Economy: Swiss-China relations: the impasse

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EconomyRelations between Switzerland and China: the impasse

Beijing is increasingly the target of criticism from Parliament, particularly in terms of human rights. In return, the country responds with silence and refusal to develop the free trade agreement. The “NZZ am Sonntag” took stock.

The Switzerland-China free trade agreement has been stalled since 2018 (illustrative image).

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This week, under the name “Xinjiang Police Archives”, the international media published photos showing the abuses inflicted on the Uighurs, from highly secure fields in China’s northwestern province of Xinjiang. The government there leads a relentless fight against this Muslim minority that wants to “re-educate culturally”.

These revelations “once again put Switzerland in a moral embarrassment” in the face of important trade relations with Beijing, our main trading partner in Asia since 2010, reports “NZZ am Sonntag”. Relations whose proximity perhaps needs to be reviewed, as Professor Ralph Weber of the European Institute at the University of Basel, a specialist in China, points out: “The pressure from Parliament and civil society to reduce dependence on China continues to grow”, as is the case in many countries.

In addition to reliable documentation of human rights violations in Xinjiang, events in Hong Kong and the “increasingly authoritarian closure of the Chinese party-state” were decisive. Added to this is the difficult situation of the Chinese economy and the war in Ukraine.

Swiss companies must check whether they use forced labor

Furthermore, Parliament is more critical of China than ever. Shortly before the publication of the “Xinjiang Police Files”, the National Council’s Legal Commission approved a parliamentary initiative demanding that Swiss companies operating abroad be obliged to examine their entire value chain to see if they use forced labor – with a focus on Xinjiang, where Uighurs are routinely coerced into working in factories.

Criticizing China has also become acceptable on the bourgeois side. “Today I would be much more critical of the free trade agreement with China,” the Center’s president, Gerhard Pfister, recently told NZZ am Sonntag.

Switzerland-China free trade agreement stalled since 2018

In 2014, Switzerland was the only European country, together with Iceland, to complete a free trade agreement with China, which should have been renewed and extended. But negotiations are stalled. Since 2018, Beijing no longer speaks to the Swiss delegation. And the two parties couldn’t even agree on a list of topics to explore further. According to information received by the “NZZ am Sonntag”, the fact that Bern was increasingly talking about the human rights situation was decisive for the conclusion of the negotiations. The People’s Republic also unilaterally suspended, in 2019, the ongoing human rights dialogue with Bern since 1991.

Beijing-Bern relations at an impasse

At the Secretary of State for the Economy (Seco), not very optimistic, we hope “to be able to continue the discussions with our Chinese partners in the near future”. But the messy situation risks being further complicated by the policy of the Seven Elders, who recognize a sharp deterioration in the human rights situation but oppose the consequences. As in early 2021, when the European Union (EU) imposed sanctions on China for human rights abuses. Berne remained on the sidelines – until today: “The Federal Council has not yet taken a decision on this”, they tell Seco. For Ralph Weber, China expert, “Switzerland’s particular path with China, which has always been a double-edged sword, seems to have ended in a dead end. The war in Ukraine has shown once again that the time when Switzerland could be somewhere among the great powers on the external level is over.”

Significant economic consequences

However, these changes will have economic consequences. What some deplore. Jean-Philippe Kohl, deputy director and head of economic policy at the Swissmem association, calls the negative political signals towards Beijing “exaggerated and emotional”. He agrees that the human rights situation in China urgently needs to be improved, but urges Bern to make “an effort of silent diplomacy, to prevent relations from deteriorating”.

International reluctance to invest in China

The war in Ukraine and the blockade in China are fundamentally changing world trade, notes the “SonntagsZeitung” at the time. Is globalization losing steam? This was one of the important issues discussed at the World Economic Forum in Davos. With particular emphasis on Asia, China in mind. As the Zurich weekly reports, if Western companies are increasingly moving away from China, it is in particular to guard against supply chain disruptions, pandemic lockdowns or potential sanctions.

Thus, interviewed at the Davos Economic Forum, Zhu Ning – finance professor at Shanghai Jiao Tong University, who spoke in Davos during a panel on the future of China as an economic space, reports that “in these days here in Davos, I have heard the word predictability too often.” Many managers say China has been too predictable. Now it’s different. That’s why companies think twice before investing in China.

(Sheep)

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