Mikołaj Woźniak, Konrad Falkowski
Global Times on Dutch plans to restrict technology exports to China
“Americans, Americans, Americans” – this is how one could describe the Chinese perception of the Dutch government’s plans to restrict the export of high-tech semiconductors to China via the Dutch giant ASML. We discussed this in more detail in the previous edition of the Review. Now it is worth taking a closer look at the Chinese response, which was included in an article by the Chinese propaganda mouthpiece – the Global Times.
Right at the beginning, it was written about Washington’s policy, the aim of which is to limit the export of chips and equipment for their production to the territory of the People’s Republic of China. It was further suggested that the situation would force American allies, such as the Netherlands, to “implement stricter export controls”. According to the Global Times, this is a “strategic move” by the United States, firstly “to further antagonize China” and secondly, “to curb its development”. In such a case, the Netherlands’ joining this strategy is to deepen the growing gap in both Washington-Beijing and Amsterdam-Beijing relations, and this – following the logical sequence – increases “global geopolitical instability”.
Washington is to exert pressure on its allies and impose its beliefs and strategies on them in the context of semiconductors: “The US is pressuring its allies to strongly sever ties with China’s industrial and supply chains, once again putting the Dutch government and ASML, one of the world’s most important producers of chip manufacturing equipment, in a dilemma”. The Global Times tries to show, by naming other countries besides the Netherlands, such as Japan and South Korea, that they face ” a difficult choice between economic interests and political pressure from US hegemony.” If ASML gives in to this pressure, it will lose the huge Chinese market, which in turn will be associated with equally huge losses in profits and even undermine ASML’s dominant position in the global market. The repercussions in the form of worsening relations will also extend to the Netherlands itself, which will choose the “side” of the US.
The conclusion of this text can be seen as, first, a suggestion to the Dutch government and ASML itself that they should “reassess their cooperative relationship with China”. Second, it shows that China, although ” lags behind the US in advanced chip technology, China’s main advantage remains in manufacturing application products”, will not give up its development aspirations and catch up with the United States: “China will double its efforts to fully resolve the technical issues of high-end chip production”. Finally, the Global Times claims that for those companies that side with Washington, “it will be challenging to return once they lose the Chinese market”.
Sanchez in China
In the past two years, Spanish Prime Minister Pedro Sanchez has visited the People’s Republic of China for the second time and met with its top officials. He last visited China in March 2023 and assured that he had spoken to President Xi Jinping about his support for the Ukrainian president’s peace plan.
This time, the purpose of the visit was fundamentally different. In the face of the growing trade conflict between the European Union and China, the Spanish Prime Minister decided to go for personal consultations with Xi, Chinese Premier Li Qiang and a representative office of Chinese business. Spain has an interest in ensuring that there is no economic war, because when the EU attacks Chinese electric cars, China retaliates against a sector in which Spain is one of the leaders. This concerns the pork trade, especially to China (in 2023, exports to China were worth $1.5 billion). Spain also has a significant share in the trade of dairy products (in 2023, sales of these products to China reached $50 million), on which Beijing is also imposing anti-subsidy investigations (more on this in the August edition of the Review). According to Reuters, their source, “independent” and “with direct access to the meeting between Xi and Samchez”, said that the leaders of both countries “found harmony and understanding” in the context of China’s restrictions on pork from Spain.
It is therefore no wonder that Sanchez came to Beijing in the spirit of “making a deal” and trying to soften both the EU’s and China’s course. This situation also benefited the Chinese president, who expressed his hopes that “Spain will play a constructive role” in the context of Beijing-Brussels relations. His other hopes were that Spain would “continue to provide a fair, equitable, safe and non-discriminatory business environment for Chinese enterprises” so that they could develop in the Spanish market. He also stated that in today’s “turbulent world”, both China and Spain should expand their cooperation towards the markets of the Global South, because they share a “sense of responsibility and mission” and share values such as multilateralism and free trade in international relations.
There is no denying that in this meeting, Xi was the one on top, and Sanchez was the one in need. The Spanish government’s statement says that Sanchez emphasized that his country is intensely engaged in “developing a positive program and seeking compromise solutions that will benefit all parties, including Europe.” Moreover, the Spanish prime minister insisted that relations between Europe and China should be “as close, rich and balanced as possible,” and all of this based on mutual trust.
As can be further read from government sources, Sanchez also raised the subject of the conflicts in Ukraine and Palestine. He stated that it is in the interest not only of Spain and Europe, but also of the People’s Republic of China to find a common solution based on international law and the principles set out in the UN Charter. At this point, he emphasized that “China’s influence as a country committed to peace is fundamental to trying to resolve the conflicts that unfortunately affect the planet.” However, from the Chinese side, we can find only one sentence, which says that the leaders of both countries “exchanged their views on the Ukrainian crisis, the Palestinian conflict and other issues.” So, it is clear that Beijing still sticks to, firstly, such nomenclature, and secondly, to “pro-Russian neutrality.”
