China, which is struggling with coronary virus quarantines and real estate distress, does not want to jeopardize its economic growth by weakening its relations with the West, says an expert interviewed by .
1.4. 06:10 • Updated 1.4. 06:29
BEIJING In China, European companies are worried about the European Union threatening China with sanctions at a virtual summit on Friday.
– The atmosphere is sour. The head of the European Chamber of Commerce describes what this means at company headquarters Jörg Wuttke In Beijing.
China has not condemned Russia’s invasion of Ukraine. The United States said China would intend to support Russia militarily or violate Western sanctions on Russia.
According to Wuttke, companies are concerned that in Europe, Russia’s way of speaking will be interpreted more negatively than it seems in Beijing.
– Sanctions are always bad. They can be set easily, but there is a heavy political price involved in removing them, says Jörg Wuttke, head of the European Chamber of Commerce in Beijing, from the perspective of international companies.
China will continue to trade with Russia. It has criticized Western sanctions as illegal and ineffective. But if China were to supply Russia with goods made in the United States, it would be violating sanctions imposed by the West.
“I haven’t noticed that China is violating them,” Wuttke said.
China is calculating its relationship
Wuttke believes it is not in China’s interests to make trade with the West more difficult now that its economy is threatened by a coronary virus pandemic and the collapse of the big real estate sector.
– 60% of Russian mobile phones come from China. They have a lot of parts made in Europe and America. We have already seen that exports of mobile phones from China to Russia have halved, Wuttke says.
Wuttke describes China as trade-friendly and, to the last, practical in its relations.
– Only one country is important to China, and that is China. Russia will see a nap if it imagines China would save it from trouble. China has no interest in jeopardizing its own relationship with the European Union and the United States, he says.
Indeed, Wuttke urges to follow what China is doing – not so much what China is saying.
The war in Ukraine has overshadowed other concerns of international companies in China. European companies expected from the EU-China summit a debate on streamlining market access and name protection, perhaps even on climate issues. Now we can hardly talk much about them.
Corona quarantines are stalling trading
My biggest grief in China at the moment is coronavirus restrictions. They have paralyzed everyday life around the country, but especially in China, China’s main trading city.
It has been silenced by strict quarantine due to China’s zero tolerance. The city is closed in two parts. Many factories have had to shut down machines during shutdowns.
According to Jörg Wuttke, the lock has dire consequences.
– 30 percent of China’s GDP is currently isolated, he calculates.
This is important for the world because the distribution chain binds the whole world into one trade route. It is further disturbed by China’s latest restrictions.
If Chinese consumption falls, it will know the rise in unemployment in Europe as well. Wuttke says about half of the world’s Porsches are sold to China. They are made in Europe.
The interest rate cut in Chinese production, in turn, can be seen in a pharmacy in the home block. China manufactures more than half of the world’s medicines.
In addition to Russia, relations between the European Union and China have been tightened by an investment agreement. Its ratification is pending because of the human rights dispute over the Uighur minority in Xinjiang. The EU and China boycotted each other’s representatives. Ratification is unlikely to succeed until the dispute is settled.
According to Jörg Wuttke, President of the European China Chamber of Commerce, the continuation of the investment agreement will depend on when the situation in Xinjiang improves. The EU is concerned about the treatment of the Uighur minority. There is strong evidence of its imprisonment and forced labor, but China denies human rights abuses.
“Lithuania must make a concession in the name of Taiwan”
The big problem in EU-China trade relations is Lithuania.
China blocked imports of goods from Lithuania last year because Lithuania was approved by the Taiwan Liaison Office as the Taiwanese Representation in the capital, Vilnius.
China interpreted that Lithuania had declared Taiwan independent and cut off trade.
In European countries, the name of the embassies is Taipei instead of Taiwan. Only thirteen countries in the world recognize Taiwan as independent. According to China, Taiwan belongs to China.
The name dispute can be seen, for example, in the factories of European car brands in China. The absence of a part can cut off the entire production.
– A couple of thirty thousand parts are needed to make a car. For the automotive industry, the politicization of the production chain is a disaster, he says.
Wuttke describes the situation as really annoying. He sees Lithuania’s retreat as a solution.
– If Lithuania does not change its name, there will not be an inch of room for maneuver in the negotiations here in Beijing, Wuttke says.
Wuttke hopes that both the EU and China will remember to take carrots in addition to sticks to the summit talks.
You can discuss the topic until 11pm on Saturday.