China-EU partnership can accelerate green transition
The writer is a private professional and writes on geopolitical issues and regional conflicts
The European Union (EU) needs to tread carefully while screening the bloc’s outbound investment in China’s cutting-edge technologies for it is a “very heavy instrument”, Liesje Schreinemacher told The Financial Times. Europe’s green energy transition will be impossible without Beijing, the Dutch Foreign Trade Minister further warned.
In another rebuke to the aggressive US posture toward China, she emphasised the power to exercise economic preferences should rest with the national governments. “They (Chinese) are doing a lot on (research and development) and it would really be a shame if we decoupled fully from China,” she said.
Schreinemacher sends a powerful message: Not all countries on the European continent support the Group of Seven (G7) communiqué from the summit in Hiroshima that called for “de-risking” trade with China. That terminology represents a protectionist maneuver as part of a catch-all strategy to contain the world’s second largest economy economically and technologically.
China and the EU have generally maintained a mutually beneficial trade and technology relationship. China is one of the EU’s largest trading partners and both of them benefit from each other’s expertise in the production of technology equipment and solar panels. Beijing is also a key source of important raw materials for automakers in Europe.
America has forced the Netherlands to impose technology export restrictions on China, hoping that Amsterdam will safeguard its own national interests. The US is expecting the Netherlands to safeguard its own national interests from a country, which Amsterdam dubs as “absolutely” a priority partner. Even the US tech businesses have warned their government that the trade curbs on China could cause “enormous damage” to its own industry.
On the eve of the fourth ministerial meeting of the Trade and Technology Council (TTC) between the US and EU in Sweden on May 30 and 31, US Secretary of State Anthony Blinken, accompanied by Commerce Secretary Gina Raimondo and Trade Representative Katherine Tai, arrived with a heavy-handed approach to hard-press the European officials into taking hostile stance vis-à-vis China.
Unlike the G7, here, many countries place “reliability and trust” underneath their cultural, diplomatic, economic and political relationship with China; describe Beijing a “top-tier global actor”; don’t want to become a US “vassal”; believe it’s necessary to “seek contact proactively” with the East Asian nations China; and acknowledge they need to work with China to tackle existential global challenges. The EU members are wary of ceding their sovereign authority on export controls and outbound investment monitoring to another body as each of them has its own national interests.
Clean energy cooperation holds tremendous potential for powering Europe’s green growth through Beijing-Brussels collaboration. After building a battery plant in Germany, China’s Contemporary Amperex Technology Co Limited has already announced it will build a 100 gigawatt-hour (GWh) EV battery plant in Hungary, which will be Europe’s largest.
The $7.9 billion project, one of the biggest-ever foreign investments in the country, is expected to generate roughly 9,000 jobs. The world’s biggest EV battery maker has contracts with Ford Motor, Honda Motor, BMW, Daimler, Toyota, Volvo and Tesla. Once completed, the new plant could supply battery cells and modules to carmakers in Europe such as Mercedes-Benz, Stellantis and Volkswagen as well as accelerate the continent’s e-mobility and clean energy transition.
China has acquired an enormous solar photovoltaic (PV) manufacturing capacity — roughly 75 per cent and 85 per cent in modules and cells as of 2021, according to the International Energy Agency — on the back of its huge domestic demand and heavy investments since 2011. This allowed the country to emerge as the world’s largest renewable energy producer and offer these products to the rest of the world including Europe at economical prices — an edge hardly any other country has over high labour costs and lacking ability to manufacture panels on such a large scale.
As the EU attempted to shift from fossil fuel to sustainable energy such as wind and solar, China in 2022 exported 86.6 GW (according to the US Department of Energy, one GW is equal to 3.125 million solar panels or 100 million LEDs) of PV modules to Europe, up 112 per cent. This highlights Beijing’s critical role in the European ambitious plan to cut reliance on coal, oil and gas and fast-track Europe’s clean energy transition.
Schreinemacher comments: “We (China and the EU) need each other when it comes to making our economies more sustainable and the green transition.” This is the basic premise that guides the way to expand the fruitful Beijing-Brussels cooperation on renewable energy and technology to advance sustainable economic development and meet climate goals. Trade and technology barriers by either of them shouldn’t decelerate the hard-won gains on clean energy transition across the two continents and the world.
Published in The Express Tribune, June 7th, 2023.
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