Skip to main content
china europe v2.jpg

Illustrated for Echowall by Tse Yuet Ching. 

10:48 am | February 25, 2021

The CAI under the Chinese Lens: "Win-win" for Whom?

While the EU-China Agreement on Investment remains a highly disputed issue in Europe, how is it framed by the Chinese public? What topics are highlighted, and what is omitted?

By Zhu Yi

For weeks, the Comprehensive Agreement on Investment (CAI), which the EU and China agreed upon on 30.12.2020, has dominated debates concerning the relationship between Europe and the People's Republic.

In Chinese media, the agreement was met with much rejoicing. Although there is little to no information to be found concerning the concrete stipulations of the agreements (published by the EU on 22.01.2021). Not even the business press, for example the renowned magazine Caixin, has taken a look at the detailed design of the agreement.

Astonishingly, even the official delegation of the EU commission in China chooses not to address these details in its Chinese publications. On 30.01.2021 the EU delegation published a Chinese language press release . However, it was already a month old at the time (as well as being a translation of an English language press release) and did not explain the "main contents of the agreement" as the title promised.

Nevertheless, the term "EU-China investment agreement"(中欧投资协定/Zhōng'ōu tóuzī xiédìng) remains a hype among the general Chinese public. Especially in the context of the Davos Economic Forum at the end of January, the bilateral agreement was hailed as an example of the "great success of multilateralism", according to the party newspaper People's Daily (人民日报).

Since the start of the negotiations in 2013 there has been as little as 100 academic publications concerning the planned agreement; many of which discussed the topic in combination with China’s infrastructure initiative (BRI). Other authors deal with selected aspects and technical issues such as details of dispute settlement procedures. Subsequently, after the official announcement, several thousand media articles and hundreds of thousands of online articles appeared within the first month with the buzzword "EU-China investment agreement". When compared to the current situation however there is rarely any actual information provided and reporting of the complex details of the agreement are limited; instead, the main focus is on celebrating the agreement as a foreign policy success for the CCP leadership.

In the following article we will take a look at the public discussion on the investment agreement, what official media are reporting, how is the business press commenting, and what is being represented (and omitted) in social media?

The (New) Old Friend of the Chinese People

After the CAI agreement the EU president Ursula von der Leyen spoke of an “milestone” being reached; it seems that China also sees the deal this way and in state media the win-win rhetoric is, once again, brought to the forefront.

Credit for the breakthrough in the negotiations is mainly attributed to the Chinese leadership and, especially, to one politician in Europe in particular, namely German Chancellor Angela Merkel.

The news concerning the investment agreement from the state agency Xinhua consequently begins with these words: "President Xi Jinping held a video call with German Chancellor Angela Merkel, French President Emmanuel Macron, European Council President Michel and European Commission President von der Leyen in Beijing on the evening of  30.12.2020." The strict order of the names was adopted by all official media and news portal.

Rise China 2.jpg

Advertising posters of the CCTV program “Rise China”

The prominence of the German Chancellor in the CAI narrative is illustrated in the title of an online article of the CCTV program site entitled “Rise China” (崛起中国 jueqi zhongguo):While Europe is in trouble, China sends a lavish gift and Angela Merkel radiates with joy” reads the headline.

The German Chancellor's unconventional political career has long attracted great interest from the Chinese public. Depending on the dominant political climate of the time, the framing of the scenario tends to change somewhat dramatically. For example, during the immigration wave in 2015 and the following years Angela Merkel was painted as the archetype of the “white leftists” (白左 bai zuo), a typical representative of the naive or hypocritical Europeans who aim to “Islamize” Europe with a generous refugee policy.

However, since the trade war between the USA and China she has been painted as the determined opponent to Trump; fighting shoulder-to-shoulder with the Chinese leadership against U.S. government bullying.  

On January 13, 2021, for example, the respected business newspaper The Economic Observer 经济观察报 (Jingji guancha bao) devoted a lengthy article to Merkel, interpreting the establishment of the CAI as the German chancellor's revenge on Donald Trump, who had refused to shake the German chancellor's hand during a 2017 meeting. The article assumed that Chancellor Merkel would visit China again in 2021, for the thirteenth time, and would be awarded the honorary title of "an old friend of the Chinese people [...] a title that will accompany her for life." 

Although, it is important to note that it is actually reserved for the main instrument of the party, the people's newspaper, to officially bestow such a title, as it represents an important foreign policy tool. The honorary title has been awarded to a number of autocratic leaders in the past, such as Robert Mugabe of Zimbabwe or Nicolae Ceaușescu of Romania.

