Dombrovskis in China + Open criticism of China’s economic direction + Tech de-risking

Given the many simmering difficult issues in the mutual relationship, EU Trade Commissioner Valdis Dombrovskis has emphasized a willingness to talk during his visit to China. At the 10th High-Level Economic and Trade Dialogue, he agreed with his new interlocutor, China's Vice Premier He Lifeng, to establish new mechanisms for talks on key issues such as market access and data regulation. Discussions on export controls were shifted to working groups to gently broach the topic and take the pressure off in an already tense situation. It also became clear that Beijing remains critical of the European "de-risking" approach.

In our new issue of MERICS China Essentials, Abiga?l VASSELIER , head of MERICS research on China’s Foreign Relations, comments, "Dombrovskis visit was a balancing act between leveraging EU’s position against the backdrop of the investigation into Chinese subsidies on electric vehicles and addressing long standing trade and economic issues. While there were no breakthroughs, it was clear that the EU is beginning to sharpen its strategy toward China at an important stage."?Read more

Dombrovskis also traveled to Shanghai to speak at the "Bund Summit". At the event, Chinese experts voiced unusually critical comments on China’s economic trajectory. MERICS expert Jacob Gunter finds the calls for an agenda that runs counter to Xi Jinping’s remarkable in light of his recent consolidation of power: “Perhaps the proponents find it worth the risk in order to influence the agenda leading into the Third Plenum this fall. But it would be quite a break from history for Xi to meaningfully reverse his current course and engage in the type of reform and opening up that he himself abandoned not so long ago.”?Read more

Tensions with China are particularly evident in the high-tech sector at the moment, with China banning its government officials from using Apple’s iPhone and state-owned enterprises being more strictly regulated in their use of foreign IT. Meanwhile in Germany, the discussion surrounding Huawei and ZTE in critical infrastructures is gaining momentum. Our experts see increased risks of "decoupling" in the tech sector: “De-risking is hard to achieve in the digital sphere,” says MERICS analyst Wendy Chang. “Our hyper-connected world makes even commercial technologies like phones potential security risks. The global tech ecosystem risks a de facto decoupling into separate markets with separate offerings.”?Read more

In this issue, we also analyze Beijing’s persistent measures to rein in civic action upon the occurrence of the trials against journalist and women's rights activist Sophia Huang Xueqin and labor rights campaigner Wang Jianbing. Katja Drinhausen, head of the Politics and Society Research Program, said: “The party remains fearful and deeply suspicious of the development of independent advocacy and action networks. Its clampdown seals off avenues which could be used to address social demands in a time of mounting economic pressure and changing social values.” Read more

Continue reading this issue of our MERICS China Essentials online here.