Mikołaj Woźniak, Konrad Falkowski
Xi Jinping in France
May began with a bang in terms of relations between the European Union and the People’s Republic of China. On May 5, President Xi Jinping arrived to Paris – as planned – for an official visit, during which he met not only with French President Emmanuel Macron, but also with the President of the European Commission Ursula von der Leyen. Xi’s choice of France as the first of three stops during his May tour of Europe was not accidental. The President of the People’s Republic of China was perfectly aware of the “potential” that France had. And it was no accident that he omitted Germany. This omission can be considered a kind of triumph for Beijing, as it recognized that Germany was already sufficiently and appropriately disposed towards it in the context of bilateral cooperation, as well as EU-China cooperation. In addition, Xi Jinping showed Macron how much he values him and the country of which he is the leader. In this way, one could say, he wanted to stimulate “French superiority” embellished with a specific, deeply rooted French anti-Americanism manifested in the pursuit of France and the EU, according to its ideas, for independence, or more precisely, strategic autonomy. All this can be reduced to the issue of the EU’s “derisking” policy, i.e. reducing the dependence of EU member states on the Chinese economy. This policy, which has recently manifested itself mainly in the form of new anti-subsidy investigations, is a significant problem for China and the continuity of economic expansion on the European market. Therefore, Xi’s two-day visit to France can be described as an attempt to break the dominant “derisking” tendency in the European Union, especially before the elections to the European Parliament. Before the bilateral talks between Macron and Xi, a discussion also took place with President Von der Leyen. During the trilateral talks, three most important issues were raised, i.e. international issues, especially conflicts in the Middle East and Ukraine, trade between the EU and the People’s Republic of China, and those relating to cooperation to combat global challenges, such as climate change or the financial situation in the poorest countries in the world. Moreover, Macron and Von der Leyen appealed to their Chinese interlocutor about the need for much more “balanced” trade between China and Europe, but as it turned out, Xi was not eager to offer new concessions. After these talks, Xi’s official state visit to France began. The discussion between the two leaders covered bilateral relations between France and China and the pressing issues related to the Middle East and Ukraine. Macron thanked Xi for “his open attitude regarding provisional measures on cognac and for his wish not to implement them,” – referring to the current Chinese restrictions on French alcohol. For now, China is not to impose taxes or duties until the conclusion of the ongoing investigation into the matter. Importantly, 18 contracts and agreements on cooperation between French and Chinese companies were signed during the visit. The nature of these agreements mainly concerned the aviation, transport, energy and financial sectors. However, these are not agreements that would constitute a quantum leap in bilateral relations. In addition to the agreements, four joint declarations were also announced. The most interesting of them concerned the Middle East. Both sides declared the need for cooperation within the UN Security Council in order to end the conflict in Israel and sided with the concept of two states in Palestine within the borders defined in 1967. Additionally, Macron and Xi confirmed the commitment of France and China to the agreement on the Iranian nuclear program. They also called on the conflicting parties to “respect the Olympic truce during the Summer Olympics and Paralympics”, which should be treated more as a symbol than as action with real consequences. The next three concerned the issue of bilateral cooperation in the fields of artificial intelligence and management of world affairs, ocean biodiversity, and agriculture. On the issue of the war in Ukraine, President Macron – like other European leaders in recent times – has not managed to influence President Xi and his views on the matter to a great extent. Macron’s words, in which he thanked the Chinese President for his “commitments to refrain from selling any arms” or providing “any aide” to the Russian Federation in order to support the Kremlin in the war with Ukraine, may be considered a small success. Xi, in turn, made it clear that the burden of this conflict should not be shifted to China, and warned against “smearing China” in connection with the “crisis in Ukraine”: “We oppose using the Ukraine crisis to cast blame, smear a third country and incite a new Cold War.” He also stressed that the People’s Republic of China continues to play a “positive role in achieving peace”. Terms such as “crisis” and “new Cold War” were also repeated in an official statement on the Chinese Ministry of Foreign Affairs website. This is primarily to show that in the context of the war in Ukraine, China is still maintaining its current course. The second day of the visit was less formal, but more symbolic. Macron invited Xi to Hautes-Pyrénées, which was supposed to be a kind of repayment for Xi’s invitation to Canton, which is close to him, last year. According to the official French message, “this format allowed for a more direct and honest exchange of views”. Analyzing the above event, one can draw various conclusions – both positive and negative. The conclusion from this first trend was presented by experts from the Polish Institute of International Affairs, Marcin Przychodniak and Amanda Dziubińska. In their opinion, “France will support the implementation of “derisking” by the next EC in order to enhance the opportunities for French companies in competition with China.”. On the other hand, according to POLITICO journalist Clea Caulcutt, French cognac is “the only thing that went down smoothly with Xi.”
