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Watching China in Europe - October 2021

October 05, 2021

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, Noah Barkin—a senior visiting fellow at GMF and managing editor at Rhodium Group—will provide his personal observations and analysis on the most pressing China-related developments and activities throughout Europe.

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Not the Main Course

For months, October 5 has been marked in the calendar as the day when the European Union’s 27 leaders would talk about China. Officials in Brussels had been preparing a special China paper to feed into the discussion. The idea was to have the first high-level exchange about China strategy in a year. In recent weeks, however, that plan was quietly abandoned. China will still be on the menu when leaders gather for their informal dinner in Slovenia on Tuesday, but it is no longer the main course. Instead, Afghanistan and—at the request of France—Australia’s submarine deal with the United States and the United Kingdom have thrust their way onto an agenda that now has the curious think-tanky title “The EU’s place in the world.”  “The initial idea was to have a China strategy discussion. Now the pure China discussion is unlikely to happen,” a senior EU official told me. “Once again, there is a feeling that we need to talk about urgent matters, not the broader trends.” 

After a meticulously choreographed first six months of Biden administration diplomacy on China, the past two months have been a disaster when viewed through the prism of the transatlantic relationship. The two sides did pull off their Trade and Technology Council (TTC) meeting in Pittsburgh on September 29, despite a late French push to postpone the meeting and then to water down its joint statement. -    But for advocates of a robust transatlantic agenda on China, recent events have been anything but encouraging—even if one sees the withdrawal from Afghanistan as necessary and Australia’s embrace of a defense alliance with the United States as understandable. “There is only one winner coming out of all of this and it’s the PRC,” the senior EU official said.

French Fury

Washington is going out of its way to make amends for having kept France in the dark on the submarine deal. Joe Biden came as close as a U.S. president ever comes to a public apology in the joint statement that followed his September 22 call with Emmanuel Macron. A statement from Quad leaders, days later, conspicuously welcomed the EU’s strategy for the Indo-Pacific. France’s Ambassador Philippe Etienne has returned to Washington and met with National Security Adviser Jake Sullivan, who is promising the French “in-depth consultations on a range of strategic matters”. And there is more to come: I was told Biden may visit Macron in Paris later this month before travelling on to Rome for the G20 summit. But no one in Washington should think that a pat on the back and a few mea culpas will put this to rest.

In the latest Watching China in Europe podcast, Maurice Gourdault-Montagne, who served as France’s ambassador to China, Germany, the United Kingdom, and Japan as well as as deputy foreign minister until 2019, described the AUKUS deal between Washington, London, and Canberra as a “shockwave.” He suggested that Paris would now push back more forcefully against U.S. pressure to refocus NATO on China: “Do we need to gather together all the countries alongside the U.S. to attack China? No.” Another French diplomat rejected any suggestion that Paris and Washington had moved on from the AUKUS episode: “There is a feeling out there that the Macron-Biden statement has ended this. We don’t see it that way.” I was told that the Élysée is rethinking the contours of a big Indo-Pacific event it plans to host in February, as one of the highlights of France´s EU Council presidency. Do not expect Australia or the United Kingdom to receive an invitation. Paris is putting the relationship with Canberra on ice until the next Australian election, expected in the spring of 2022, in the hope that voters boot out Prime Minister Scott Morrison. Neither does it seem inclined to listen to Prime Minister Boris Johnson’s pleas to “donnez-moi un break” or “prenez un grip”. The franglais jibes have only added fuel to a raging French fire.

Rapidly Closing Window

None of this is good for efforts to mount a collective response to China. But it would wrong to put all the blame on the Biden administration and its Anglo allies. What the AUKUS deal shows above all is the sense of urgency in Washington and Canberra when it comes to China. The same sense of urgency is not there in Europe. Even French diplomats conceded to me that the EU’s Indo-Pacific strategy lacked strategic teeth and will need to be made more “political” in the months ahead. “We are caught between our own unwillingness to step up and an American protector who is less interested,” a German defense official told me. As Tom Wright of Brookings noted recently, Europe and the United States face a rapidly closing window of opportunity to get on the same page and create facts on the ground while Biden is in office. How soon will it be before another “America First” president emerges in Washington or political changes in Europe make transatlantic cooperation an even harder sell?  The conditions for such cooperation are much better now than they are likely to be in the years ahead.

