European parliamentary elections will not change tensions in relations with China

The weekend's European Parliament elections brought unexpected losses for Germany's Greens and large gains for the right. What does the vote mean for European relations with China, in particular for its companies which could benefit from better relations?

The vote is unlikely to ease the impasse over a delayed investment deal and business concerns about the country's investment environment, said Bengt Johansson, a former longtime Swedish diplomat in China, current assistant professor at the MBA Center of Shanghai University and a frequent writer on Commerce and Business in China. The election also comes amid greater Sino-European geopolitical tensions, including Russia's invasion of Ukraine, Johansson said in a Zoom interview from Stockholm. Edited excerpts follow.

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

Johansson: I didn't feel where the wind was blowing on election day. The next day, when I saw the European results, the wind was blowing in 27 different directions! Europe is not one political entity like the United States, but rather several national systems.

< position="inread" progressive="" ad-id="article-0-inread" aria-hidden="true" role="presentation"/>

The big shock, of course, was the setback 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 and Finland, we had increased participation from the Greens and the left.

Among the major countries, we see a crisis for the German government, with the Green Party having lost around half its members. France will have early elections on June 30. Macron could lose the election and lead the country as president with the opposition prime minister. This has already been tried in France and it works. However, in the European context, we consider Macron as France's representative in the European Council.

Flannery: What about the impact on relations with China?

Johansson: The European Parliament does not decide the EU's foreign policy. Of course, they are trying to gain a foothold by creating a committee for every country in the world. But it is the member states and governments that direct foreign policy and security policy. In the last revision of the European treaty, the Treaty of Lisbon, they managed to obtain the right to co-authorize all economic treaties.

However, after the EU and China concluded an investment agreement in December 2020, China sanctioned members of the Parliament's Human Rights Committee in March 2021, and since then the European Parliament is strongly opposed to treaties with China. This means that even if China goes to 27 national governments and says: Isn't it in your interest for us to sign this investment agreement? he will still not succeed in convincing the European Parliament to accept.

This is and will be the big question between the European Parliament and China. It was a mistake because China sanctioned these members, but they can't say, “Sorry, huh, forgive us, we made a mistake, as we all know.” We are therefore at an impasse.

I was recently at a meeting of the European Chamber of Commerce in Shanghai and asked if we could start the investment treaty again now, because we have a new Parliament. The leader had just gone to Brussels, spoken to the European Parliament and said no.

Flannery: What's next for the important economic and trade ties between Germany and China?

Johansson: What is decisive is how Germany will react to the anti-dumping duties on electric vehicles announced this week by the EU. I think they have come to the conclusion that they are against it. It won't be easy to overthrow him. They can count on traditional liberal countries like my country, but they will not escape France, Italy and Spain, which consider anti-dumping duties as the only means of survival for their automobile industry. The US and many other countries already have higher tariffs on Chinese than the EU. It is possible that Mr Scholz will say loud and clear that this is not a good thing. But other than that, I don't think there's much he can do.

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

Johansson: The big problem for Europeans is the Russian invasion. When it comes to the parliamentary elections, there has been a lot of speculation about who is a little more lenient towards Russia and who is not. China will come back more and more in the future. The anti-dumping tariff on electric vehicles 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 also obliged to pay Macron another visit in France, and he did so. As long as the war in Ukraine continues, Russia will be our main problem and concern.

However, the general mood here in Europe (about China among businesses) is a bit more pessimistic towards China. I recently met Swedish companies that are leaving China for different reasons than two years ago, during the pandemic, when staff contracts had expired. The recently published European Union Chamber of Commerce China Business Confidence Survey This is the most negative reading I have ever had. Investment has declined. The European Commission cannot do anything without first asking the House of the European Union whether it wants to make a decision on trade with China.

See related articles:

Global 2000: China ranks low in real estate glut and stock decline

Global 2000: Chinese glass maker benefits from auto industry boom

No, China Isn't Buying All U.S. Farmland, Says Cornell University

Fragile stability in US-China relations likely ahead of US elections (Steve Orlins)

@rflannerychina