On the same day, the Spanish Prime Minister also met with his Chinese counterpart, Li Qiang. The meeting could be considered more practical, as it concluded with seven agreements on ecology, trade, investment, culture, education and science. During the conversation, Sanchez eloquently stated that Spain is seeking to develop cooperation, especially economic cooperation, with China: “We want to build bridges to jointly defend a fair trade order that allows our economies to develop and benefits our industries and citizens.” Li added that China is ready to cooperate with Spain “to implement the important consensus reached by the leaders of the two countries, build political mutual trust, and jointly build bilateral relations with strategic focus.”
The Spanish Prime Minister’s visit to the Middle Kingdom was continued with a visit to Shanghai, where he held a series of meetings with representatives of business and culture. First of all, during his speech at the opening of the Spain-China Business Meeting, he advocated economic openness, i.e. greater trade and investment, while ensuring that they are fair and balanced. In his opinion, the specter of a trade war should be eliminated through dialogue, and the trade conflict itself “will not benefit anyone”, and a solution should be developed within the World Trade Organization (WTO). Later, during a meeting between the Spanish Prime Minister and the management of the Chinese company Envision, an agreement was signed regarding electrolyzers for the production of green hydrogen. Another business visit was a meeting between the Prime Minister and the CEOs of Chinese automotive companies: Chery, SAIC Motor and Hunan Yuneng – these companies expressed their interest in being present on the Spanish market, especially SAIC, whose CEO confirmed his desire to build a factory on the Spanish soil. Sanchez also visited Tongji University and inaugurated the opening of the second Cervantes Institute in China.
Beijing wants negotiations on the Chinese EVs
On September 10, the People’s Republic of China proposed negotiations on Chinese electric cars and EU countervailing duties. The aim of such a move was, of course, an attempt to soften the proposed tariffs by the European Commission. The Chinese sent a special delegation to Brussels, led by China’s Vice Minister of Commerce Li Fei. The European Union side was represented by Sabine Weyand, Director General for Trade. During the talks, Li tried to convince that it would be worth turning to consultations to discuss the issues of bilateral trade and Chinese electric vehicles.
Li’s mission can be described in the following words, spoken by the spokesman of the Chinese Ministry of Foreign Affairs: “China is willing to continue to work closely with the EU to reach an early solution that meets the common interests of both sides and conforms to World Trade Organization rules, so as to promote the sound and steady development of China-EU economic and trade relations.” Beijing was also aware of what the Ministry of Commerce emphasized, that the issue of Chinese electricians is “complex” and achieving success is a “significant challenge.” However, it expressed – not for the first time – hope that the issue will be resolved amicably: “we continue to maintain the utmost sincerity and hope to resolve the dispute through dialogue and consultation and find a mutually acceptable solution.”
It should also be noted that Li’s visit to Brussels had another purpose, namely, to lay the foundations for talks between the Chinese Minister of Commerce, Wang Wentao, and his EU counterpart, Valdis Dombrovskis. You can read more about these consultations later in the Review.
EU rejects proposals from Chinese producers
The public opinion, thanks to the words of the European Commission spokesman for trade Olof Gill, has been informed that the Commission has rejected proposals from Chinese producers of electric cars, which were to concern price adjustments in order to avoid an undesirable increase in the value of tariffs before potentially crucial talks between Beijing and Brussels. Gill announced that although the Commission did not accept the “offer of price undertakings” put forward by Chinese exporters, this does not mean that the EU is closing itself off from talks, on the contrary – it is “open to a negotiated solution”. Gill also made it clear that the lion’s share of the effort to work out a solution to the conflict over electric vehicles lies with Beijing, not Brussels: “The Commission has no obligation to determine what that solution should look like […] It is their turn”. He also assured that the Commission has undertaken an appropriate analysis of these offers “based on World Trade Organization rules and EU anti-subsidy rules”. Gill made it clear that the lion’s share of the effort to work out a solution to the conflict over electric vehicles lies with Beijing, not Brussels: “The Commission has no obligation to determine what that solution should look like […] It is their turn”. He also assured that the Commission has undertaken an appropriate analysis of these offers “based on World Trade Organization rules and EU anti-subsidy rules”. He went on to detail what exactly that involved: “Our review focussed on whether these offers would eliminate the injurious effects of the subsidies identified in our investigations and whether these price undertakings could be effectively monitored and enforced. The Commission has concluded that none of the offers met these requirements.” Unfortunately, more detailed information on this subject was not disclosed and remains confidential.
