China caves to EU on knowledge to maintain buyers candy – POLITICO

BRUSSELS — When EU digital chief Věra Jourová sat down in Beijing with a senior Chinese language official in September, her criticism checklist was so long as the 11-course dinner her host had ready.

Sore factors included Beijing’s disinformation campaigns, electoral interference, state management over Synthetic Intelligence growth, and ties with Russia.

Predictably, Jourová did not get many straight solutions from her counterpart, Vice-Premier Zhang Guoqing. It is a nail-biting time to be a politician in China, as main figures comparable to Qin Gang and Li Shangfu have lately been purged as overseas and protection ministers, and nobody needs to be accused of constructing massive concessions to the West.

Then, in a sudden shock initiative, Zhang mentioned he was prepared to supply a goodie to European companies going through an more and more hostile political atmosphere in President Xi Jinping’s China. He defined Beijing was prepared to maneuver on knowledge flows — a sphere the place China has been making an attempt to curb the flexibility of overseas firms to export knowledge generated throughout the nation. All that knowledge is a goldmine for European enterprise, however China guards it zealously.

A deal on knowledge flows was a giant name from Zhang, however might be defined by China’s rising fears about its precarious economic system. Whereas safety is front-and-center to Chinese language policymakers, additionally they know they’ve to supply some massive carrots to maintain overseas buyers onside.

“You possibly can really feel that one thing clicked on the spot,” mentioned an EU official with data of the dialogue, recalling the heated debates on knowledge over Chinese language delicacies like beef in lotus leaves and dim sum.

Though the dinner occurred in September, three officers with data of China’s switching tack have solely now defined how the change of coronary heart in Beijing took place.

“The vice-premier instructed her he understood the proposal is smart, and requested the related authorities to take the matter ahead,” the primary official mentioned. Zhang instantly turned to his junior colleagues from the Our on-line world Administration of China and the Ministry of Trade and Data Know-how. ”You had a sense that that was the second the massive man gave the go-ahead.”

In line with one other official, when Commerce Commissioner Valdis Dombrovskis visited Beijing shortly after Jourová, he obtained the ultimate affirmation of the modifications to the information legal guidelines from his counterpart, Vice Premier He Lifeng, an influential financial aide to President Xi Jinping.

Shortly afterward, China agreed to reverse the burden of proof beneath the related legal guidelines, permitting most knowledge saved in China to be transferred in a foreign country until expressly excluded by the authorities. EU officers, although, cautioned that they will nonetheless wait to see how Chinese language authorities in any respect ranges implement the brand new provision.

Particular present to Europe

Regardless that U.S., Japanese and different firms had additionally been pushing for this sort of measure from Beijing on knowledge, China provided the diplomatic win to the EU.

The European Union Chamber of Commerce, among the many first to be notified when Beijing made the authorized revision, despatched Jourová a congratulatory letter, seen by POLITICO.

”Make no mistake, China is merely fixing an issue of its personal making,” the second official famous. ”It is not an act of benevolence. It is an act of self-correction.”

Nonetheless, that self-correction is way from a given beneath a nationalistic authorities going through stiff competitors from the U.S.

More and more, China’s uncompromising ideological focus is forcing many firms to regulate their enterprise methods, together with by taking their new investments out of China. Certainly, the EU and the remainder of the G7 wealthy democracies are calling on their firms to ”de-risk,” as Russia’s conflict towards Ukraine prompts considerations a couple of doable Chinese language invasion of Taiwan.

In line with a report issued Wednesday by Penta, a enterprise analysis group, one in 5 EU policymakers considers China to be essentially the most urgent problem going through the bloc — whereas solely 16 p.c of individuals say they’re open to working with firms from China, backside of the checklist.

It is towards this backdrop that Beijing needs — and desires — to throw some bones to the EU.

“For certain there’s plenty of self-interest for China [to give EU the data deal], the place there’s a pointy drop of overseas direct funding which China desperately wants,” the primary official mentioned.

Over the previous three months, Beijing has welcomed a protracted line of EU officers in a thaw from the 2021 low level the place China’s sanctions on EU politicians and intellectuals had been adopted by an indefinite freeze of a large EU-China commerce deal, which stays unratified.

Fee President Ursula von der Leyen and her European Council counterpart Charles Michel are anticipated to attend an EU-China Summit in December and meet Chinese language President Xi Jinping.

EU officers ought to use China’s underperforming economic system — most particularly in the actual property sector — as leverage, based on Luisa Santos, deputy director of BusinessEurope, a Brussels-based foyer group, who’s presently visiting China.

Talking earlier than her journey, Santos described the Chinese language economic system as ”not in an excellent state of affairs,” including that EU officers ought to seize this chance to persuade Beijing to open up additional.

”China wants to acknowledge that what is going on in our bilateral relationship is one thing that’s not sustainable,” she mentioned.