German Chancellor Angela Merkel, in yet another attack on China, has warned Beijing that the European Union would be looking to diversify its markets in the Indo-Pacific region unless China opens up EU’s access to Chinese markets. This is the second setback to China in as many days in its relation with Europe as on Friday, Finland, China’s all-weather ally in Europe, dumped it very openly in favor of the United States.
Merkel’s latest statement was made at an event organized by the Asia-Pacific conference of German Businesses on Monday. Merkel urged the German companies to diversify and win new markets throughout the Asia-Pacific region. Merkel’s latest actions are in line with the abrupt U-turn on China which starts a few weeks ago.
These statements will surely hurt Chinese statements and businesses in the European Union as the EU pushes for more access to Chinese markets and wants China to stop subsidies for state-controlled companies. In addition to that, the European Union also wants a liberalized FDI regime in many sectors such as pharmaceuticals, and genetics.
The latest push from Merkel falls in line with other state policies towards China. The pandemic has revealed the dependency of current global supply lines to China. Countries are therefore hurriedly looking to source new avenues so that they could avoid another global standstill when and if China goes offline.
Japan has led the way in pulling out its businesses from China, as officially ‘87’ companies have answered the call for diversification in the region. Hopefully, Japan will serve as an example to the EU in regards to the current developments in regards to the calls for investment diversification in Asia with South Korea, Singapore and India touted as possible destinations.
Angela Merkel’s statement has been in line with Germany’s abrupt U-turn on China since another meeting on the EU-China investment deal failed to materialize into results. There have been more than thirty rounds of talks between the two parties over the past seven years, as China fails to open up its markets.
In another of her scathing attacks on China, Angel Merkel, in the recently concluded EU summit in Brussels said that “EU expects the same kind of access for its companies in China as the Chinese companies enjoy in the single market”. She warned that the European Union will start limiting access for Chinese companies if Beijing doesn’t move to provide greater reciprocity to the bloc.
Her official statement read, “If there is no market access from the Chinese side for certain areas, this will of course also be reflected in the fact that market access to the European market will be narrower.”
Germany has a big automobile market in China and thus naturally wants to expand onto other sectors but stringent measures and increased bureaucratic red tape has not allowed it to do so. Back in May, Germany-based healthy footwear brand Von Wellx, owned by Casa Everz GMBH, relocated its entire production line from China to India. This shows the seriousness of Merkel’s recent statement and also the desperation in Germany’s business circles to move away from China to other countries and shows that they can if they so do wish to.
Back in September, Germany further aggravated their ties with China when it launched its India-centered Indo-Pacific strategy. The move comes as Germany looks to play a key role in Berlin’s outreach in the region where China’s aggressive foreign policy has rattled countries. The move was met with great furor by New Delhi and expected hue and cry by Beijing. CCP mouthpiece Global Times’ retaliation almost felt like a cry for help when it started going on about the term “Indo-Pacific, not being a simple political term, nor is it value-neutral.”
Another factor that will weigh in EU-China’s relations is Merkel’s own will to leave a legacy of a strong Germany and inevitably as Chairman of European Union of a strong European Union in its position in regards to the China-EU investment deal. Merkel’s desire to leave on a strong note might leave China being strong-armed in their relations to the European Union and their long-dragged investment treaty.
China’s EU expedition seems to have been derailed by the number of issues that have been aggravated since the Pandemic. Most countries have been rightfully looking to retune their supply lines and the EU as a major global market does not wish to be left out. The move will be welcomed by other developing countries in Asia, including India which will be another kick to the chin to Chinese ambitions in the region and the world.
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