From discussing major trade deals to visiting pandas recently loaned to Belgium, Chinese President Xi Jinping gets busy building ties with Europe.
BRUSSELS — Some political leaders know exactly how to attract the media’s attention. Chinese President Xi Jinping is no exception: for his first visit to Belgium last week, he asked Belgian authorities to see the pandas — Hao-Hao, a female, and Xing Hui, a male — in Belgium on a 15-year loan from China.
When the pandas arrived in early April, they were welcomed as heads of state. Prime Minister Elio Di Rupo and about a hundred foreign journalists met them at the airport. The two pandas were then given a police escort to Pairi Daiza, a zoo in Brugelette, a town about 60 kilometers south of Brussels, and close to Di Rupo’s home.
The pandas had become celebrities and a favorite topic in the press even before their arrival in the country because, in a typical Belgian row between the Flemish-speaking northern region of Flanders and the French-speaking south, Wallonia, the Flemish were angry that the pandas — animals prized for their ability to draw in thousands of visitors — would go to a zoo in Wallonia rather than the older Antwerp Zoo in Flanders.
The Belgian media dubbed the issue “Pandagate,” and it made headlines for weeks. Flanders’ Minister-President Kris Peeters demanded that the government provide an explanation for why the pandas were being sent to a private zoo in Wallonia and not to the historic zoo in Flanders. Flemish politicians accused Prime Minister Di Rupo, a former mayor of Mons, a city near Brugelette, of partiality.
Media attention ratcheted up a notch on March 30, when President Xi and Belgian King Philippe, along with their spouses, inaugurated a panda house in Pairi Daiza in a show of friendship between the two countries. Some dubbed the move “panda diplomacy.”
The Chinese president’s visit in Belgium came as part of a wider tour in Europe that included trips to the Netherlands, France and Germany. While he attended the Nuclear Security Summit in the Netherlands, in Paris and in Berlin, the focus was clearly on trade.
A series of trade deals
In France, China signed an order with European aviation giant Airbus for 27 long-haul A330 and 43 smaller A320 planes — deals worth a combined $10.2 billion at catalog prices. The deal had previously been suspended by Beijing, which opposed an EU scheme forcing airlines to join a carbon emissions trading mechanism. Airbus Helicopters and China’s Avicopter also signed a joint production agreement for 1,000 helicopters.
In Germany, too, President Xi presided over a string of deals between companies of the two countries, including a $1.38 billion agreement to expand German automaker Daimler’s presence in China.
As for Belgium, a tiny country barely visible on the world map, it has become a necessary stop for foreign dignitaries because it hosts the EU institutions. Discussions between President Xi, President of the European Council Herman van Rompuy and President of the European Commission José Manuel Barroso focused mainly on the global economy and EU-China bilateral trade relations.
The European Union and China are among the world’s major traders. According to the European Commission, China is the EU’s second biggest trade partner behind the United States and the EU is China’s biggest trade partner.
In November, the two sides announced the launch of negotiations on a comprehensive EU-China Investment Agreement. Since then, two rounds of negotiations have taken place. According to the European Commission, “the Agreement will provide for progressive liberalization of investment and the elimination of restrictions for investors to each other’s market.”
The renewed trade relations opened in the context of ambitious economic reforms recently announced in China. These include the decision to further open up China’s economy to foreign investors in order to boost innovation and competitiveness. The reforms are also aimed at reducing the government’s role in the economy.
But President Xi, the first Chinese leader to visit the EU institutions in Brussels since ties were established in 1975, pressed EU officials to consider a wider trade agreement, a long-held goal for Beijing. This may reflect China’s concern about being excluded from a series of trade agreements that the EU and the U.S. are negotiating between themselves and with several other trade partners.
Europe is eager to conclude a transatlantic agreement with the U.S., but it is lukewarm about a deal with China. The EU says it first wants to ensure that China trades fairly, respects intellectual property rights and meets its obligations to the World Trade Organization. The bloc also wants to test China’s readiness to open its markets through an investment agreement before considering a wider trade agreement.
Endless trade rows but no war
Despite its misgivings, during President Xi’s visit, the EU committed for the first time to opening talks on a free trade agreement if current negotiations on an investment agreement to improve business ties are successful.
“Negotiating and concluding such a comprehensive EU-China Investment Agreement, (…), will convey both sides’ joint commitment towards stronger cooperation as well as their willingness to envisage broader ambitions including, once the conditions are right, towards a deep and comprehensive FTA, as a longer term perspective,” the two sides said in their summit statement.
Talks of a free trade deal seemed unthinkable just a year ago, when the European Commission threatened to impose punitive import duties on Chinese solar panel and wireless device companies exporting to the European market because, it said, the products were artificially kept cheap thanks to subsidies from the Chinese government. This practice, known as “dumping,” adversely affected EU domestic producers.
Beijing reacted by launching an investigation into European wine and polysilicon exports to China. The dispute, which analysts said almost led to a trade war, was recently defused after Chinese companies agreed to set minimum prices on solar panels.
More recently, the European Commission accused Beijing of imposing excessive tariffs on stainless steel tubes imported from EU countries, thereby significantly hampering their access to the Chinese market. Trade disputes between China and Europe occur regularly, with both sides blaming the other for engaging in unfair trading practices.
Nevertheless, trade experts are convinced that a real trade war between the two partners is unlikely because the economic consequences would be disastrous for both sides. According to Nicola Casarini, Asia expert at the European Union Institute for Security Studies, the recent disputes have been “mainly skirmishes aimed at finding out how far each side is ready to go in order to defend its economic interests.” In other words, they are just “tactical maneuvers.”
It seems pretty clear that both sides want to broaden and deepen access to the other’s marketplaces. Both China and the EU have something to gain from increased trade. Europe’s economy is barely growing after years of recession and some countries are suffering from record unemployment, while China’s economy — the world’s fastest growing economy over the past 30 years — appears to be cooling down. Put simply: the EU and China need each other.