to the thorny issues of Hong Kong and Xinjiang at the risk of embarrassing President Xi.

With such a political and highly contentious flavor for a digital summit, it has become obvious that EU-China relations have reached a new low since the turn in 2019 with the new EU-China strategy’s acknowledgement of systemic rivalry between the EU and China. Very clear proof of the distancing of the two parties as regards to the CAI, is that while President Xi insisted on the 2020 deadline remaining intact, President von der Leyen made it very clear that a good deal was more important than a speedy deal from the European perspective.

Few concessions were made from the China, or at least not those that the European leaders were expecting. Promises of more imports from Europe were made, in line with what Chinese negotiators offered US counterparts to reach an agreement for the Phase 1 deal, but no further market access, and even less so a reform of China’s economic model which the Europeans continue to describe as state-led capitalism. With such a mercantilist offer — imports instead of market access or reform — and a reminder that the EU should not meddle on China’s internal issues, whether it is Xinjiang, Hong Kong or its particular economic model, the meeting ended without any relevant conclusion. I really wonder why this EU-China digital summit had to be held knowing that positions were so far apart. It’s likely that only the US administration is rejoicing about the outcome.