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GMF Newsletter

Watching China in Europe - September 2021

September 01, 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. 

August is the month when Europe likes to shut down and tune out—but this year has not gone according to plan. Officials in the big European capitals were forced into an all-hands-on-board scramble to evacuate their citizens from Afghanistan as the 20-year slow-burn war lurched to a chaotic, humiliating end. Meanwhile, closer to home, Lithuania became the latest country to find itself on the receiving end of a Chinese trade war, in this case for embracing closer ties with Taiwan. And in Germany the campaign to succeed Angela Merkel began to heat up. With less than a month to go until election day, her conservatives are in freefall and the Social Democrat Olaf Scholz has emerged as the latest favorite to be the next chancellor. All of these events, distinct as they may seem, have important implications for Europe’s geopolitical positioning—and for its increasingly fraught relationship with China. I have spent the past weeks speaking to officials whose summer breaks were delayed, interrupted, or cut short by international crises or national campaigning. Let’s take the issues one by one. 

After Afghanistan

Across Europe, there is broad understanding for the Biden administration’s decision to withdraw from Afghanistan. There is also a recognition that, even with the best preparation, this was never going to be a smooth process. And there is a sense that Europe shares some blame for failing to foresee the worst-case scenario and to engage more actively with Washington on the details of the pullout. But caveats aside, none of the diplomats and government officials I spoke to believe that the pictures of the Taliban overrunning Kabul and the United States on the run will be without geopolitical consequences for Washington—and that includes the Biden administration’s campaign to build a coalition to counter China.

First, officials say that the space for Europe to get cozy with Washington has narrowed. A concrete example of this: on August 16, Foreign Minister Heiko Maas was due to give a speech in Hamburg on Germany and Europe’s relationship with China that, according to people familiar with the planning, was going to highlight the importance of stronger transatlantic ties. “This is not a speech that is likely to please the Chinese side,” I was told beforehand. But Maas was forced to cancel his appearance on August 15 as the Taliban rolled into Kabul, and it is unclear whether he can or will deliver the same address now. For the time being at least, making the case for a robust partnership with Washington is not good politics.

Second, some fear that this sentiment will have ripple effects beyond Germany and Europe. One diplomat pointed to the looming Third Committee debate on human rights at the UN General Assembly in early October. Last year, 39 countries came together in condemning China’s actions in Xinjiang and Hong Kong. After the events in Afghanistan, convincing as many to stand up and condemn Beijing may be more challenging. “It will be more difficult to convince other countries to join with the United States in criticizing China. It will be harder to build coalitions. The attractiveness of the United States as a partner has lost its shine,” the German diplomat told me.

Another consequence, a senior diplomat in Brussels predicted, would be an emboldening of those voices that have been calling on Europe to chart its own course, independent of the United States. “Those in Europe arguing for more autonomy and independence will be strengthened,” the senior diplomat said. “In the end, U.S. policy is still ‘America First.’ This is one of the messages from the debacle in Afghanistan.” At a meeting of EU ambassadors in Brussels last week, I was told that some member states stressed the need for a deeper discussion about the transatlantic relationship in the wake of Afghanistan. Others underscored the importance of closer engagement with China and Russia—a message reiterated by Maas during a visit to Uzbekistan on Monday. The big fear, with elections looming in Germany and France, is that the chaos in Afghanistan could trigger another influx of refugees that would rip Europe apart.

Lithuania and Taiwan

The tensions between Lithuania and China may seem like a minor distraction next to Afghanistan, but they will play a central role at the meeting of EU foreign ministers in Slovenia this week, at which the broader relationship with Beijing is on the agenda. I was told that there are no plans to rethink the EU’s March 2019 strategic outlook on China, as High Representative Josep Borrell seemed to suggest in July. Instead, the discussion is expected to focus on two main themes: how to achieve greater EU unity on China at a time when many member states are unhappy with Chancellor Angela Merkel and President Emmanuel Macron’s 2+1 outreach to President Xi Jinping, and how to inject some positive momentum into an EU-China agenda that has gone nowhere since tit-for-tat sanctions in March sent the Comprehensive Agreement on Investment (CAI) into deep freeze. Addressing the diplomatic row between Vilnius and Beijing is central to both challenges. 

