4 The EU – a cornerstone of Sweden’s policy on China The Government’s approach to China takes its cue from the 2016 EU Strategy on China. The strategy establishes that the EU is to engage with China in areas where we have common interests, such as economy and trade, environment and health. The EU will also demand more of China regarding the rule of law, democracy and human rights, market access and the rules-based multilateral international order. The strategy confirms that the EU adheres to the ‘One China’ policy, that the EU commits to maintaining strong links with Hong Kong and Macau and promoting respect for the ‘one country, two systems’ principle, and that the EU will continue to develop its relations with Taiwan. Sweden contributed actively to the development of the joint strategy on China. As China’s global influence has grown, discussions in the EU have intensified concerning investments in sensitive technologies, and the risks to multilateral cooperation. This impacts on discussions on the competitiveness of European businesses, and which methods should be chosen to promote their growth. Issues concerning strategic autonomy, relaxed competition law, stronger protective mechanisms and major investments in strategic technologies are raised in these discussions, in addition to traditional strengths such as effective competition, open trade and a well-functioning single market. This debate will affect the industrial policy strategy that the European Council has asked the European Commission to present by the end of 2019. In March 2019, the European Commission and the High Representative for Foreign Affairs and Security Policy adopted a joint communication entitled ‘EU-China – A strategic outlook’. The communication is based on the EU Strategy, and notes that the balance of challenges and opportunities presented by China has shifted in light of the country’s growing influence and its ambitions to become a leading global power. China can no longer be regarded as a developing country; it is a key global actor and leading technological power. This requires a flexible and pragmatic approach enabling a principled defence of the EU’s interests and shared values. The communication also states that the EU should therefore deepen its engagement with China to promote common interests, while seeking a more balanced and reciprocal economic relationship. There are also areas where the EU needs to adapt to changing economic realities by strengthening its competition policy. The communication establishes that all EU Member States have a responsibility to maintain and contribute to unity. Consistency with EU law must be ensured in all cooperation with China, both bilaterally and within sub-regional cooperation frameworks. Following the Tiananmen Square massacre in Beijing in 1989, the EU imposed an arms embargo on China. This embargo is still in force. 13