As you might guess, the above-mentioned review showed that it was impossible to accept the proposals put forward. However, as the Financial Times reports, such a decision was not made without internal disputes. Some member states fear retaliatory actions (an eye for an eye) from the People’s Republic of China above all. We can already hear about them: the Chinese are primarily examining European dairy products, pork and brandy.
In response to the EU’s actions, China has expressed disappointment. Beijing said Brussels had disregarded “the good faith and efforts made by the Chinese EV industry” by rejecting proposed solutions to the dispute over Chinese electric vehicles and refusing to hold broader consultations on the issue. The Chinese Ministry of Commerce said it would “closely watch the EU’s subsequent actions” and “take all necessary measures to defend the legal rights of Chinese companies.”
Wang Wentao’s journey across Europe
Wang and Tajani
The Minister of Commerce of the People’s Republic of China, Wang Wentao, began his previously announced “Tour de Europa”, the aim of which was to lobby for a softening of the EU’s stance on Chinese electric vehicles. He began in Rome and a meeting with the Italian Minister of Foreign Affairs. Before the meeting, Antonio Tajani, when asked about it by a journalist from the Italian newspaper “Corriere della Sera”, replied that Italy supports the actions of the European Commission, which are to level the playing field on the automotive market and prevent unfair practices, such as dumping. “Our companies must compete on equal terms. In order to achieve these goals, in Brussels we support the obligations proposed by the European Commission aimed at protecting the competitiveness of our companies,” stated the head of the Italian Ministry of Foreign Affairs. This approach is also evidenced by the non-binding vote of the member states on the entry into force of the proposed countervailing duties – Italy expressed its approval at that time (we discussed this topic in the Review in July).
The Chinese and Italian ministers met on September 16 this year in Rome’s Farnesina, the third time they have met. According to a government source, Wang’s visit to Rome is a prelude to the planned visit to China by Italian President Sergio Mattarelli. Tajani said that “relations between Italy and China are going through an important phase of recovery” – which is a fact, because after leaving the Belt and Road Initiative at the end of 2023, the Italians are trying to rebuild relations with China next year, proposing a kind of reset of those relations and moving to a more partnership-based level of cooperation. Tajani added that he sees a clear “need for fair access to the Chinese market and a level playing field for our companies, especially SMEs [Subject-Matter Experts] and companies in the agri-food sector”. And that is why, in his opinion, Italy wants to continue working with China “to strengthen economic cooperation and restore the balance of trade between Rome and Beijing”.
The Italian Foreign Minister also touched on issues related to international security, especially in the context of the war in Ukraine and the conflict in Gaza. In his words, “I raised the issue of supplies of military equipment to Russia,” and he also recognized that “China’s cooperation is of fundamental importance also in view of the next peace conference.” A problem closer to Italy concerned security in the Red Sea. Here, Tajani also appealed to the Chinese, noting that “it is very important for China to cooperate for the security of the Red Sea, a region of key importance for freedom of navigation and export security.”
According to Reuters, Wang reportedly stated during his visit to Rome that the EU investigations were causing concern among Chinese investors and seriously affecting their confidence in investing – in this case, in Italy. Moreover, in a conversation this time with Italian Economic Development Minister Adolfo Urso, he said encouragingly that the foundations for cooperation between Beijing and Rome in the context of the automotive industry were “solid” and its potential was “huge.”
Wang and Habeck
The next stop for the Chinese Minister of Trade was Berlin and a meeting with the Minister of Economy of the Federal Republic of Germany, Robert Habeck, which took place on September 17. Germany is more willing to resolve this conflict without unnecessary losses, because the largest German automotive companies want to continue to cooperate with China and deepen this cooperation, and the CEOs of Volkswagen and BMW, quoted in many editions of the Review, have spoken directly about the disadvantages that the introduction of countervailing duties may bring. In his message, Habeck stated that Germany does not seek to develop a trade conflict, but wants to avoid it: “We want to avoid a trade conflict with spiraling tariffs that ultimately harms both sides at all costs.” Therefore, in his opinion, the way out of this situation is a “political solution.” The German minister, speaking to his Chinese counterpart, also wanted to emphasize that it was not in Germany’s interest to avoid competition with the Chinese: “On the contrary, we embrace competition – but it must be on fair terms,” he said, most likely wanting to dispel doubts that Germany would benefit from weakening China on the European market. The question is whether he said this sincerely or was just an attempt to present himself well to the Chinese side.