Jokes circulated on the Internet, for example, that the so called "old friends of the Chinese people" were threatened with extinction just like Chinese panda bears. But the seemingly extinct jargon still carries weight in China. In 2014, media scholar Fang Kecheng published a book on 600 officially appointed "old friends" noting that in the Mao era, it was mainly heads of state who had supported China's admission to the United Nations who earned the title. Since the 1980s, it is mostly Western political and business leaders who have been given the honorary title. All "friends of the Chinese people," Fang Kecheng states, are first and foremost friends of the Chinese Communist Party. 

If we take a look at the twenty or so “old friends” from Germany we find a list including names such as Helmut Kohl, Helmut Schmidt, and Gerhard Schröder among them; the only political representative of the GDR to be honored as a "friend" was a former ambassador, because party relations between the CCP and the SED were problematic.  When Gerhard Schröder was honored by the party’s newspaper as an old friend of the Chinese people, the CDU under its party chairwoman Merkel had distanced itself from Schröder's economically oriented China policy. In 2007 the Union, with regard to China, presented a paper calling for an Asia policy with an emphasis on values. And yet three years later Chinese state media reported on Chancellor Merkel’s “silent turnaround” toward economic interests; her visits to China, which were always accompanied by high-profile corporate delegations, were seen as proof of such a statement. In the meantime, Chancellor Merkel has visited China twice as often as her predecessor and has, thus, been portrayed as a reliable ally of the CP leadership since the CAI settlement.

Merkel Macron.jpg

Screenshot of a Chinese online article claim that: "between great nations there is no eternal friendship, what counts forever is only [business] interest."

Interference

Skeptical opinions concerning the CAI are often and regularly described as “interference” (噪音zao yin) and their relevance dismissed as trivial. Cui Hongjian, the director of the European Institute of the China Institute of International Students (CIIS) has, in the media, criticized that even in China there has been some noisy ‘interference’. According to Cui there have been unjustified criticisms that China had been too lenient in the negotiations. However, such voices can’t be documented. Those who see their interests affected have tended to attempt to exert influence behind closed doors; there has been no controversial public debate. Nevertheless, a number of publications via social media and on various journalistic platforms provide clues about where the agreement might not be assessed in a purely positive way.

A popular online commentator Lu Kewen writes in one of the most accessed articles on the CAI that: "German car manufacturers are bursting with joy as their dreams have all come true." Indeed, VW and Audi's top managers are celebrating the signing of the contract for the new Audi FAW NEV joint venture in Changchun, northern China, on 18.01.21. Audi has a majority share of 60% in the e-mobile project in China for the first time. In the future, the German automotive industry is also likely to increase its shares in joint ventures with Chinese partners at other locations in China.

Audi China.jpg

Screenshot of the press release from Audi China from the official website: www.audichina.cn. The investment agreement was mentioned in combination with this context.

But is this already a result of the agreement? Many Chinese commentaries point out that the relaxation of joint venture restrictions was already announced in 2018 and will be gradually implemented by 2022. Given that the CAI is unlikely to be ratified before the first quarter of 2022, the agreement cannot possibly yet have a direct impact on the playing field of today.

And, thus, Chinese commentators on social media try to put to rest the joy of the German car manufacturers: "VW may control the technologies, but the distribution channels are in the hands of the Chinese companies!" States an online magazine for car enthusiasts. "No matter how good the technologies and products may be, they are worth nothing without the Chinese distribution channels! [...] If VW dares to go it alone, the support of national and local governments will fall away, and, without the backing of the Chinese state, how long can VW survive in China?"

Overwhelmingly, China is presented as the ‘winner’ of the investment agreement.  In a similar vein some authors argue that Chinese cars have primarily been exported to developing countries; that through the agreement the market access to Europe will become easier, and Chinese cars will occupy the European market. Most Chinese observers believe that Chinese companies are also ahead in battery technology and autonomous driving, and will benefit from the agreement rather than their European competitors.

One of the most popular economic experts, Lang Xianping, explains in his talk show broadcast on the southern Chinese television station Guangdong TV, why and how China was the big profit-taker of the CAI. The prospect of good business in China makes politicians in Europe immune to the U.S. efforts to win the EU over to its side in the economic conflict with China; that, specifically, is the decisive gain for China from the agreement. However, the second big win for China, he said, is access to European energy markets and power grids. Chinese companies will capture this sector, said Lang Xianping. Ultimately, he stated, the investment agreement "means a green light for Chinese 5G providers in the European market."

The online commentator Lu Kewen argues that thanks to the CAI, China will obtain "technology by investing [in Europe]" (投资换技术touzi huan jishu).  Lu asserts that:

"We [i.e. China] have tried in vain for many years to obtain technology in exchange for market access (市场换技术shichang huan jishu). In the future, China can penetrate the most advanced fields of European steel, pharmaceuticals, aerospace, machinery, military, microelectronics, environmental science, robotics and engineering, and use their technology to upgrade Chinese enterprises."  