Xi Jinping in Serbia
Serbia, a candidate for membership in the European Union, has become the first country in Europe to sign an agreement on a “common future” with the People’s Republic of China. This event was related to the tour of Chinese leader Xi Jingping around Europe, who arrived in Belgrade on the symbolic day of May 7, i.e. on the 25th anniversary of the bombing of the Chinese embassy in Belgrade by American jets during the NATO campaign against the former Yugoslavia. The purpose of Xi’s visit to Serbia was to meet with the Serbian authorities, especially President Aleksandar Vučić. During the visit, the parties stressed that they are connected by an “iron friendship” based on respect for the mutual vested interests of both countries regarding the issues of Taiwan and Kosovo, deepening the “traditional friendship” regarding ideological ties based on the socialist past and aversion to Western values, and the desire to build economic ties. The visit of the Chinese delegation headed by Xi was crowned by the signing of 29 agreements to promote legal, regulatory and economic cooperation. They concerned, among others, issues such as: implementation of the Belt and Road Initiative, extradition, customs and scientific-technical cooperation, mining and geology, communication, agriculture, information policy and media cooperation. Serbia is also set to become the first European country in many years to have a binding free trade agreement with China. Signed in 2023, it will enter into force on July 1 of this year. China is currently the largest investor in Serbia, with its investments increasing 30-fold over the past decade. Chinese companies operate Serbia’s largest copper mine and ironworks, Smederevo, and are building dozens of roads and highways across the country, as well as a railway line connecting Belgrade with Budapest, which, despite delays, is due to be completed in 2026. Serbian-Chinese cooperation is also noticeable in the security sphere. Belgrade is the only user of Chinese drones, weapons and HQ-22 “Hong Qi” anti-missile systems in the region. According to statements from February this year, Serbia is interested in further acquiring Chinese drones and related technology in order to produce its own drones under the name “Pegasus” in the future.
Xi Jinping in Hungary
The next destination on Xi Jinping’s European tour was Hungary. Between May 8 and 10, Xi held meetings with Hungarian officials: Prime Minister Viktor Orban and President Tamás Sulyok. As a result, 18 agreements and letters of intent were signed, and the status of Sino-Hungarian relations was raised from the level of “comprehensive strategic partnership” to “all-weather comprehensive strategic partnership in the new era”. Similar agreements have already been signed by the previously mentioned Serbia, as well as Pakistan, Belarus, Venezuela and Zambia. The agreements concluded primarily concern the development of cooperation in the fields of finance, modern technologies, artificial intelligence (AI), green technology, mobile communication technologies, including the 5G network, the development of nuclear energy, tourism and culture. In the case of the latter issue, Beijing’s involvement in the nuclear sphere may be related to the construction of the Paks II nuclear power plant by the Russian company Rosatom. Although the project bypassed Western sanctions, the broader security context in Europe complicated Russia’s ability to carry out the task. In view of the delays and losses generated by this initiative, Hungary decided to diversify and find an alternative partner in this matter, namely China. During the meetings, the parties emphasized that they would