Watching China in Europe - August 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. 

Hong Kong Crackdown Jolts Europe

Europe reacted slowly and quietly when news broke in late May from the National People’s Congress that Beijing planned to impose new security legislation on Hong Kong. Beyond expressions of concern, the response was also muted when details of the sweeping law were unveiled a month later. But that has all changed over the past week as China, with astonishing speed, has used its new powers to crack down aggressively on dissent, detaining pro-democracy campaigners living in Hong Kong, issuing arrest warrants for half a dozen activists in exile, and postponing legislative elections there that risked dealing Beijing an embarrassing defeat. This is looking increasingly like an inflection point in how European capitals view China. While positions have been hardening for years, the focus of the EU’s pushback has been mainly in the economic realm (investment screening, competition policy, industrial strategy, critical infrastructure and connectivity). What we are witnessing now is broader, with values playing a more important role in the political debate. In a blog post last week, the EU’s top diplomat Josep Borrell described China as “somewhat friendless,” a country whose relationships are increasingly defined by fear and coercion. It is hard to imagine this sort of language being used just a few months ago.

The mood shift has been most pronounced in Berlin, even if it hasn’t reached all corners of the government yet (see “The CSU’s China Problem” below). Leading the charge has been the Social Democrat-led foreign ministry, which had gone silent on China over the past year as Angela Merkel pushed her Leipzig cooperation agenda. The cracks in her dialogue-first approach, China’s increasingly aggressive behavior, and an approaching federal election in 2021 seem to have changed the calculus, with Foreign Minister Heiko Maas becoming more vocal of late. Last week he announced that Germany would suspend its extradition treaty with Hong Kong. Days later, in perhaps the most toughly worded commentary on China that I have read from a senior German official, one of Maas’s top deputies, Michael Roth, described Hong Kong as an “acid test” for China’s credibility as a reliable international partner. “The message to Beijing is crystal-clear, namely there will be no ‘business as usual’ as far as the EU is concerned,” Roth wrote in Der Spiegel.

The hardening tone comes after two official reports in July, from Germany’s domestic intelligence agency and the Monopolies Commission (an advisory body to the government), that highlighted the threats emanating from Chinese espionage and state capitalism in starker terms than ever before. The intelligence report spoke of a “significant increase in political and economic spying” from Beijing and detailed how the Chinese state is using various payment platforms, mobility apps, and even bike sharing services to collect private data from German citizens. As I explained in an article for Politico this week, German views on China are hardening across the political spectrum.

The CSU’s China Problem

This appears to be the case even within the Christian Social Union, the Bavarian sister party to Merkel’s conservatives, who for years have viewed the relationship with China through the prism of regional business interests. I spoke with Thomas Erndl, a CSU lawmaker who is preparing a motion for debate at a CSU congress in December which calls for a “realignment” of the party’s approach to prioritize broader strategic and security interests. "I'm convinced that the CSU needs to find a clearer language when talking about China,” Erndl told me. "The strategic challenge that China presents is underestimated in Germany and its economic importance for the German economy is sometimes overestimated.”

The party’s position on China has become more relevant in recent months, as its leader Markus Söder, who is also the state premier of Bavaria, has emerged as an early favorite in the race to succeed Merkel. Like his Bavarian predecessors (longtime CSU leader Franz-Josef Strauss was the first German politician to visit Mao Zedong in 1975 following the Nixon-led thaw in relations) Söder has stood out for his friendly approach to China. He has opposed the exclusion of Huawei from Germany’s 5G network and earlier this year it emerged that Bavaria was the only state in Germany that was using taxpayer money to fund Confucius Institutes. Söder’s government refused to divulge the details of this financial support until an opposition lawmaker threatened to sue. The board of one of the three institutes in Bavaria is headed by another former state premier, Günther Beckstein. 

More troubling are two recent spying cases with links to the CSU. In June, it emerged that prosecutors were investigating a 74-year-old man and his wife on suspicions of spying for China. The man had worked for decades in senior positions at the Hanns Seidel Stiftung, a political foundation with close ties to the CSU. Gerhard Sabathil, another German national and a former EU ambassador who prosecutors believe collaborated with Chinese intelligence, had close ties to senior figures in the CSU and his lawyer, Peter Gauweiler, is a former CSU parliamentarian. There is more: the China-Brücke (China Bridge), a new grouping of politicians and businessmen created to push back against the hardening German line on China and foster closer cooperation with Beijing, is headed by Hans-Peter Friedrich, another CSU member who serves as vice president of the Bundestag.

If Söder does emerge as the conservative candidate for chancellor, he will have to address the China question sooner or later. How the next German government positions itself will have significant implications. Because of its economic and political weight, Germany’s position on China helps shape the broader European approach to Beijing. It will also have significant implications for the transatlantic relationship, as China becomes the operating principle of U.S. foreign policy. Söder is a pragmatist whose tone on climate policy and refugees has changed dramatically in recent years as the political winds in Germany changed. Were he to become chancellor he would face pressure to shift on China, too, not only from Washington but from the Greens, the most hawkish party in Germany…and his likely coalition partner.

Preparing For Biden–Or Not

Back to transatlantic cooperation on China. Over the past weeks, I have asked numerous officials in the big European capitals whether any planning is underway for how to work with a Biden presidency on China. And each time I have come up empty. There are small changes taking place which could make it easier for the EU to engage with a new U.S. administration on China. For example, the German EU presidency is making a push to resolve a longstanding impasse on the reform of EU export controls, and pivot to a broader discussion on emerging technologies. Over the past month, we have seen a mini-reorganization of DG Trade, including the creation of a new unit focused on technology, security, and FDI screening–a sign the EU has recognized that these issues cannot be kept apart. But bureaucratic tweaks are not enough. In the coming months, some hard thinking needs to take place, beyond the issue of trade, about what Europe is prepared to put on the table on China if there is a change in the White House six months from now. Some diplomats are whispering about a “grand bargain” in which the U.S. recommits to the transatlantic alliance and renews its fight against climate change in exchange for European commitments on China and security. “What will be crucial for Europe is whether a new administration shifts from this clash of civilizations narrative, the Pompeo line which sounds a lot like regime change, to one of containment or managed antagonism,” one veteran European diplomat told me. “If you see a different tone, one can imagine some sort of transatlantic bargain that includes China.” Europe needs to get ready for this debate.