China has called the EU’s bluff, so now what?

24 May 2012
It’s probably far from the minds of tired European leaders following last night’s summit, but an announcement from the Chinese Ministry of Finance should give them pause for thought. As reported by the state newspaper Xinhua, government departments have been told to continue to “buy China” (as well as ban the purchase of “luxury office supplies”, so Politburo officials can forget about ordering those gold-plated staplers). It appears the Chinese authorities aren’t that frightened by the EU’s proposals to block contracts for companies from nations exhibiting protectionist policies. This decision will now force the European Commission to act. But they have little manoeuvrability now the bluff has been called, as it was hoped the threat would be enough to encourage recalcitrant nations to fall into line. China is not getting its own way everywhere, however. Last month, the Australian government rejected a tender for its national broadband network from the communications firm Huawei’s local office, due to “security” reasons. This has caused the Chinese to complain vociferously, saying the exclusion was “beneath impartiality” and “deeply concerning”. I was tempted to write that China cannot have it both ways, but I’m not sure that is the case. If the EU fails to come up with an appropriate response, this is exactly the behaviour they will be reinforcing. Perhaps they should set up a call with their Australian counterparts to discuss a strategy?
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