Watching China in Europe - April 2021

9 min read
Welcome to Watching China in Europe, a monthly update from GMF’s Asia Program.

Welcome to Watching China in Europe, a monthly update from GMF’s Asia Program. Now more than ever, the transatlantic partners need clarity and cohesion when it comes to China policy. In this monthly newsletter and the WCIE podcast series, Noah Barkin—a veteran journalist, managing editor at Rhodium Group and a senior visiting fellow at GMF—provides his personal observations and analysis on the most pressing China-related developments and activities throughout Europe.

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A Sanctions Punch

“We slapped them on the fingers and they punched us in the face,” is how one senior German official described the tit-for-tat exchange of sanctions last month between the European Union and China. As is often the case with punches to the face, Europe didn’t see this one coming. And more than a week later, it still hasn’t decided whether to get up off the canvas or stay down and pray that the bell rings, ending this bruising round with the heavyweight in Beijing. But one thing is sure: China’s decision to respond to the EU’s studiously measured Xinjiang sanctions with a powerful left hook to European lawmakers, EU institutions, individual academics, and leading think tanks (not to mention family members and associates) takes the relationship into uncharted territory. It shows that Europe’s attempt to compartmentalize its relationship with China may be running up against its limits. It shows that Beijing won’t hesitate to punish Europe if it gets serious about cooperating with the Biden administration. And it shows that, when push comes to shove, Xi Jinping is perfectly happy without that investment agreement he clinched with the EU just a few months ago. Bludgeoning Europe into submission on China’s red lines—Xinjiang, Hong Kong, and Taiwan—is a higher priority than getting the CAI over the finish line. This is a clarifying moment for Europe, which has spent the past years working diligently on its technocratic toolbox of defensive measures, while averting its gaze from the bigger geopolitical choices it faces in an era of great power competition. “The Chinese are doing us a favor—they are pointing out that all of this has a price tag,” the senior German official said. “Are we prepared to live with a Volkswagen that is half the size of what it is now? That is what this boils down to. That is the debate we need to have.”

This debate may have to wait until Angela Merkel rides off into the sunset. She expended her last ounce of diplomatic capital with China on an investment deal that now lies in tatters. By remaining silent on Beijing’s counter sanctions (not a single mention in her Bundestag speech last week, in her post-EU summit press conference, or in her one-hour prime time TV interview on Sunday), she has made clear that her focus is on de-escalation—the diplomatic equivalent of staying down on the canvas. So where to next? Germany is due to hold government consultations with China at the end of April. The two sides had agreed to make this high-profile annual gathering a virtual affair after last year’s meeting was cancelled because of the pandemic. Now some people in Berlin are questioning whether it should happen at all. “Both sides need time to think. I’m not sure that this meeting should happen anytime soon,” one German diplomat said. Merkel, however, remains committed to the meeting, I was told. This means that it is likely to go ahead, barring a cancellation from the Chinese side. German officials are not ruling that out—in part because, they say, Beijing has come around to the view that Berlin was the “ringleader” that convinced others to get behind the EU’s Xinjiang sanctions. Hungary, which had been the lone EU country resisting those sanctions before it caved under pressure from other member states (pressure from Washington also played a role, according to some officials), has been feeding this narrative, putting the blame squarely on Berlin in its conversations with Chinese diplomats. The Hungarian foreign minister’s public denunciation of the sanctions shortly after having agreed to them was the latest surreal twist in Europe’s troubled quest for a common line on China.

Carte Blanche

Is China finished retaliating? No one knows for sure. Beijing suspended its human rights dialogues with the EU, Germany, and other European countries in the immediate aftermath of the EU sanctions—a symbolic move that China often resorts to in times of tension. And it has ratcheted up pressure on Europe behind the scenes since then. I was told that China’s foreign ministry had lodged a formal protest with the EU following attempts by the EU delegation and diplomats from several member states to attend the trial in Beijing of imprisoned Canadian Michael Kovrig, denouncing the move in a call with EU officials as a violation of its judicial sovereignty. In the same call, the ministry warned EU counterparts not to enter into an anti-China coalition with other countries, referring specifically to President Biden’s video meeting with EU leaders and Secretary of State Antony Blinken’s visit to Brussels. “The wolf warriors in China’s foreign ministry have been given carte blanche,” the German diplomat said. “Yang and Wang are being celebrated as national heroes after Anchorage. Lashing out at the West has become a popular sport in China.”

