Europe's increasing reliance on China for critical drugs + Foreign investment + China-Africa

Welcome to the newest edition of our bi-monthly MERICS China Essentials. In this issue, we cover the following topics:

A key European supplier of active pharmaceutical ingredients announced it would close two factories, partly due to price competition from China. This is part of a longer trend that illustrates Europe’s challenge in reducing foreign dependencies in critical drugs. Jeroen Groenewegen-Lau , Head of Program Science, Technology and Innovation at MERICS, argues: “China’s recent efforts to modernize its industrial base should prompt Europe to take action against its own de-industrialization. Next to critical technologies, this should include investments in relatively low-tech areas like active pharmaceutical ingredients, as not doing so is already creating shortages of the most common drugs.” Read more

China this week again opened the door to a few more sectors for foreign investors, further reducing the number of off-limits areas of its economy to 29 from 31 in 2021. According to Jacob Gunter , Lead Analyst at MERICS, this year’s minor opening up is unlikely to drive significant foreign investment: "Companies once clamored to invest in China. But today the value proposition of more FDI is a shadow of what it once was as macro-economic and political factors dampen investor sentiment." Read more

China hosted the Forum on China-Africa Cooperation (FOCAC) last week, which gathered representatives from more than 50 African nations. Beijing pledged 360 billion CNY (45.8 billion EUR) for investment in Africa's green transition. China wants FOCAC to strengthen its leadership role among developing countries, says MERICS Analyst Claus Soong . He argues: "The focus on Africa’s green transformation – tailored to meet the needs of African countries and making China's narrative more appealing to them – reflects Beijing’s refined approach to economic statecraft." Read more

MERICS Head of Program Politics and Society Katja Drinhausen looks at recent online debates about China’s economic woes and tight public finances that have caught the watchful eyes of censors. She says: “The state of the economy and public finances appears to be a growing concern for the public – and therefore an increasingly sensitive issue for Beijing. China’s powerful leadership can censor online discussions on the subject, but it can’t mandate optimism and confidence in the country’s economic prospects.” Read more

Continue reading this issue of MERICS China Essentials online here.