make progress in implementing key projects, including: the reconstruction of the Budapest-Belgrade railway project, the construction of a freight railway line around Budapest, and a high-speed railway connecting the center of Budapest with Ferihegy Airport. These projects are related to the concepts pursued by the parties: the Hungarian strategy of “opening up to the East,” which assumes opening up to foreign direct investment from Asia, and the related Chinese Belt and Road Initiative, which focuses on the development of infrastructure (railways and sea routes) connecting the countries of Asia, Europe, and Africa. An additional issue is to be the establishment of a joint investment committee for phytosanitary cooperation, whose task is to increase the availability of Hungarian agricultural products on the Chinese market. An example of this is, among others, the import of Hungarian fresh cherries to China. During the growing antagonism among EU countries towards Chinese economic expansion, Hungary and China – as President Xi announced – are embarking on a “golden journey” in bilateral relations. Their tightening has already been noticeable since 2010, after Viktor Orban came to power, who, in addition to cooperation in the economic field, supports China’s foreign policy and vision of security in the world, and more precisely supports China’s position on the Russian-Ukrainian conflict. Currently, the effects of the development of relations are planned and implemented investments, including the CALT battery factory under construction in Debrecen worth 7.3 billion euros and the planned BYD car factory in southern Szeged. China is also developing cooperation with Hungary at the level of public security and law enforcement, an example of which is the presence of the Chinese police on the streets of Hungary.
The top candidate of the AfD for the European Parliament criticizes European “paranoia” regarding China
Maximilian Krah, the leading candidate of the German far-right for the European Parliament, does not let himself be forgotten. In the April edition of the “EU-China Affairs Review” we described the high-profile spying scandal in which he was indirectly involved. However, his assistant Jian Guo was directly involved, who was supposed to spy for the People’s Republic of China and pass on information about European Parliament sessions and Chinese dissidents living in Germany. On May 19, Krah appeared in the media again in the context of relations between Europe and the People’s Republic of China. Namely, he stated, referring to the recent confusion, that “currently every Chinese is suspected of espionage”, confirming his own words that “this is complete paranoia.” Moreover, Krah added that European countries should not lecture the Chinese on human rights and their domestic politics, because “the West should realize that it does not rule the world.” However, no one should be surprised by such slogans thrown out by a representative of the Alternative for Germany, because already in 2023, the German portal T-Online.de published a report in which Krah’s connections with the Chinese state were broadly characterized. Tim Hildebrandt shared a very interesting observation in his article. In his opinion, “Krah’s friendly attitude towards China and his connections with Beijing reflect a broader trend in the AfD, and the pro-Chinese attitude may become a hallmark of this party’s foreign policy platform.” This text, published in June 2023, is very much in line with the current reality. It can be suspected that in the coming months, further connections of Krah and his party with Beijing, as well as his pro-Chinese disposition, will come to light.
