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1 1 (June 2, 2023)

handle is hein.crs/govelvo0001 and id is 1 raw text is: Congressional Research Seri informing the legisi itive debate since 1914 The European Union and China Views within the 27-member European Union (EU) regarding the People's Republic of China (PRC, or China) have hardened and now mirror more closely U.S. and congressional concerns about China's global influence. In a 2019 position paper, the European Commission (the EU's executive body) described China as a cooperation partner with whom the EU has closely aligned objectives, a negotiating partner with whom the EU needs to find a balance of interests, an economic competitor in the pursuit of technological leadership, and a systemic rival promoting alternative models of governance. Some observers viewed the description of China as a competitor and rival as indicative of mounting frustration with China's trade and investment practices, aspirations to become a global technology leader and standard setter, and promotion of a governance model at odds with EU values. In May 2023, EU foreign policy chief Josep Borrell stated that partner, competitor, and systemic rival remained the EU's general approach to relations with China, while underscoring it would be necessary to recalibrate the three elements' relative weights based on China's actions and increasing assertiveness. EU-China relations have been tested in recent years by China's so-called wolf warrior diplomacy in Europe, use of economic coercion, alleged information manipulation and interference efforts, and continued no-limits friendship with Russia (especially since Russia's 2022 full-scale invasion of Ukraine). Some EU officials also express concern about the PRC's human rights practices and intentions toward Taiwan. In March 2023, European Commission President Ursula von der Leyen called for a sober assessment of EU-China relations. The EU has adopted or is weighing measures to bolster its economic security and democratic resilience and is advancing partnerships in the Indo-Pacific. At the same time, some European policymakers appear to be wary of U.S.-China tensions and reluctant to antagonize a major economic partner. EU officials also point to a need to cooperate with China on global challenges, such as climate change. EU- China relations are of interest to some Members of Congress given the EU's role as a key U.S. diplomatic and economic partner. Economic sues Although some European policymakers seek to sustain or deepen economic ties with China, they appear to share U.S. concerns over China's industrial policies, which have led to asymmetric trade and investment advantages for China, as well as China's growing control of certain global supply chains. EU officials also have expressed concern regarding China's use of economic coercion for political objectives. Trade and Investment Asymmetries. The EU has sought to increase market access in China for European firms and Updated June 2, 2023 investors amid PRC policies that limit foreign investment and subsidize domestic firms in strategic sectors. The EU has worked with the United States and Japan to develop approaches to counter China's subsidies, but the group has not moved to implement any specific proposals. Although a proposed EU-China Comprehensive Agreement on Investment (CAI) remains on hold (see below) and China's direct investment in Europe hit an estimated decade low of £7.9 billion in 2022, several major investment projects have moved forward, which some experts contend could set the stage for further EU-China economic integration in the medium-to-long term. For example, Airbus (a European company) announced a new investment in April 2023 that would double the production capacity of its China joint venture, and PRC electric vehicle battery manufacturers- including national champion firm Contemporary Amperex Technology Co., Limited (CATL)-have invested in battery plants based in Germany, France, Hungary, and the United Kingdom (which is no longer an EU member state). Supply Chain Measures. In September 2021, the United States and the EU launched a new Trade and Technology Council (TTC) to address a wide range of trade and technology issues, including enhancing cooperation in sectors where China controls key supply chain inputs, such as critical mineral processing and pharmaceuticals. Additionally, the European Commission in December 2020 published a regulatory toolbox for 5G network rollouts that some analysts contend could limit the ability of Chinese firms to meet the standards for participation. Several EU member states have adopted measures that limit and in some cases exclude Huawei's participation in their 5G network buildout. In March 2023, the European Commission proposed a Critical Raw Materials Act to address the EU's reliance on imports from quasi- monopolistic third country suppliers. Response to PRC Economic Coercion. Some EU policymakers have expressed concerns about China's use of economic coercion-frequently defined as the threat or imposition of economic costs by a state on a target with the objective of extracting a policy concession-to advance certain geopolitical objectives. In 2021, China imposed a de facto trade embargo on Lithuania and European firms that source from Lithuania after Vilnius announced it would open an office in Taiwan. The EU is finalizing an anti- coercion instrument that could allow the EU to respond as a bloc to economic coercion against a single member state, among other tools. Human Rights an d Other Issues European criticism of human rights violations in China, and China's reaction to such criticism, is a source of tension in EU-China relations. Some European policymakers have condemned human rights violations of the Uyghur Muslim

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