European Union knits together strategies to check China

The European Union set out strategies to counter state-funded Chinese takeovers and repatriate the production of semiconductors, just as the U.S. seeks to persuade the world’s biggest economies to harden their stance against Beijing.

The overlapping initiatives to push back against the Asian giant are part of a plan to ensure the bloc has more control over its future and stands up for its values. The European Commission, the EU’s executive arm, proposed measures on Wednesday on industrial strategy while the ratification of an investment agreement with China is on hold due to a tussle over tit-for-tat sanctions.

These are the latest drives that will shape EU relations with China:

Foreign State Aid

• The commission unveiled proposals to curb potentially unfair foreign state support. “We will act assertively when necessary to keep our economies working well,” Competition Commissioner Margrethe Vestager told reporters on Wednesday. Vestager said earlier that the EU needs “intrusive” rules to prevent foreign state-funded firms—such as those from China—from undercutting EU rivals.

Chip Production

• Also today, the commission will give more details about a strategy announced in March to double the region’s production of semiconductors by 2030. So far the region has been “too naive, too open” about outsourcing chipmaking to countries like Taiwan, China and South Korea, Industry Commissioner Thierry Breton said in an interview.

G-7 Coordination

• Foreign ministers from the Group of Seven nations are considering a U.S. proposal for a consultation mechanism that would involve the G-7—as well as other stakeholders—coordinating their approach to China with the aim of bolstering the resilience of G-7 nations. A paper was circulated before a two-day meeting of foreign ministers in London.

India Trade Talks

• Envoys in Brussels are discussing a draft joint statement between the EU and India announcing the resumption of free-trade talks. Commission President Ursula von der Leyen described China’s regional rival as a “democratic partner” this month following a call with Prime Minister Narendra Modi. Vestager on Tuesday described China, in contrast, as a “systemic rival.” The statement is due to be issued by EU and Indian leaders after a virtual meeting on Saturday.

Investment Pact on Hold

• The EU has paused its efforts to get member states and the European Parliament to ratify an investment deal with China, Valdis Dombrovskis, the bloc’s trade commissioner, told newswire Agence France-Presse. He blamed “the current situation, with the EU’s sanctions against China and the Chinese counter-sanctions.”

Human Rights in Hong Kong

• EU officials are discussing a ministerial statement for next week lambasting China over alleged human rights violations in Hong Kong.