Expert warns Switzerland is unprepared for China trade risks

Swiss President Guy Parmelin is meeting Chinese President Xi Jinping in Beijing today, where an updated free trade agreement is due to be signed, SRF reports. A China expert at the University of Zurich says Switzerland has not done enough to prepare for the geopolitical risks of closer economic ties.

Switzerland has had a free trade agreement with China since 2013. At the time, China was seen mainly as a major economic opportunity and a growing market becoming more integrated into the global economy, said Simona Grano, a sinologist at the University of Zurich who leads its Taiwan Studies project.

China is now a major power competing directly with the United States and increasingly uses economic tools to pursue strategic goals, Grano said. The pandemic and the war in Ukraine have also shown the risks of relying on a single country.

Switzerland’s goal in signing trade agreements is to diversify its markets. But closer ties with China also signal that Switzerland is pursuing its own course, Grano said, and bring a responsibility to manage the resulting geopolitical risks. If the United States and China impose sanctions on each other, Switzerland could be more vulnerable than other countries because of its close links with both.

Grano said Switzerland needs a strategy to address dependencies in specific sectors, including rare earths. “True autonomy does not lie in signing an agreement,” she said, but in preserving room to make decisions when economic and security interests conflict. In her view, Switzerland is not sufficiently prepared, although it is not alone in that regard.