Watching China in EuropeMay 2024

Fear factor

If I had to summarize in a few simple words the evolution of European policy towards China in recent years, I would be tempted to say that it is no longer driven by fear. The EU was not afraid to label China as a systemic rival in 2019. It was not afraid to support Lithuania when it was the target of Beijing's economic coercion in 2021. And during over the past year, the European Commission has shown with its Economic security strategy, the launch of its anti-subsidy investigation in imports of electric vehicles (EV) from China, and the extensive use from his level playing field toolbox, he is willing to accept a level of tension with Beijing that would have been unthinkable in years past. In Brussels, officials have come to understand that economic leverage goes both ways. And at the time when The Chinese economy is struggling, the United States is closing itself to Chinese companies and Beijing's need for foreign technology, investment and markets remains strong, Europe's influence is greater than it has been in a long time.

But having leverage and using it are two different things, as we saw during German Chancellor Olaf Scholz's recent trip to China. The leader of the EU's largest economy has demonstrated, through what he has done and what he has not said, that his approach to China is still shaped by fear, fear, nourished by Chinese leaders and taken up by the captains of German industry, that Beijing will be unleashed against German companies if Berlin or Brussels push them too far. This anxiety appears to have led Scholz, during his three days in China, to downplay the threat that subsidized Chinese products pose to European industry, thereby undermining the Commission and the French. And that's what convinced him to dance carefully around the grim reality that China is supplying Russia with dual-use goods that fuel Vladimir Putin's war machine in Ukraine. From what I have seen, Scholz made no mention of Taiwan or human rights in his public remarks in China. He also didn't use the term “reduce risk” at any point during the trip, choosing instead to repeat his old straw man mantra: No decoupling!

Go public

It's a worrying sign when your own intelligence agencies and the head of NATO feel the need to publicly (albeit indirectly) express their concerns about your policies following a trip like this. But that’s what happened the week after Scholz returned. German domestic intelligence services held public event in Berlin during which he warned on the naivety of German companies to forge closer ties with China. A day later, NATO Secretary General Jens Stoltenberg traveled to Berlin to issue what looked like a public wake-up call to the German government about China's support for Russia. China says it wants good relations with the West, Stoltenberg said. At the same time, Beijing continues to fuel the largest armed conflict in Europe since World War II. They can't have it both ways. We don't have a complete picture of what Scholz said to Xi behind closed doors. But given his public statements, the Chinese leader can be forgiven for feeling like he could indeed have it both ways.

The weeks leading up to Scholz's trip don't inspire confidence either. The Chancellery, I learned, requested at the last minute that the Commission postpone the announcement of its case against China for discriminatory purchasing practices in the medical device sector. It appears that the arrests of three German citizens for passing information on military technologies to China, and of a parliamentary assistant to a far-right German member of the European Parliament, suspected of espionage for China, were also slowed down to avoid embarrassing Chinese leaders while Scholz was in Beijing. This did not prevent Beijing, in a bizarre twist, of the invocation German Ambassador after the arrests. I understand that separately, a month before Scholz's trip, Berlin rejected a request from Taiwan's vice president-elect, Hsiao Bi-khim, to travel as a private citizen through southern Germany on a journey. visit to Europe. Hsiao, who will not take up official duties until the end of May, has been allowed to enter Belgium, Czechia, Lithuania and Poland.

Where is the pork?

In Beijing, I understand Scholz promised his hosts that any steps to exclude Huawei from Germany's 5G network would be taken quietly, without a public announcement from the government. It's unclear how this will work in practice in a country where government transparency is sacrosanct. But I was told that Berlin, after years of trying, would be days away from making a decision on Chinese 5G suppliers. Let us at least hope that the final decision will reach the telecommunications operators who will have to implement it. Several officials told me that China refusal to give up Restrictions on the import of German pork during Scholz's trip were partly linked to the lack of clarity on Germany's final position on Huawei. China's ambassador to Germany reiterated a years-old warning in the weeks before Scholz's trip that his host country face the consequences if Chinese suppliers were excluded from the 5G network. This issue, I was told, was high on the list of demands of Chinese leaders during Scholz's meetings in Beijing.

Interestingly, a separate deal between the German and Chinese governments to cooperate on connected vehicles nearly collapsed as the Greens and Free Democrats fought over language days before it was concluded. In the end, I was told, the Greens managed to introduce language on reciprocity and compliance with EU data standards. the press release (more than two weeks later, the full agreement has not been published). But the Commission still considers this agreement problematic. We are all a little lost. We know our companies are struggling to extract data from China. But we are working to resolve this problem, a European official told me. It boggles the mind that Germany is doing something limited to the automotive sector. This takes away our influence.

Gulf of China

All this indicates that there is a dangerous divide between Berlin, on the one hand, and Brussels and Paris, on the other. This chasm could be full screen next week, when French President Emmanuel Macron and European Commission President Ursula von der Leyen speak with Chinese President Xi Jinping in Paris. During Xi's latest trip to Europe, Macron hosted him alongside Angela Merkel and Jean-Claude Juncker, the predecessors of Scholz and von der Leyens. Five years later, Europe's united front against China no longer includes Germany. I understand that Macron might still try to convince Scholz to join Xi's party in Paris when the two leaders meet on Thursday for a private dinner with their wives. But an official in Scholz's entourage rejected the idea that he could travel to Paris to see Xi so soon after his trip to China. If this is the final word, the picture that emerges will be one of a divided Europe, with Berlin pursuing a “Germany first” approach. Germany must be careful not to give the impression of acting against European interests with regard to China. We are very close to that line, a senior EU diplomat told me. Another person involved in EU China policy accused Scholz of leaving the French in the lurch during his trip to China. The only thing they wanted from the Germans was a strong message about trade, and Scholz couldn't even deliver that, this person said.

The messages from Berlin have raised concerns within parts of the Commission that Germany could try to sabotage the case of electric vehicles. The Chancellery's position on this subject is very clear. They occupy the same position as the German automobile industry. They want it to go away, a German official told me. But with his Green coalition partners backing the Commission's investigation and the French firmly behind von der Leyen, Scholz's options appear limited. The Commission can impose interim measures duties on imports of electric vehicles of China before July without the approval of Member States. And Berlin would set a disastrous precedent if it then tried to convince other member states to join it in blocking final duties later this year. In my opinion, this procedure is unstoppable, added the German official. The Commission is determined. And the French will not oppose the Commission. The Chancellery will have to take care of it.

Mountain air

That puts Macron, whose warm-and-fuzzy trip to China a year ago drew heavy criticism, in the odd position of playing tough guy to Scholz during Xi's visit to France next week. The decision of the French president, a week before the visit, to invite the president of the Tibetan government in exile, Penpa Tsering, at the Lyse Palace, sends a signal to the Chinese leaders that it is difficult to imagine that Scholz would ever dare to send. Trade and China's position on Ukraine top the list of French priorities for the meeting with Xi, according to diplomats, who expect the Chinese leader to pressure Macron to abandon his support for the investigation into electric vehicles. It is unlikely that mountain air of the Pyrenees, where Macron will take Xi and their wives for a more personal exchange after the Paris talks, will lead to any sort of breakthrough. By then, Xi may already be looking forward to the next leg of his trip, to Serbia, where he will land on the 25th anniversary from the American bombing of the Chinese embassy in Belgrade, or to its final stage, in Hungary, where another Chinese car manufacturer is established open a store. One thing is certain: He won't hear complaints about Chinese electric vehicles or his close ties to Putin. Happy Alexander Or Victor Orbn.