China and the European Union in Africa : partners or competitors?

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Houdret, Annabelle Political Scientist. Iacobuta, Gabriela Environmental Researcher.

Leininger, Julia Political Scientist. Srigiri, Srinivasa Reddy Agricultural Economist. On the surface, this is a good cultural value, yet when digging deeper it is often conceived as paternalistic in nature Bodomo , 26f. One could even argue that concentrating on aid is partly the cause for tensions and negative sentiments towards each other.

What is China's Belt and Road Initiative?

This does not mean the EU should start ignoring what is happening in the developing world, but maybe it can be seen as a wake-up call to shift priorities, especially in areas that are usually served by the private sector. There is virtually no country in the world in this age of globalization that does not encourage foreign investment one way or another.

There must therefore be a globally implicit understanding that FDI is necessary to spur development. The fall in external financial flows is particularly worrisome in light of the Sustainable Development Goals SDGs. Past experience shows that one of the most efficient manners to build necessary infrastructure is indeed capital investment by foreign investors Bodomo , 11ff. But what is most astonishing is not yet the absolute volume, but the speed at which Chinese investment is growing — while FDI by the EU in the SSA region only demonstrates annual growth of Relative numbers describing FDI stock are largely analogous.

EU elections 2019: Why they matter for Africa - DW Special

In , infrastructure commitments from China even outgrew those of the World Bank Fioramonti und Kimunguyi , It seemingly being one of the major factors for the Chinese success, it is assumed that SEZs will boost diversification of the economy and promote manufacturing in Africa Kim Their role in the economic system is certainly significant, accounting for approx. Farole , This kind of share grants Nigerian stakeholders the role of the deputy president of the board as well as positions as senior managers for legal affairs and local promotion.

They did, however, offer capacity building: by inviting African officials to a day-long workshop during which field trips and experience sharing were meant to give an understanding, what was most crucial to success stories such as the SEZs in Shenzhen and Tianjin. Therefore, instead of downplaying Chinese engagements as destructive, the European Union could set an example by increasing their investment, focusing on its sustainability i.

Countries are especially concerned about their agricultural as well as manufacturing sectors — under free trade rules, the EU is able to lucratively export processed food products, while African farmers are bound to produce products with a much lower margin, such as raw coffee and cotton for EU markets. Furthermore, it has to be considered that many EU agricultural products are often subsidized and might therefore ultimately displace inter-African exports GRAIN Sanders , The intention to increase African domestic integrated markets in order to stimulate FDI Wouters, Defraigne und Burnay , 42 did not necessarily prove to be successful once individual countries started signing interim EPAs before regional negotiations came to a conclusion, but instead required new border controls within economic free trade regions in order to enforce EPA commitments Sanders , There is no theoretical or empirical proof that openness and all its concomitant phenomena will generate higher economic growth per se Djeri-wake , Similarly, they do not expect African countries to fully open their markets.

Bodomo notices that Chomsky already pointed out that all industrialized countries have applied protectionist trade and investment policies during one or several stages of their development Bodomo , 16f.

EU firms worried about China's tough business environment, trade tensions

Considering the massive divergence in resources and the unequal strength and capacity, the principle of reciprocity does not necessarily translate into fairness. GRAIN Through preferential market access, it is assumed that local companies are enabled to engage in new exporting opportunities more easily. Although not untrue, lately it has become clear that non-tariff barriers, in particular rules of origin ROOs , are sometimes more restrictive than tariffs Wouters, Defraigne und Burnay , Within Free Trade Agreements, they ensure that products from third countries do not avoid paying duties by shipping through countries with preferential access.

However, by specifying the amount of required local materials and processing, these rules do not reflect real global supply chains, often impede competitiveness, and prevent trade diversification Andriamananjara, et al. Figure 3 clearly demonstrated the importance of rules of origin determining export success.

China can offer a distinct advantage in this matter. In , Beijing introduced new rules of origin for all LDCs that, among others, expand cumulation to regional economic groups e. The renewal in is a good opportunity for adaptations. The EU should, of course, not neglect human and social rights or disregard their own values, yet it seems as if to some extent the Union has to take a step back from proactively demanding other countries to live by the same rules. It is clear, that all of this should not imply that each and every action put forward by China is preferable.

On the contrary, so far, they have not communicated their intents well or justified certain issues and consequences of its measures Bodomo , 49f.

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African countries are noticeably engaged in reforming trade and investment agreements, especially through harmonizing regional provisions Pan-African Investment Code, Continental Free Trade Area, etc. These initiatives demonstrate the determination to create a more balanced investment framework for Africa, oriented towards sustainable development UNCTAD , Additionally, sound regulations must be built on robust institutions. If China fails to develop these there is a risk that it will get stuck in the middle income trap.

Fully realizing national treatment would put an end to unequal treatment for foreign firms and allow them to operate on a level-playing field. Germany and China — trade partners and competitors.

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What can be done by European governments to persuade Chinese authorities to ensure a level-playing field for their companies in China? China has made repeated commitments on equal treatment for all businesses since its accession to the World Trade Organization WTO in , but international firms are still legally required to register as foreign-invested enterprises, which differentiates them from domestic Chinese companies.

There are multiple instances of unequal treatment, including regulatory enforcement, access to financing and forced technology transfers. In the Business Confidence Survey , 19 percent of respondents report that they felt compelled to transfer technology in order to maintain market access. It is now urgent for China to deliver on its promises by realizing national treatment for all companies operating in China. This would not only show that China is committed to upholding its WTO obligations, but would also provide international companies with the operating conditions they need to provide the products and services that Chinese consumers demand.

US President Donald Trump's administration and China appear to be heading toward a showdown on trade, with growing fears worldwide about its ramifications. Many of the European Chamber's member companies are concerned about the trade tensions between the US and China. Raising tariffs means disrupting the global supply chains that our members have built up. There is also the risk that this could bring an end to the present boom in the economic cycle. We must remember, however, that the root of the problem began in China. It is imperative that China starts fulfilling the reform promises it has repeated since President Xi Jinping's speech at the World Economic Forum in Davos in January The European Chamber believes in engaging with China and creating a common narrative to support further market opening and reform and delivering equal treatment for all businesses.


If China is not prepared to take the necessary steps to make this a reality, it could escalate existing tensions. Taking a long term approach to structural issues is the right way forward. As the EU launches a complaint at the world's trade watchdog over US tariffs, the bloc is also taking China to task. The EU warned that "if the main players don't stick to the rulebook, the whole system might collapse. It said the New Silk Road trade corridor has the potential to disadvantage and even divide the bloc.

Ahead of another tariff exemption deadline, Washington's European allies have been telling President Donald Trump that his trade threats are misguided and the real focus should be on China. Will he get the message? DW takes a look at what he has done and how those affected have responded.

How Should Europe Handle Relations with China? | ChinaFile

Analysts and politicians warn that the move could backfire on the US car industry, and even help China. But all is not well between the two trade partners.

The US has removed tariffs on over Chinese goods after American firms complained that the levies would cause economic hardship. But trade talks between the world's top two economies remain on a delicate footing.