Europe’s biggest party set to take tougher line on China, push Taiwan investment deal

The biggest party in the European Parliament, European People's Party (EPP), is set to adopt a hardline policy on China, including an investment treaty with Taiwan and a total ban on goods "produced in re-education camps".

EPP, an umbrella grouping that includes MEPs from Angela Merkel's Christian Democratic Union, will debate the paper on Tuesday night, when it is expected to be adopted without serious opposition, party sources said.

"We support the launch of negotiations for a bilateral investment agreement with Taiwan," said the EPP paper, details of which were first reported by Politico.

While it will have no direct bearing on the European Union's policies on China – foreign policy is mostly driven by member states at the Council of the EU – the document will reinforce the parliament's harsher approach to China in recent months, particularly on trade and investment, the South China Morning Post reported.

The centre-right EPP holds 175 out of 705 seats in the legislature, 30 more than the second-biggest party, the Socialists and Democrats.

The paper calls for a start on Taiwan investment talks and for Taipei to be welcomed "to participate in WHO meetings, mechanisms and activities, particularly during the pandemic". Previously, calls from countries such as Australia for Taiwan's involvement in the WHO have angered Beijing.

The 2015 edition of the EU's "Trade For All" policy paper was designed to "explore launching negotiations on investment" with Taiwan, but this was dropped from the most recent edition, released in February.

The EPP document lent cautious support to the EU-China investment deal signed in December, saying it would "provide more reciprocity in market access, contribute to level the playing field".

But the paper also described the EU's approach to China as "outdated" and was fiercely critical of China's "disregard for the multilateral system and international agreements, spread of Chinese malign influence, failure to live up to fundamental human rights obligations".

"As the EU's partner, China should respect its own international obligations, which is not yet the case. Systemic rivalry can increasingly be seen as the overriding paradigm in our relationship, however we should not disregard the need to continue dialogue with China," it said, adding that "an investment agreement itself cannot resolve all issues ailing our economic and political relationship".

The paper builds on an EPP position paper from September, which called for Brussels to "reshape" ties with Beijing. However, the previous document did not contain policy recommendations and was milder in tone, analysts said.

The updated position calls for the EU to follow the United States in banning "imports of products from companies taking advantage of forced labour", while "products produced in re-education camps should be banned from EU markets as well" – a big shift from last year's position.

China has denied allegations of widespread persecution and detention of Uygurs and other ethnic minority groups in its far western region of Xinjiang.

"What is striking is that the EPP is now joining ranks with the Greens and other political groupings in the European Parliament about the rather weak commitments secured by the Commission in the EU China investment deal," said Steven Blockmans, director of research at the Centre for European Policy Studies, a Brussels think tank.

Blockmans said the "hardening in tone is a sign of the times, with the overall mood in Europe is, of course hardening" towards the Chinese government.

Other policy steps recommended in the draft document include excluding Chinese "companies deemed as a security threat" from any 5G-related ventures.

It also calls for EU-wide controls on Chinese entities investing in European media companies and a crackdown on Chinese efforts to "interfere with the curricula of Western universities to censor critical discourse and research about China".

On trade, it calls for "strict reciprocity" and a sharpening of Brussels' tools for dealing with alleged trade distortion efforts from Chinese firms. "They should mirror the restrictions European companies face in China," the draft said.

Guillaume Van der Loo, a research fellow at the Egmont Institute specialising in EU trade affairs, said it was "very unusual" for a mainstream party to come out with such a strongly worded policy paper.

"I don't think any political group is doing this frequently, so I think on its own, it is already quite something quite remarkable," he said.

The paper is largely the work of former Polish foreign minister and now influential MEP Radek Sikorski, who previously called on the EU to develop a "principled and pragmatic" foreign policy that steered between China and the US.

Roland Freudenstein, policy director at the EPP's official think tank, the Wilfried Martens Centre for European Studies, said the conciliatory tone on the investment deal and the harder line on human rights represented the party's "big tent" of views on China.

But for the party's mainstream, the coronavirus pandemic helped move the needle on the perception of China, he said.

"The needle has moved pretty far, and I would say the main change factor in 2020 was Covid-19 and everything that happened around it. There had been a more gradual change in the mood in Europe in the years before, but the pandemic accelerated it," Freudenstein said, adding that rows over mask diplomacy and China's trade actions against Australia helped sour perceptions.