European Parliament elections will not alter the strain in China relations

The weekend elections for the European Parliament brought unexpected losses for Germany’s Greens and wide gains for the far-right. What is voting for European relations with China, especially for its institutions that could benefit from better relations?

The vote is unlikely to ease the stalemate over a delayed investment deal and concerns among businesses about the country’s investment climate, said Bengt Johansson, a longtime Swedish diplomat in China and current adjunct professor at Shanghai University’s MBA Center, a frequent visitor. Writer on Trade and Commerce of China. The election comes amid larger Sino-European strains in geopolitics, including Russia’s invasion of Ukraine, Johansson said in a Zoom interview from Stockholm. Edited sections follow.

Flannery: What do you think of the overall results of the European Parliament vote over the weekend?

JOHNSON: I don’t know where the wind is blowing on Election Day. The next day when we saw the European results the wind was blowing in 27 directions! Europe is not a single political system like the US – it is a multi-national system.

The big shock, of course, is the backlash for Macron in France and the Green Party and other ruling parties in Germany. However, the wind blew differently in smaller countries. In the Nordic countries – Sweden, Denmark, Finland, we had strengthened green and left participation.

In key countries, we see a crisis for the German government as the Green Party loses half of its members. A snap election will be held in France on June 30. Macron could lose the election and run the country with a prime minister from the opposition. It has been tried before in France and it works. However, in the EU context, we count Macron as France’s representative in the European Council.

Flannery: How is the relationship with China affected?

Johansson: The European Parliament does not decide the EU’s foreign policy. They try to establish a foothold by establishing a group for every country in the world. But it is member states and governments that drive foreign and security policy. In the Treaty of Lisbon, the last amendment to the EU Treaty, they were able to obtain the right to ratify all economic agreements.

However, after the EU and China launched an investment agreement in December 2020, China allowed members of the parliament’s human rights committee in March 2021, and since then the European Parliament has been dead set against deals with China. I mean, China goes around 27 national governments and says, „Isn’t it in your best interest that we sign this investment agreement?” Even if you say that. It still cannot get the European Parliament to agree.

This is – and will remain – the big issue between the European Parliament and China. It was wrong because China allowed those members in, but China cannot say, „Sorry, forgive us, we all know we made a mistake.” So we are deadlocked.

I was recently at a meeting of the European Chamber of Commerce in Shanghai and asked if we could start an investment treaty now that we have a new parliament. The president had been to Brussels, spoke to the European Parliament, and he said „no”.

Flannery: What now for Germany’s macroeconomic and trade relations with China?

JOHNSON: The deciding factor is how Germany will react to the anti-dumping duties on electric vehicles announced by the EU this week. I think they have come to the conclusion that they are against it. It will not be easy to topple. They may trust traditionally liberal countries like mine, but they won’t get around France, Italy and Spain, who see anti-dumping tariffs as the only way their car industries can survive. The US and many other countries already impose higher taxes on the Chinese than the EU. This is a wrong move, said Mr. Scholes can speak loud and clear. But other than that, I don’t think he can do much.

Flannery: The French under President Macron have certainly tried to build a special relationship with President Xi and China.

JOHNSON: The big problem for the Europeans is the Russian invasion. Looking ahead to the parliamentary elections, there was a lot of speculation about who was a bit too soft on Russia and who wasn’t. China will come even more in the future. Anti-electric vehicle tariffs will be the first big issue this week. If Xi visits Serbia and Hungary, the rest of Europe will notice but not care. He was forced to pay a return visit to Macron in France, and did. As long as the war in Ukraine continues, Russia is our biggest headache and worry.

However, the overall mood in Europe (regarding China in trade) is a bit pessimistic towards China. I recently met with Swedish companies that were leaving China for different reasons than when employees’ contracts expired during the pandemic two years ago. Recently released European Union Chamber of Commerce Business Confidence Survey in China The most negative reading I’ve had – investment has gone down. When it comes to decisions on trade with China, the European Commission cannot do anything without first consulting the European Union Chamber.

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@rflannerychina