While for European companies, the compulsion to enter into joint ventures, and with this the associated surrender of their technologies, has always been seen as one of the biggest problems, whereas for Chinese economic policy this has been a key part of the deal; the expression “technology in exchange for market access” has been used in official policy language since the 1980s as a main argument for the opening up of policy for foreign investment. However, critical voices have become louder in recent years stating that it is especially those German car manufacturers that make large profits from the Chinese market; without transferring the technology desired by the Chinese parties. As a result, many are calling for this policy to be discarded altogether and for national industries to, instead, be strengthened. Lu Kewen's article reflects this sentiment.

For the economy of the recipient country, the investment agreement is, in any case, stimulating; the situation is different for the economy that invests abroad on a large scale, where the outflow of capital could lead to an erosion of the industrial basis.

 

An article in the economy magazine Caixin undertake a more credible analysis of the technology transfer: In an interview from 30.12.2020 Tu Xinquan, director of the China Institute for WTO Studies at the Beijing University of International Business and Economics UIBE (对外经济贸易大学), states that the EU is the most important technological source for China and Chinese interested parties. The transfer of technologies don’t usually take place through acquisition but rather through investments; especially from European companies to their companies invested in China.  Compared to U.S. and Japanese companies, Europeans were more active in investing in China, with major foreign investment projects coming mainly from EU companies. Whether the investment agreement has a positive effect on a company depends on the specific case, Tu said. For the economy of the recipient country, however, the investment agreement is, in any case, stimulating; the situation is different for the economy that invests abroad on a large scale, where the outflow of capital could lead to an erosion of the industrial basis.

The Chinese Way of Life

The criticism that dominates the European debate concerning the CAI is rarely visible for the Chinese public: The issues of human rights and especially labor rights, a topic made particularly volatile by the latest Western media coverage of forced labor camps for Uyghurs in Xinjiang. Of the eight International Labor Organization's (ILO) core conventions, China has yet to ratify four: Articles 29 and 105 concerning forced labor and articles 87 and 98 on freedom of association, i.e. the admission of independent trade unions.

EU representatives in China also avoid addressing these sensitive issues. On 23.01.2021, the Chinese website of the EU Chamber of Commerce in China published an analysis of the "important information" regarding specific parts of the agreement recently published. While the paragraphs on China's opening market are presented in great detail, the topic of labor rights is ticked off with two sentences: "Provisions for dialogue on environmental and labor issues related to investment have been established" and "[t]he labor provisions of the agreement have received considerable attention and were recently discussed by Members of the European Parliament, respectively."

Apparently, work conditions in China don’t play a decisive role for European investors. And even for EU policy, it seems that human rights are not of the highest priority to the relationship with China; the statements of the EU delegation in Beijing gives this impression to Chinese observers. On 05.01.2021, the delegation posted a short video on its official Weibo platform, the Chinese equivalent of Twitter: What is our comprehensive agreement on investment about”. The film portrays the problems that European companies tend to complain about in China; business is difficult, states the film. According to the film the CAI would finally improve conditions for EU investors, and that would be good for jobs as well as growth in Europe. The topic of labor rights, however, does not appear in the film.

The Caixin magazine is the only Chinese media worth mentioning that deals with the topic of forced labor as well as ILO conventions. On 19.01.2021 the magazine published an interview with EU Ambassador Nicolas Chapuis. In it, Mr. Chapuis makes some suggestions about what steps toward ratification of the ILO conventions might look like in the coming months. He talks about the risks for the EU politicians who gave China the benefit of the doubt and made the agreement without seeing China’s roadmap toward the ILO ratifications.

Caixin does not explain what the ILO agreements are about and why critics of the agreement in Europe are discussing these points so heatedly. However, there is a lively discussion about working conditions and workers' rights on the Chinese Internet, quite independently of the positive reporting on the CAI issue. This discussion is mainly sparked by concrete cases that have surfaced on the Internet: A delivery driver for the food delivery service ‘Ele.me’ died early in January during his shift. As the driver, and many of his fellow colleagues as well, did not have a proper contract with the internet company, Ele.me only gave his family the equivalent to 250 Euros in compensation for so-called “humanitarian reasons”. Merely a few days later another Ele.me driver set himself on fire in protest because his salary had not been paid. With capital from Alibaba, the multinational tech company, Ele.me is the market leader and incidentally a business partner of Aldi Süd in China. A widespread problem exists, whereby Chinese tech companies refuse to adhere to basic labor laws; with workers usually working days from 9 a.m. to 9 p.m. Furthermore, six days a week are the norm, so much so that the term work shift "996" has become a popular neologism.

