Xinjiang sanctions threaten China-EU investment agreement

April 01, 2021 06:00
Photo: Reuters

It took years to negotiate the European Union-China Comprehensive Agreement on Investment (CAI). Now, less than three months later, it appears that it may not be approved by the European Parliament because of a bitter row over the treatment of Uyghurs in Xinjiang.

The two sides announced the deal last December 30. “The agreement will create a better balance in the EU-China trade relationship,” the EU said in a statement. “It will provide unprecedented access to the Chinese market for European investors.” After legal review and translation, it must be approved by the EU Council and the European Parliament (EP).

Then, on March 22, the EU announced sanctions against four Chinese officials who it said had abused human rights in Xinjiang. It was the first such sanctions by the EU since the military crackdown on student-led protest in Beijing in spring 1989.

Enraged, Beijing immediately placed sanctions on a number of European individuals, including five members of the EP, and four institutions in revenge. Since then, the row has escalated.

“Claims of alleged human rights abuses are false and based on nothing but lies and disinformation,” said the China Daily in an editorial last week. “Imposing the sanctions on China to check its rise is like a mantis trying to stop a chariot by raising its forelegs. “The EU should not turn a blind eye to the development achievements of Xinjiang and the remarkable progress it has made in protecting human rights.”

Last Monday, in Beijing, Vice Foreign Minister Qin Gang summoned Nicolas Chapuis, EU ambassador to China, to protest and severely condemn the sanctions.

In response, the second, third and fourth largest groups in the EP said that, while the Chinese sanctions remain in place, they would not approve the CAI. “It is not possible to work on the ratification of the CAI while members of the parliament are under sanction,” said Marie-Pierre Vedrenne, vice-chair of its committee on international trade.

European diplomats in Hong Kong have different views on what will happen. “The CAI is the baby of German Chancellor Angela Merkel. It is German companies that would benefit the most from it. Before she leaves office in September, she wants to see it passed,” one said.

A second one said that China had misread the political mood in Europe. “The behaviour of its ‘wolf warrior’ diplomats is angering governments and the public. In any event, the CAI does more for Europeans firms than Chinese ones. The EU market is more open for them than the other way round. Perhaps Beijing has decided that it can do without the CAI.”

In an editorial last week, the Financial Times, the most influential business newspaper in Europe, welcomed the sanctions. “The mass imprisonment of Uyghur Muslims in the name of fighting terrorism is a moral outrage. What looks like a multi-pronged campaign to eradicate a whole culture demanded unambiguous repudiation by democratic powers.” It said that, by punishing members of the EP, Beijing had made it all but impossible for the legislature to ratify the agreement … Beijing may feel that it can dispense with it.”

In its statement on December 30, the EU said: “China has made significant commitments on manufacturing, the most important sector for EU investment in China. Manufacturing makes up more than half of total EU investment – including 28 per cent for the automotive sector and 22 per cent for basic materials. This includes production of electric cars, chemicals, telecoms equipment and health equipment.
“China is also making commitments for EU investments in various services sectors, such as cloud services, financial services, private healthcare, environmental services, international maritime transport and air transport-related services,” it said.

Trapped in the middle of this dispute are thousands of European companies in China. Joerg Wuttke, president of the European Chamber of Commerce in China, said that the dispute might get more heated. “More European companies are going to be between a rock and a hard place. Everyone has to service their domestic crowd.” Xinjiang produces 87 per cent of the cotton in China. Roughly one in five cotton garments in the world contain cotton or yarn from Xinjiang. Are European companies to give up cotton garments made in China?

The two narratives on Xinjiang, in China and the West, describe different planets. The one in the Chinese media speaks of rising incomes, the building of roads, railways and airports and Uyghurs finding better jobs, in the region and elsewhere in China, thanks to their new training.

The one in the West describe “training camps” where tens of thousands of minorities are forced to live and work, study Mandarin, Party history and theory, and divorce themselves from their religion and culture. The European media carry interviews with Uyghurs in exile who say they cannot contact their family members at home and describe abuses against them.

Last week the Xinjiang Production and Engineering Corps published its 2020 report. It said that, during the year, it built 19 new settlements, 17 of them in the south of the region, where non-Han account for a majority of the population.

Founded in 1954 to settle Xinjiang, it has 14 divisions and 2.6 million members. It has built 11 cities and is the biggest economic entity in Xinjiang, with at least 11 listed companies. It is a major producer of cotton, tomatoes and other farm goods. It is not subject to the regional government, but reports directly to Beijing.

-- Contact us at [email protected]

A Hong Kong-based writer, teacher and speaker.