European Union

US-based researcher Yu Shiyu notes that the EU seems to have gained greater unity and internal coherence from the stress test of Covid-19. In contrast, the US seems to be more divided and has not found its way around the pandemic as well as its many other domestic issues. What has the EU done right to be able to be a standard setter in the post-pandemic era?

Economics professor Zhu Ying notes that the new Biden administration is trying to rope in the EU in its efforts to contain China. However, the evidence so far seems to suggest that such a plan is unlikely to work, given the pragmatic stance exhibited by key countries such as Germany. The China-EU investment agreement is an early warning that the EU may not be a firm ally of the US, not forgetting that China has always leveraged the economy to divide the West.

German academic Jan Kliem says the Indo-Pacific that Germany envisions is neither unipolar nor bipolar, but led by multilateralism, which forms the key principle throughout its Indo-Pacific policies, from climate cooperation to security. However, while implicitly repudiating much of China’s behaviour regarding the international rules-based order, Germany is not directly criticising or shutting the door on China. This is good news for Southeast Asia and ASEAN, signalling increasing cooperation and support by both Germany and the EU for ASEAN’s multilateral (security) architecture.

The conclusion of the EU-UK Trade Cooperation Agreement and the EU-China Comprehensive Agreement on Investment (CAI) in the last days of 2020 sent a strong signal that the EU will not wait for the US to resume a leading role in the world economic order. Building partnerships with countries like China are just the impetus the EU needs to deepen integration and build better prospects for itself. In this move away from a US-centric view of the economic order, the EU is not alone.

China’s willingness to consider joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is perhaps an admission that emphasising free trade but ignoring fair trade is no longer sustainable. Even sacred cows such as its state-owned enterprises (SOEs) and insistence on the WTO platform for multilateral trade negotiations may be up for discussion. On a practical level, the CPTPP may just be the external push it needs to force its SOEs to reform.

Even if it might be a unilateral move, China should embark on its third phase of opening up, says Zheng Yongnian. The first phase of China’s opening up took place after the Opium War while the second was led by Deng Xiaoping’s reforms. Now, in the face of unprecedented challenges of the new century, China must undertake a higher-order opening up, and work towards setting global standards and formulating rules at the international level. These endeavours begin at home, with the domestic standardisation of rules in different regions and localities.

Talks on the China-EU investment deal were concluded on 30 December 2020, lending fresh impetus to China’s further opening up to the world. However, the response so far, both externally and internally, seems to be lukewarm to the idea of what some call China’s third opening up. Zaobao associate editor Han Yong Hong ponders why this is so and analyses where China is likely to go from here.

Cai Daolu of the NUS Business School says that the Comprehensive Agreement on Investment (CAI) between China and the EU can help to reduce uncertainty and facilitate the flow of investment, technology and know-how across borders. In fluid times, good old-fashioned economic integration and openness to foreign direct investment are just the booster shot that the world economy needs.

Over the past few years, and especially in the past few months, the US has been painting China as its biggest threat and even enemy. Are these claims valid or exaggerated? What does it mean for the incoming Biden administration, and will it be able to improve China-US relations? Economics professor Zhu Ying explores the topic.