37864472485_2d06937ed1_c.jpg

Haidian District in Beijing. China's "Silicon Valley" at night. Image by Mitch Altman available at Flickr.com under CC license.

The tragic death of a young woman in Xinjiang caused by being overworked sparked particular outrage. She did not die in a labor camp, but rather she was an IT employee for the e-commerce platform Pinduoduo and was “voluntarily” transferred from Shanghai to Xinjiang, working to "open up new territory" for the fastest growing e-commerce company in the world. The kind of job that includes forced overtime late into the night and one single day off every two weeks.  

China’s internet industry has, over the last few years, been growing at an exponential rate and makes good on the promise to fulfil the Chinese dream of getting rich quick. Thus, workers - whether unskilled migrant labor or well-trained skilled personnel - accept harsh working conditions that also violate Chinese labor law. If employees want to sue for these rights, they generally have poor chances at winning such a court case. There are no independent employee representatives or workers’ unions, and the internet giants, who are significant GDP contributors, enjoy a good relationship with local governments and the courts under their control.

Perhaps this is why, after the death of the employee, Pinduoduo went so far as to comment on their official online platform: "Who among the lower classes doesn't trade their life for money?" Naturally this insensitivity aroused fierce criticism. When a popular influencer tried to come to the defense of the internet company, he himself became a target: Ma Qianzu is a popular representative of the so-called “industry party”. This is not, as one might imagine, a political organization, but rather a loose group of influencers who - by their own definition - want to bring statism and industrial policy together with traditional socialist values.  After the Pinduoduo scandal Ma commented on his video platform that "the proletariat has no future unless it deals harshly with itself." He supposed that one wouldn’t want China to become as ineffective as Europe and the US. "Karl Marx also despised workers who refused to work overtime" Ma said; without citing a reference. But Ma's followers criticized him for siding with capital because of his internet businesses; the core problem in China, they said, is that workers are not allowed to freely form unions and bargain collectively. These are precisely the demands enshrined in ILO agreements, which the CAI only half-heartedly demands.

China's economic miracle over the past 40 years has not been conjured up by investment. It is due, rather, to the extremely high labor input with low rewards of several generations.

 

"China's economic miracle over the past 40 years has not been conjured up by investment. It is due, rather, to the extremely high labor input with low rewards of several generations", writes a young lawyer in his blog and expresses his hope that the existence of this "sweat and blood" philosophy will come to an end with the investment agreement with the EU; while companies like Pinduoduo could be better regulated. He refers to the free trade agreement signed between the EU and Vietnam in 2020. Prior to the agreement, Vietnam had enacted a new labor law and ratified the crucial ILO conventions. Vietnam has now recognized 7 of the 8 core conventions; in line with EU thinking.

However, unfortunately the attitude of the EU might disappoint said lawyer. Professor Wang Yiwei, director of the European Institute of the Renmin University quoted Jörg Wuttke, president of the EU chamber of commerce in China, in his guest article for Chinese media sources saying: “Why should the EU force the Chinese to adopt a ‘European way of life’ at the expense of EU jobs?” Mr Wuttke’s original quote comes from a FT article in December, shortly before the CAI agreement.

Thus, the prevailing opinion in the Chinese narrative on the agreement is that the EU would only instrumentalize workers' rights as a negotiating lever. Moreover, as columnist Tao Duanfang writes for Caixin, some European companies hope to weaken the competitiveness of their Chinese competitors by raising their costs. That's another reason, Tao says, why China has remained tough in negotiations on labor standards. And the EU has been "significantly soft" settling for "approximate and principled mentions of high labor standards."

The narrative of European hypocrisy regarding China's labor and human rights is illustrated by this fictional dialogue on the site of online influencer Lu Kewen:

Europa: In Hongkong there are some serious human rights issues…

China: We have decided to fully open the market for the automotive industry, you can hold 100% of the shares in the future.

Europa: OK! But about that Xinjiang problem, we are going to need to send an inquiry commission…

China: We could also open up the medical services market, you can then run private hospitals in China.

Europa: Done! But what about the religious issues in Tibet...

China: Let's open up the financial sector! Your banks and insurance companies are more than welcome…

Europa: In fact, you know what? We have carefully analyzed your human rights situation and are pleased to say it's actually quite good; at least better than Saudi Arabia's, let's do business first, we can talk about these other issues later.

February 25, 2021
Author
Zhu Yi

Currently a researcher at the Institute of China Studies at the University of Heidelberg, Ms. Zhu has her research focus on political communication, media perceptions and China’s social changes.