China’s relationship with the United States is not in good shape and is unlikely to get any better anytime soon, we know that. The Middle Kingdom’s relationship with most of the rest of the world is reasonably stable and unremarkable in major geopolitical and economic terms. But in the relationship with Europe, which in total has an economic weight that matches that of the United States, China is not doing so well. And it really is a relationship that China needs to get right as it deals with various other challenges, both external and domestic. Data released this week, shows that Chinese investment into Europe plunged by 22% last year to a decade low. Reasons for the falloff include rising interest rates, growing strategic risks related to Russia’s Ukraine venture, as well as China constraints on capital outflows.
But more than that, Brussels has proposed sanctions on a number of Chinese companies for supporting Russia’s Ukraine war effort. Seven Chinese companies accused of selling equipment that could be used in weapons have been listed in a package of sanctions to be discussed by EU states this week, says the Financial Times. Some of the companies are already on the US sanctions list but Beijing will not be happy about this. The sanctions list needs unanimous approval from the 27 member states before it can be enforced, which may be tricky to achieve. But it’s indicative of the fact that the EU, like other players including Canada, are being forced by circumstances to pick a side.
We choose a quiet weekend, and wish you one too.
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