Trade, Technology & Connectivity

The TTC meeting in Pittsburgh offered glimmers of hope, with both sides committing to closer cooperation on export controls, investment screening, and standard setting. I was told that officials in Washington have also begun discreet discussions with partners like the Netherlands and Japan in a bid to forge a consensus, outside of the Wassenaar Arrangement, on export controls related to semiconductors. A common approach from like-minded countries on this important issue would send a strong signal. There are also signs that Europe is preparing to move on other China-related policies that have been stuck for years in a bureaucratic morass. It was encouraging to see European Commission President Ursula von der Leyen embrace a revamp of the EU’s connectivity strategy—renamed Global Gateway—in her state of the union speech in mid-September.

Still, there are reasons to question whether the European Commission is serious about developing a real geopolitical alternative to China’s Belt and Road Initiative (BRI), as big member states have been urging. At the same time as it is touting Global Gateway, I learned, EU institutions are also poised to double down on connectivity cooperation with China, with the launch of a major $2 million study (with funding split between Brussels and Beijing) of rail transport corridors between Europe and China. The study, to be carried out by the European Bank for Reconstruction and Development and the Asian Infrastructure Investment Bank, has raised eyebrows among some EU diplomats because it includes the possibility of rail corridors through countries like Iraq, Syria, India, Pakistan, Iran, and Afghanistan. Some see this as a use of EU taxpayer money to further Beijing’s BRI ambitions in its zones of interest. The European Commission will have to explain how this project fits with Global Gateway, an initiative that Von der Leyen has made clear is aimed at countering Beijing’s influence.  

German Election

This edition of Watching China in Europe would not be complete without a quick look at Germany’s recent election results and what they could mean for Berlin’s policy toward China. There are differences of opinion on that front. Some observers believe that German policy would change little under a coalition of the Social Democrats, Greens, and Free Democrats (FDP) – the most likely scenario. Others, including myself, believe the departure of Angela Merkel and the entry into government of the Greens and the FDP, who advocate a tougher line toward Beijing, will change the dynamic in Berlin. This is a view that is shared by many of the diplomats who have worked closely on China policy in Berlin and Brussels in recent years. But the fact that Social Democrat Olaf Scholz, the probable next chancellor, has no real foreign policy profile adds an element of doubt to any and all predictions.

One German diplomat who expects a shift to a harder stance in Berlin pointed to the changes that would occur across the government with Merkel’s conservatives out of power.  Not only would she be leaving but also the officials—from her economic adviser Lars-Hendrik Röller to Economy Minister Peter Altmaier—who helped drive her China policy. “Regardless of Scholz, if you have the Greens in charge of the foreign and economy ministries, which is not a stretch, then you will have a very different dynamic in Berlin,” this diplomat said. Another veteran diplomat was more cautious: “Will we have a change of attitude, a change of rhetoric? Yes, I think we will,” this diplomat said. “The question is how much these changes translate into a real shift in policy.” This diplomat predicted that France’s Emmanuel Macron would try to take advantage of Merkel’s absence to create more distance between Europe and the United States. “How does Scholz react if Macron is pulling him in this direction? We don’t know.”

The next government will face important decisions in its first months, including on Huawei’s role in Germany’s 5G network and the renewal of the EU’s Xinjiang sanctions in March. Escalating tensions in the Taiwan Strait could force Berlin to position itself more vocally on one of China’s reddest lines. One diplomat who has regular exchanges with Chinese counterparts said this was the biggest concern in Beijing. “It is their worst nightmare. They see the Taiwan debate shifting. They see what the Greens and FDP are saying. If Germany starts speaking more loudly, they have a real problem.” Further departures from the 16+1 grouping with China are also possible early next year, with Estonia, Romania, and the Czech Republic all considering following Lithuania’s recent lead, I was told. If these countries were then to incur the wrath of Beijing, as Lithuania has, then the parties in the next German government would face an early test of their commitment to more European solidarity vis-à-vis Beijing.