Panorama-China’s Global Investment & Geo-Political Outlook Post G20 Summit
This article was originally published in Italian in Panorama on 2nd Dec 2022.
Please note that this is a courtesy translation of the Italian language article originally published in the Panorama Magazine Issue at: https://www.panorama.it/economia/post-g20-scenario-geopolitico-e-sugli-investimenti-globali-in-cina
The G20 summit held in Bali, Indonesia between November 15th- 16th was significant in it’s indications on how the most powerful nations of the world aim to tackle the most pressing issues of are time, from geo-political concerns, climate change, digitalization as well as diplomacy amongst the attendants.
For China, the trip to Indonesia was one of President Xi’s first appearances at a major global gathering outside China in recent years, a milestone that was not lost on occasion as the Chinese side aimed to reintegrate and coordinate with leaders from around the world on a variety of aspects.
We’ll examine Post-G20 what are the new indicators in terms of China-US relations, as well as what this summit means for the E.U. moving forward.
US & China Relations
Following on from the first meeting between Joe Biden's and Xi Jinping's advisors in March 2021 in Anchorage, Alaska, tensions ran high for the first head-to-head meeting between the US and Chinese presidents in Indonesia. When Joe Biden and Xi Jinping first got to know each other more than 10 years (both then in the capacity of Vice President), the US and China had been moving closer despite their differences. Now in 2022, in the midst of the G20 summit, the relationship between the two superpowers is at its lowest point in decades.
The 3 hour plus meeting, however, featured televised images of smiling officials and handshakes all round and despite no tangible outcomes, the delegations did agree to work together to address transnational challenges including climate change and global macroeconomic issues including debt relief, health security, and global food security. The resumption of China-US top leaders’ direct dialogue therefore signals more of a cooling of China-US tensions rather then any dynamic geo-political shifts, boding well as the nations find some common ground.
The stock markets in mainland China and Hong Kong were buoyed as a result, with technology giants such as Alibaba and Tencent, which had been hammered by a regulatory crackdown domestically and rising geopolitical tension abroad, had their shares rise in Hong Kong by 11% & 10% respectively in the subsequent days.
As to what’s next in the agenda for Sino-US diplomacy, Secretary of State Antony Blinken, is now expected to visit China next year. The trip is aimed at keeping the lines of communication open and having frank exchanges about important issues at senior levels in order to avoid conflict.
China & the E.U.
While there was an initial plan for European Council President Charles Michel to meet President Xi in Bali, the meeting was eventually canceled, this alongside the decision to shelve a prerecorded speech for President Michel to address the China International Import Expo (CIIE) in Shanghai earlier in November was a worrying sign.
However, President Michel did indeed have the unique opportunity to meet with President Xi Jinping in China on December 1st, in order to discuss a range of global challenges including the war in Ukraine, tensions over Taiwan and EU concerns about imbalanced economic ties. President Michel, also met with Chinese Prime Minister Li Keqiang and Li Zhanshu, the chair of the standing committee of the National People's Congress, on his one-day visit.
Therefore at the G20 summit, it was tasked to the EU member states to address China on their own terms, with that being said it was indeed a notable debut for the Italian Prime Minister Giorgia Meloni on the international stage. President Meloni was seen to be discussing the country’s ‘China strategy’ with President Biden as well as accepting President Xi’s invitation — for her whole cabinet — to visit Beijing. “Meloni expressed the Italian government’s interest in promoting mutual economic interests, also with a view to increasing Italian exports to China,” the Italian government said in a statement.
President Xi had also told Prime Minister Meloni at the G20 summit he hoped Italy would play an important role in helping the European Union's policy towards China remain "positive" and "independent."
In their first-ever meeting, President Xi also stressed that he hoped both countries could find new growth points for areas of cooperation, such as high-end manufacturing, clean energy and aviation, which may provide some impetus for existing and potential Italian investors in the Middle Kingdom after such a positive impression on the world stage.
Only a few hours before the Meloni-Xi bilateral meeting, Beijing also gave the go-ahead for the purchase by 2035 of at least 250 Italian-French-owned ATR (the world’s number one regional aircraft manufacturer.) After 36 months of negotiations, an agreement had been reached which has been defined as a milestone in access to the Chinese market and a further assistance in people to people exchanges between the E.U. and China.
Amidst another subsequent summit in Thailand, the Asia-Pacific Economic Cooperation forum, President Xi held a brief meeting with US Vice President Kamala Harris with official broadcasters stating that these weeks of diplomatic meetings have been an “important guiding significance for the next stage of China-U.S. relations….(sic) and it is hoped that the two sides will further enhance mutual understanding, reduce misunderstanding and misjudgment, and jointly promote China-US relations to return to a healthy and stable track."
With positive steps aligning on the American side, Chancellor Sholz after his visit to Beijing with his business delegation at the beginning of November has called for diversification and strengthening of supply chains, but stressed a staunch abjection to decoupling from China, avoiding any protectionist measures in Germany and in the European Union.
In terms of the attitude to Western democracies, the stance from China seems to have been softened somewhat in what has been a fully scheduled November of diplomacy for the country. On the domestic front, while China’s National Health Commission published 20 measures to ‘optimise’ COVID containment policies in an attempt to reduce the burden on local governments and the economy, businesses were looking forward to a more pragmatic approach that would mitigate the impact of COVID regulations on both their operations and social interactions. However, a coinciding resurgence of COVID outbreaks throughout China has since impacted major cities, with business activities, including travel, being curtailed and more and more public facilities are being shut down.
In preparation for his high-level EU-China meeting, President of the European Chamber of Commerce in China, Joerg Wuttke, Vice President Carlo D’Andrea along with various other European Chamber representatives had the opportunity to conduct a one hour briefing with President Michel. The underlying themes of discussion were equal treatment & reciprocity for investments as well as the softening of COVID related restrictions.
Now, with COVID cases once again spiraling out of control and as the government attempts to balance effective COVID policies with economic growth, President Michel’s meetings in Beijing at such a pivotal juncture, with communication channels open (especially person to person), exchanges between both sides are set to continue through to the next EU-China Summit in 2023 with a renewed sense of optimism in the air.