Speaking about the Chinese side, Wang admitted that the European Commission’s actions would “seriously interfere” cooperation between China and Germany on trade and investment grounds. He also expressed his hopes that the dispute could be resolved within the World Trade Organization almost immediately, because in such a situation it would be possible to avoid further deepening of the tensions between Beijing and Brussels. The Chinese also want to assign Germany a leading role in actions aimed at sabotaging the plans of the European Commission. Beijing’s efforts have failed, as the EU has not responded to attempts to hold consultations. Therefore, at this point it wants to initiate them from the inside – in this case through Germany. As Wang himself stated, China will continue its efforts “until the last moment”. In this way, he also expressed hopes that “Germany, as a core member of the EU, will take the lead in playing an active role and urge the European Commission to show political will and work together with China to properly resolve the case.”
Wang and Dombrovskis
Wang’s last and final stop on his trip around Europe was Brussels and a meeting with Valdis Dombrovskis – Vice-President of the European Commission and Commissioner for Trade. The topic of the conversation was, of course, the issue of EU tariffs on electric vehicles from China. According to the European Commission’s press release, Dombrovskis and Wang “held a frank and constructive discussion”. For his part, the Vice-President of the European Commission admitted to his interlocutor that the investigation conducted by the EU “is based strictly on facts and evidence and is in full compliance with WTO rules and EU law”. At the same time, he added that despite this, the European market remains “open to imports of Chinese electric vehicles”, because the EU is not about glorifying only European companies and closing itself off to external companies, i.e. falling into isolationism and protectionism, often accused of Brussels by Beijing, but to compensate for detected state subsidies and thus equalize the opportunities on the market. Moreover, both sides indicated that they continue to express their willingness to hold consultations that would help end the dispute in a “peaceful” manner. Therefore, Dombrovskis and Wang were to instruct their working teams to make “every effort” to work out a solution acceptable to both the European and Chinese sides. They also agreed to launch a special communication channel at ministerial level, which would support the consultation process and ease tensions. The EU Commissioner made a point of mentioning the Chinese investigations against goods from the European Union. We are talking about brandy, pork and dairy products. According to Dombrovskis, they are “unwarranted” and based on “questionable allegations” and “lack sufficient evidence”. Therefore, according to the European Commission, they are unfounded and should be suspended by the PRC, and the Union itself will firmly “defend the interests of its industries.”
For his part, as the Global Times article reads, Wang described the rulings of the anti-subsidy investigations initiated by the European Commission in three ways during the conversation: first, that they were “non-compliant,” second, “unreasonable,” and third, “unfair.” He also called for the implementation of the “consensus reached by the leaders of China, France, and the EU,” thereby wanting to evoke the positions of some EU member states, suggesting – probably – that the Commission is acting against the will of EU countries.
Cui Hongjian, (Beijing Foreign Studies University) suggested in the quoted text from the Global Times that the Dombrovskis-Wang talks of September 19 were to be a “positive signal for both sides”. A slightly different narrative can be found in the Western press, for example on the POLITICO and Euronews portals. In these two cases, the assessments of the talks were more reserved and not necessarily indicating great optimism. It was reported that Brussels and Beijing had agreed to reconsider the price undertakings, which would help reduce tensions between the two capitals. However, this situation did not turn out to be a breakthrough in the whole matter and it can be assumed that the European Commission is not wandering from its chosen course. The final destination will be the vote on October 4, 2024, and the vote of the EU member states on the adoption of tariffs (you can read about this in the next edition of the Review).
EU questions Chinese investigation into European dairy products
A month ago, in the August issue of the Review, we wrote about how China had retaliated by announcing an anti-subsidy investigation into European dairy products. This was in response to the European Commission’s disclosure of the final tariff figures. Nevertheless, the EU was not particularly concerned about such a move by Beijing.
On 23 September, the European Commission filed a request for consultations at the World Trade Organisation (WTO), questioning the validity of the Chinese investigation. As emphasised in a press release by the Commission – and later highlighted by Reuters – this is the first time that the EU has taken such action, as it has never previously challenged an investigation “at its initiation stage”. According to the Commission, the justification for challenging the Chinese investigation is, firstly, “questionable allegations” and, secondly, “insufficient evidence”. Moreover, according to the Commission, such action is fully justified, because in this way the European Commission is doing what it has committed to: “firmly defend the interests of the EU dairy industry and the Common Agricultural Policy against abusive proceedings.” The consultations at the WTO are to be the first step towards resolving the dispute between the parties. However, if this fails, then the EU has the right to ask the WTO to convene a special panel to decide on the investigation.
On the same day, upon learning of the Commission’s application, the Chinese Ministry of Commerce decided to address the whole matter. A representative of the ministry, in a Xinhua news release, said that Beijing was disappointed with the European Union’s move: “China regrets that the EU referred the anti-subsidy investigation to the WTO dispute settlement mechanism and will deal with it in accordance with the relevant WTO rules.” It was probably hoped that the matter would be resolved through bilateral consultations, without third parties, and the talks themselves could have an impact on the issue of tariffs on Chinese electric cars.
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