In the end, Xinjiang is unlikely to be the issue that leads to a deeper rupture between Europe and China, European diplomats say. Neither will it be Hong Kong, no matter how strong the statements of condemnation from Brussels are getting these days. But what about Taiwan? In the aftermath of their meeting in Anchorage, U.S. officials communicated their concern to European counterparts that China’s leadership may now be flirting with the idea of seizing control of the island. This prompted Biden’s Asia czar Kurt Campbell to issue an unusual warning in the Financial Times last week. Where is Europe on Taiwan? Not where it needs to be. “I don’t think we know how we would react,” confided the senior German official. “We urgently need to think about Taiwan scenarios. I don’t think there’s any doubt that this would be the defining issue for the transatlantic relationship.” The book this official is reading right now: “2034”—a geopolitical thriller in which a naval clash between the U.S. and China triggers a new world war.

17+1 Revisited

It has been almost two months since China held a virtual 17+1 meeting with Eastern and Southern European countries, and the full story of its pressure campaign around this gathering is only now coming out. You will recall that half of the 12 EU member states that participate in the format decided not to send their leaders to the meeting, in a stinging loss of face for Chinese officials who were under intense pressure to deliver prime ministers and presidents for host Xi Jinping. Weeks later, officials told me of a mad scramble by Beijing to convince the six defiant EU states (Bulgaria, Estonia, Latvia, Lithuania, Romania, and Slovenia) to reverse course. This included calls to the EU’s top diplomat Josep Borrell and to the German foreign ministry. It also involved a mix of trade threats and—24 hours before the meeting was to take place—a promise of cheap vaccines. All to no avail.

Although Lithuania has signaled on several occasions that it is considering leaving 17+1, conversations with diplomats in several capitals suggested that departures are not imminent. Poland, the largest EU country in the grouping, has been a vocal critic of 17+1 in the past. But its right-wing government appears to have little interest in exiting a grouping that gives it leverage with the EU. That has made it difficult for smaller countries like Lithuania, Estonia, or Romania to make a move. “If the core group that splits from the format is too small, and big EU countries like Poland remain, then this doesn’t look good,” a diplomat in one of the Baltic countries told me. There also appears to be little appetite in Brussels for making the cumbersome 27+1 format a permanent alternative for small member states seeking face time with China. Merkel had promised to get all 27 EU leaders together for a summit with Xi Jinping last year. That was cancelled because of the pandemic, prompting European Council President Charles Michel to offer Xi a make-up summit this year. Portugal, which took over the rotating EU presidency from Germany at the start of this year, then invited India’s Prime Minister Narendra Modi for a 27+1 summit in May in the city of Porto. But officials in Brussels are hoping these meetings will be the last ones in the bigger format. In the meantime, 17+1 limps on.

Disinformation & China

This month marks the one-year anniversary of the European External Action Service’s (EEAS) self-censorship scandal. You may recall that in April 2020, during the early months of the COVID-19 outbreak, the EEAS was found to have softened a report on Chinese disinformation after coming under pressure from officials in Beijing. The affair damaged the image of the EEAS and prompted departures from the cell set up in 2015 to counter disinformation and influence operations from hostile foreign powers, notably Russia. What has changed in the year since this incident—particularly in relation to China? Unfortunately, not a great deal. In a hearing at the European Parliament in early March, the head of the EEAS Josep Borrell complained that the unit had neither the mandate nor the resources to counter disinformation from China. In one sense he is right. The EEAS was never given the explicit mandate for China that it received for Russia. But it was given a broad mandate in 2019 to counter hybrid threats—a message that was reiterated by the European Council only a week before Borrell’s remarks. The complaint of no mandate, therefore, seems more like an excuse for inaction.

As for resources, the budget allocated for the disinformation work of the EEAS task forces was increased this year to 11.1 million euros, up sharply from the 6 million euros it received in 2020. An EU spokesperson told me that despite the rise, more resources were needed for the team to meaningfully extend its activities to actors like China. Over the past year, the team has brought on two staff members focused on China. It is currently in the process of hiring a third, I was told. But these are tiny numbers in relation to the challenge. Officials familiar with the team’s work say the larger budget has created space. What is really missing is clarity on the team’s approach to China. For instance, no one knows how much of the new 11.1 million euro budget will be dedicated to countering disinformation from Beijing. “This is not an issue of mandates or resources, it is about using the resources we have in a targeted way,” one official said. “There is a lot we could do in relation to China if the political will was there.” A year after the disinformation debacle, that still seems to be missing.