Switzerland’s position is becoming delicate vis-à-vis China, report warns

According to a study by Avenir Suisse, Switzerland should objectively examine its relations with China: given the geopolitical situation, ties with its third trading partner are becoming delicate. Switzerland must demonstrate diplomacy and communication skills.

According to the study published on Wednesday by the think tank Avenir Suisse, entitled “Sailing in troubled waters, three options for Switzerland against China”, the country would indeed be hit hard by the disappearance of its large volume of trade. the Middle Kingdom. Its authors consider the cooling of relations between the West and China as a danger to the Swiss economy. These, as well as political authorities, must therefore act.

a balance exercise

The current geopolitical upheaval is leading to a balancing act in the Swiss-Chinese relationship between fundamental Western values ​​on the one hand and Switzerland’s policy of neutrality and economic interests on the other. According to the study, Switzerland should be careful not to find itself, as a small state, in the crosshairs of US and possibly EU sanctions on China.

But the Middle Kingdom is also increasingly criticized in our country for the absence of the rule of law that prevails there, its obstacle to freedom of expression and its repressive approach towards minorities and democratic movements.

In this topic: a chronicle: Switzerland-China: the construction of an ideological war (III)
and a column from the Chinese ambassador to Switzerland: Switzerland ignoring Chinese economic successes in human rights

Three strategies for 3 levels of escalation

The study presents strategies for Switzerland based on three levels of escalation. In the event of low pressure, major trading partners “must be kept in a good mood”. In case of mounting pressure, Switzerland should focus on its main trading partner, the European Union (EU). Finally, in the event of a further escalation, Switzerland should move closer to the American position “in tow of the EU” and form a common front with the West as in the war in Ukraine, because keeping away from economic sanctions would be “fatal”.

If the confrontation between the United States and China ends up leading to a trade embargo or a military confrontation, Switzerland should seek to move closer economically to the EU and the United States, its biggest trading partners.

A significant economic cost in the event of a break with China

Giving up China as a way out, however, should weigh more than in the case of Russia, according to the study, as it risks losing its third-largest trading partner.

A two-pronged strategy would then have to be adopted: treating China as an economic partner and competitor, on the one hand, and as a systemic rival, on the other. In case of political pressure, one must continue to “act pragmatically with diplomacy and good communication skills”.

Exports to 31 billion

Between Switzerland and China, whose economic recovery is impressive, there are long-standing political, economic and social relations, “even if they are not simple”. In 2014, Switzerland was one of the few Western countries to negotiate a free trade agreement (FTA) with Beijing, although this has been criticized because of the human rights situation in China. Neither the EU nor the US have an equivalent agreement whose potential has not yet been exhausted.

Every year, Switzerland exports goods worth CHF 31 billion to China. Imports total 19 billion. About 132,000 workers would benefit from exports of goods and services to the Middle Kingdom. The disappearance of this volume of trade would hit Switzerland hard and would weigh more heavily than in the current case with Russia.

Chinese direct investments in Switzerland play a less important role. They certainly doubled between 2016 and 2020, but they represent only 1% of all foreign capital in the country (for comparison, the EU totals 27% and the US 49%). Political circles are also demanding that they be more strictly regulated.

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