Divided Europe need unity on China issue
The European Union is facing a huge problem, which is the issue of a new phase of the trade war between the United States and the People’s Republic of China, as well as its role in this conflict. On May 14, President Joe Biden announced new tariffs on China. The new restrictions range from 25% to 50% on Chinese industrial, medical and technological goods. However, the biggest blow to Beijing is the imposition of a 100% tariff on Chinese electric vehicles. The European Union, being an ally of the United States, also feels the negative impact of the flooding of the market by Chinese cars (and not only) subsidized by the Chinese government, which is at odds with the principle of fair competition. Voices saying that Europe should join the United States and also pursue a tough policy towards China are heard not only from overseas, but also from the EU itself. US Treasury Secretary Janet Yallen has submitted an appeal to EU policymakers to “urgently” curb China’s growing export of cheap green technologies, especially solar panels and wind turbines. She believes there should be “united way” between the US and its Western allies on this issue, as China’s growing production poses a threat to industry in the US and European markets. Italian Industry Minister Adolfo Urso expressed similar opinion, saying that “much higher tariffs against Chinese products are inevitable if we do not want the European industry to be wiped out,” suggesting that Europe should join the US in this skirmish. At the other end of this spectrum there is European, and especially German, business, supported – more or less – by leaders such as German Chancellor Olaf Scholz and Swedish Prime Minister Ulf Kristersson. On May 8, the heads of German car companies such as BMW, Mercedes-Benz and Volkswagen loudly expressed their concerns about deepening tensions between the European Union and the People’s Republic of China. This is of course about imposing EU tariffs on imported electric vehicles from China. In their opinion, this could contribute to torpedoing the assumptions of the Green Deal and to harming local car manufacturers who import cars manufactured by Chinese companies. Quoting BMW CEO Oliver Zipse, the EU “could very quickly shoot yourself in the foot” with such a move. During a joint conference with Scholz in Stockholm, Kristersson, asked about the prospects of imposing tariffs on Chinese cars, said: “It is a fundamentally bad idea to dismantle global trade”, further adding: “[…] a wider trade war where we block each other’s products is not the way to go for industrial nations such as Germany and Sweden”. In this way, he suggested that Europe should not seek a field for conflict with China, but rather seek an agreement that – one may suspect – would contribute to further deepening the dependence of the European economy on the Chinese one. And in the middle of this dispute there is President Ursula von der Leyen and her “derisking” policy. On May 8, she stated directly that “China must be stopped from flooding EV market.” During her speech in Berlin, she clearly admitted that “fair competition is good. What we don’t like is when China floods our market with massively subsidized electric cars. And we have to tackle this, we have to protect our industry.” In turn, in an interview for the “Financial Times” published on May 20, speaking in a similar tone and being aware of the new tariffs imposed on China by the US, she indicated that she does not want a trade war with China, that the European Union presents a “different approach” to this issue: “Let’s say we share some of the concerns of our American counterparts. [But] our approach is different. […] We want competition, we want to trade together, but we want it to be fair and by the rules.” The European Commission faces a difficult task, especially when the European Parliament elections will elect a parliament with a different composition than before, and perhaps a change will be made at the highest level. Therefore, the prevailing internal conflict in the EU and the lack of cohesion do not favor Europeans in these dangerous times amidst numerous geopolitical turmoil and growing conflicts between the biggest players on the global scene. The EU, wanting to be a real power both political and economic, should develop a coherent policy towards China as soon as possible, which will protect the interests of Europe.
China warns the EU
Beijing decided to use the last day of May to send a warning to Brussels about the future tariffs on Chinese electric cars that the European Commission intends to implement. For this purpose, the Chinese Ministry of Commerce sent a special letter to the EU Trade Commissioner Valdis Dombrovskis. According to POLITICO, the letter calls on Europe to reset its regulations, which is supposed to indicate Chinese irritation with the increased number of trade investigations that have been initiated in recent months by EU bodies, and calls for a “truce”. This truce is supposed to reduce further escalation of tensions in bilateral relations. Nevertheless, the Chinese did not stop at just warnings. They also announced retaliation, which would “start” with aviation and agriculture. It is worth adding here that the day before, on May 30, during a press conference, Chinese Foreign Ministry spokeswoman Mao Ning was asked by a representative of the Reuters agency about the ministry’s anticipated response to the postponement of the European Commission’s decision on Chinese tariffs on electric vehicles until the June 9 elections. Ning first pointed out that the People’s Republic of China has repeatedly expressed its position on the EU investigation and described the nature of such action as “protectionist”. Next the spokeswoman said words which could be treated as an announcement to the letter to Dombrovskis: “China urges the EU to stop the investigation as soon as possible so as not to disrupt China-EU economic and trade cooperation and the stability of industrial and supply chains. If the EU insists on continuing with the investigation, China will not sit back and watch. We will take every necessary measure to firmly safeguard our lawful rights and interests.” This shows that tensions between Brussels and Beijing are growing, especially when each side sees its arguments. The question is whether the European Union is able to actually cross the “trade” swords with China.
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