China-US rivalry poses threat to Switzerland

In 2013, a group of Swiss business leaders traveled to Beijing to celebrate the signing of a free-trade agreement between Switzerland and China, marking the occasion with champagne.

The agreement, implemented the following year, was praised in a PricewaterhouseCoopers LLP report as a landmark deal that "recasts the international trade landscape" and could even contribute to "a re-industrialization of Switzerland", Caliber.Az reports, citing foreign media.

Now, a decade later, the agreement is up for review, but the initial enthusiasm has waned, reflecting the changed geopolitical climate marked by intense US-China competition. There are growing doubts about whether the updated negotiations will yield results.

The uncertainty surrounding the trade agreement highlights Switzerland's challenging position between major global powers, overshadowing its traditional stance of neutrality and independent economic policies. With the US working to restrict China’s access to advanced technology and the European Union aligning more closely with Washington, Swiss companies face increased risks of being caught in the crossfire.

Earlier this year, Zurich-based industrial giant ABB Ltd. came under US scrutiny for its involvement with Chinese state-owned enterprises in supplying cranes to US seaports. A Congressional committee raised concerns about potential "cybersecurity risks, foreign intelligence threats, and supply chain vulnerabilities." ABB stated that it responded to the committee’s inquiries "with care."

Switzerland’s renowned pharmaceuticals and biotechnology sectors are now anxiously watching proposed new US legislation that could limit their ability to collaborate with China.

“There is an uneasy feeling,” said Jean-Philippe Kohl, deputy director of Swissmem, the association representing Switzerland’s mechanical and electrical engineering industries. “Geopolitical tensions are particularly sensitive for companies that produce high-tech products, which Swiss firms excel in. Such concerns were not prevalent five to ten years ago.”

Kohl expressed that the possibility of the US mandating a halt to technology transfers is a profound concern for many companies. He warned that being forced to choose between the US and China would be "a disaster," describing a withdrawal from China as a “partial amputation” of their business.