Watching China in Europe - September 2020

Welcome to Watching China in Europe, a new 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 veteran journalist based in Berlin and a senior visiting fellow at GMF—will provide his personal observations and analysis on the most pressing China-related developments and activities throughout Europe. Click here to receive the newsletter version. 

Chemistry Lesson

I wrote last month about how Beijing’s crackdown in Hong Kong could be an inflection point in how European countries view and respond to China. My conversations with officials in EU capitals over the past weeks have only reinforced that sense (despite all the friendly elbow bumps during Wang Yi’s ongoing European tour). One French diplomat used a chemistry analogy to describe the hardening of the EU line. You may (but probably don’t) recall from high school chemistry class that a “combination reaction” occurs when two or more elements come together to form a single compound. A diplomatic version of this seems to be happening in the big EU capitals at the moment, with Hong Kong serving as a catalyst. “For quite a while, we looked at all of the China issues, whether it was trade, Hong Kong, 5G, or the South China Sea, as distinct issues,” the diplomat told me. “Now there is a recognition that compartmentalizing is no longer adequate, that we need a comprehensive strategy.” I heard similar tones in Berlin, there is growing disenchantment with Beijing across the German government. Crucially, this feeling is said to extend to the traditionally softer corners of the Chancellery. Angela Merkel, together with European Commission President Ursula von der Leyen and European Council President Charles Michel, will hold a video conference with Xi Jinping on September 14, the same day that their in-person EU-China summit was supposed to kick off in Leipzig. But there is little hope that the call will break the deadlock in negotiations over an investment treaty or pave the way for agreement on the other areas of partnership— climate and Africa—that Berlin was pushing. “China is not moving,” one German official told me. “After what we’ve seen over the past months, we have to ask ourselves whether we can still call them a partner.”

Feeling the Stones

Make no mistake, Europe is not on the verge of embracing Cold War 2.0 or American-style “decoupling” from China. The preferred buzzword in Berlin these days is “diversification” and officials make clear that it will be a step-by-step process, not a U.S. or U.K. big bang. One employed a Chinese saying—“crossing the river by feeling the stones”—to describe it. Germany is ready to cross the river, but it is wary of getting swept away. The shift, of course, will also hinge on the results of the U.S. election (more on that below). The pushback is being led by Berlin and Paris, fresh from their successful campaign for a European recovery fund. The comprehensive strategy that officials in both capitals describe would include more robust action on a number of fronts. First, if Beijing is not prepared to level the trade and investment playing field by opening up its market, then Europe will progressively restrict China’s access to its own market. EU Commissioner Margarethe Vestager, whose White Paper in June took aim at distortions from Chinese subsidies, offered a taste of the hardening line in a recent interview in which she raised questions about whether social media apps like TikTok were respecting EU data privacy rules. Second, one can expect more concerted pushback against Chinese influence, interference, and hybrid operations on the continent. A report last month from the Australian Strategic Policy Institute on the Chinese Communist Party’s foreign talent recruitment operations showed that four of the CCP’s top 10 target countries for recruitment were in the EU, with Germany ranked second only to the United States. A broader campaign to raise awareness of CCP activities across the EU could be next. A third pillar is closer cooperation with democratic allies in Asia—in the trade, connectivity, and security spheres.

Embracing the Indo-Pacific

In this vein, the German government is poised for a potentially significant shift in its approach. This week, Merkel’s cabinet is expected to approve a new German strategy for the Indo-Pacific, a concept that was long frowned upon in Berlin because it was closely associated with the Trump administration (whose “Free and Open Indo-Pacific” concept was unveiled in late 2017) and seen as overly confrontational toward China. What has changed? For one, France, which developed its own strategy for the region in 2018, has been encouraging Germany to follow suit. In June of last year, ASEAN countries also embraced the concept. A few months later, German Defense Minister Annegret Kramp-Karrenbauer used the term in a speech at the Bundeswehr University in Munich. German officials say the strategy is not meant to counter China. But it is clearly aimed at balancing China’s influence in the region by reinforcing trade and connectivity ties with countries like Japan, Australia, and India. “It plays into our diversification strategy,” the German official said. Significantly for Germany, it also has a security component. Germany expects to boost its maritime presence in the region going forward, although Berlin will not play a prominent role in freedom of navigation exercises, as the French, British, and Americans have. Officials expect the move to pave the way for a broader EU strategy for the Indo-Pacific. This is occurring in parallel to discussions about how the EU and NATO can work together to counter China. This security dimension was absent from the Strategic Outlook paper on China that the European Commission presented last year. It reflects a growing recognition that a more joined-up strategy that addresses the full range of challenges emanating from China is needed.

Waiting For Biden

As positions on China harden, there is a growing readiness to engage with a new administration in Washington on the challenges posed by Beijing. If Trump is re-elected in November all bets are off. In that event, officials expect Europe to be forced into a terrifying balancing act between two hostile superpowers. The term “equidistance” would no longer be taboo. But a Joe Biden victory “could change everything” in terms of transatlantic cooperation on China, I was told by officials in Berlin. The European tour of Wang Yi, the Chinese government’s top diplomat, over the past week was primarily aimed at heading off a common transatlantic front. In Paris on Sunday, he appealed to Europe to join with China in pushing back against “extremist forces” in Washington. The red-carpet treatment he received in Paris, including a meet-and-grin elbow-bump with President Emmanuel Macron, raised some eyebrows. But this has not been an entirely cozy trip for Wang. He was confronted with condemnations of China’s actions in Hong Kong and Xinjiang on virtually every stop. And the EU’s Josep Borrell welcomed Wang with an article in the French press on Sunday that accused China of building a “new empire.” I was told that the message Wang will receive in Berlin on Tuesday, where he is due to meet Foreign Minister Heiko Maas and President Frank-Walter Steinmeier (a request to see Merkel was denied), is that China is doing irreparable damage to itself—and running out of time to address European concerns. Known for choosing his words carefully, Steinmeier warned last month of a “lasting negative change” in Europe’s relationship with China if it did not reverse course in Hong Kong. No one in Europe is under the illusion that it will.

5G Saga

A final word on the excruciating debate in Germany over Huawei’s role in 5G. While countries like France and Canada are finding ways to phase the company out of their next generation mobile networks without making a big splash, the German government is still agonizing over legalistic formulations. Meanwhile, operators are accelerating the deployment of 5G-enabled antennas—predominately from Huawei—across the country. I’m told that very little progress has been made to break the political deadlock in Berlin and that this could lead to further delays in bringing IT security legislation—meant to resolve the role of Huawei—to parliament. Some officials believe a delay beyond the U.S. election is now likely. “I expect that we’ll wait until we are clear what the next U.S. administration looks like before we have a final decision,” one senior government official told me. The government has gone to Deutsche Telekom with its concerns that Huawei will not be able to deliver 5G due to U.S. sanctions, but I was told that the company has played down the risks. “Our experts say they won’t be able to deliver, that Huawei is basically out of the game unless U.S. policy changes. But Telekom thinks they can handle it,” the official said. Several people in the industry said Huawei, keen to prevent mass cancellations, is telling operators in Europe that a Biden administration could reverse the sanctions—a move that seems highly unlikely.