The ferocity of Beijing’s response to the announcement, in late July, that a “Taiwanese” representative office would soon open in Vilnius appears to have caught by surprise Lithuania’s government, which is calling on other EU member states to send a strong message of solidarity. Lithuanian officials told me that, in addition to widely reported steps to halt rail traffic and eliminate food export permits, China had closed a facility that grants Lithuanian importers interest-free three-month credits and closed the Hong Kong bank accounts of a leading Lithuanian telecommunications firm. The fear in Vilnius is of a total ban on imports and exports—a step that officials say would hurt. While only about 1 percent of the country’s exports go to China, Lithuania imports nearly four times as much from China—including essential inputs such as steel and semiconductors. Local companies are already scrambling to reorganize their supply chains. 

Lithuania has received strong support from Washington. In addition to public backing from Secretary of State Antony Blinken, I was told that the United States had sent a diplomatic démarche to all EU and NATO countries in late August, urging them to support Lithuania on the Taiwan question. This past week, a group of European lawmakers also offered their backing. But the European officials I spoke to were decidedly cool about the prospects for a strong statement from EU foreign ministers on the Taiwan question. “Our advice to Lithuania would have been go ahead and leave 17+1, continue to raise human rights issues, but think twice before taking on the Taiwan issue,” the senior diplomat in Brussels said. “You can do it but there will be blowback and you better be ready.”  

The German diplomat suggested that the best Lithuania could hope for was a vague message of support, without any mention of Taiwan—a result that risks underlining the lack of EU unity on the question and playing into Beijing’s hands. Lithuania took a risk by leaving the 17+1 format earlier this year—a step that was quietly applauded in Brussels, Berlin and other EU capitals. But no other European country has followed its lead—including Estonia, which under a previous government had privately assured Lithuania that it would move in lockstep with its neighbor, I was told. “I worry they will be left high and dry,” one Baltic official told me. “Would it cost the EU so much to put on a poker face and support Lithuania on this?” 

Scholz And China 

In recent months, I have touched on what a government led by conservative Armin Laschet or Greens leader Annalena Baerbock would mean for Germany’s China policy. But now, one month before the election, it is the Social Democrats that have taken a narrow lead in the polls, and their candidate, Finance Minister Olaf Scholz, may have the best shot at the Chancellery. Where does he stand on China, and would a Scholz-led government trigger a shift in Berlin’s approach? These are not easy questions to answer, given that Scholz has studiously avoided taking a clear position on some of the biggest China-related questions in recent years. 

This includes whether Chinese telecommunications group Huawei should play a role in Germany’s 5G network—a decision that will fall to the next government. Rolf Bösinger, the state secretary in the Finance Ministry and a close Scholz ally, has represented the government on Deutsche Telekom’s supervisory board for the past three years—a period during which the company, which is 32 percent state-owned, doubled down on Huawei as a 5G supplier. Scholz has also remained vague on whether he supports the CAI, though he did praise elements of the deal before the exchange of sanctions between the EU and China in March. During a foreign policy debate hosted by the Munich Security Conference in June, he railed against “decoupling fantasies” and called for a return of Cold War-style détente with China. “We shouldn’t talk up this crazy illusion that a resolution of the German Bundestag can change China overnight,” he said. 

Scholz served for seven years as mayor of Hamburg, a port city that lives from trade with China. He is a soft-spoken pragmatist, who has shown an aversion to open confrontation in domestic politics and in Germany’s relations with other countries. It is difficult to imagine him steering Berlin in a tougher rhetorical direction with China if he becomes chancellor. Still, German diplomats, SPD officials, and some members of Scholz’s entourage see policy continuity on China as unlikely, especially if he were to end up leading a coalition with the Greens and Free Democrats, whose leaders have been more openly critical of Beijing.  

“If the [conservative] CDU does really poorly in the election, the chances of a shift in China policy rise,” the German diplomat said. “Merkel herself has identified this risk—and that is why she is handing the China baton to Macron. He’s the one that is going to have to keep this on track. She realizes that she can’t count on her successor to do so.” Another official involved in SPD debates over China policy in the Bundestag put it this way: “I don’t think we would have continuity with Scholz. He will be pulled into the new dynamic with China—not because he wants confrontation, but because China itself is leading us down that path.” A poll for the foreign policy journal Internationale Politik this week showed that majorities in all the major German parties now support a tougher line on China—even if that comes with some economic pain. This is the mood that the next chancellor will have to grapple with.