Amid US Decoupling, China Faces EU Pressure On Biosecurity Law
'In China For China' Meets New Reality
Executive Summary
After proposing a sweeping biosecurity law in May, China is facing pressure from European governments for potentially posing severe restrictions on key sectors such as life sciences and biological research.
In May, amid the spreading global coronavirus pandemic, China's State Council released a draft of a strengthened Biosecurity Law, which many feared would bring high hurdles to conducting research and other studies in the world’s second largest economy.
Extra layers of administrative approvals were seen posing challenges that could make these life science R&D harder for international sponsors, if not outright impossible.
Already, regulations are such that clinical studies sponsored by foreign biopharma firms must be approved by the Human Genetics Management Office at China's Ministry of Science and Technology, but the new biosecurity law would require an additional pre-approval from the State Council for such studies. The proposed law aligns with the regulation but seems to be tightening processes, a legal expert told the Pink Sheet in an earlier interview.
The draft legislation covers a broad spectrum of issues, ranging from public health outbreaks to bioscience research, biolabs to biodiversity to bioweapons. The wide scope has also brought worries that it could impact many aspects of research not limited to pharma and biologics, but also general discovery and natural sciences. (Also see "China Tightens Clinical Study Grip In Sweeping Biosecurity Law Proposal" - Pink Sheet, 26 May, 2020.)
New EU Pressure?
As such, the planned legislation has grabbed international headlines, and amid the China/US decoupling on a wide range of issues from trade to key technologies to scrutiny over publicly-listed companies, China is also facing pressure from European governments over several areas including biosecurity.
“There is a quite a bit of gap in ICT [information and communication technology], biosecurity and labor conditions that have to be reached [in negotiations]. I imagine that it is painful for China but we need their commitment,” Joerg Wuttke, president of the EU Chamber of Commerce in China, said at a 10 September press briefing.
The China-EU Summit, to be held virtually on 14 September, is likely the last chance for the two sides to reach a Comprehensive Agreement on Investment (CAI) before time runs out, Wuttke warned.
However, the task won’t be easy for the Chinese delegation, headed by President Xi Jinping, and his EU counterparts, led by German Chancellor Angela Merkel and EU President Charles Michel, noted Wuttke. “If I have to rank the discussions [for the CAI] to be reached by the end of year using Thai chili peppers [to rank food spiciness], I’d give it one chili pepper,” he said, half-jokingly.
'In China For China' Meets New Reality
Despite increasing calls to diversify their global supply chains away from an over-reliance on China, and possible further decoupling between China and the US, EU companies are unlikely to leave China any time soon.
In effect, the majority of the companies surveyed by the EU chamber intend to stay with their policy of “In China for China”, but recent events have made the strategy harder, it said. Such events include China imposing a new National Security Law in Hong Kong and labor conditions in the western Xinjiang region, among others.
There is a risk of a long-term, downward spiral in relations between China and Europe, which “have the potential to seriously impact European companies,” notes the EU chamber’s newly released annual position paper for 2020-21 in which it raises the issue of the dominance of China state-owned enterprises and its impact on foreign and private companies in the country.
Although Chinese companies might have had success in targeted acquisitions of European companies in recent years, that could change with more regulatory scrutiny, said the head of the EU chamber. Meanwhile, more EU major pharma players such as Sanofi and Roche Holding AG are actively looking to partner locally to grow their presence in China.