Watching China in Europe - November 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. We hope you find it useful, but if you would like to opt out at any time please do so via the unsubscribe button below.

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Taiwan About Face

In January of last year, when Taiwan’s President Tsai Ing-wen won a second term, her victory was greeted with silence in Berlin. Worried that a public message of congratulations would offend Beijing, the German government said nothing for days—until a question from a journalist prompted a stiff acknowledgement of Tsai’s victory from Chancellor Angela Merkel’s spokesman. Less than two years later, this awkward dance seems terribly archaic. When the three parties negotiating in Berlin to form the next coalition government unveil their agreement next month (assuming they stick to their timeline) it is all but certain to voice support for Taiwan. In the foreign ministry—as well as in EU institutions in Brussels—officials have tentatively begun the process of thinking through scenarios around a Chinese intervention in the island. And Taiwan is now at the top of the list of discussion topics when European officials pass through Washington. “A short while ago we wouldn’t even utter the word Taiwan. Those days are over, we have moved on,” one senior German diplomat told me. “Our ‘One China’ policy remains in place, but we are not going to let China dictate to us what that looks like or what we can and cannot say anymore.”

The change in Berlin is part of a major shift in how Europe is talking about and engaging with Taiwan. In the past weeks alone, the European Parliament voted overwhelmingly in favor of a report on EU-Taiwan relations that urged the bloc to ramp up cooperation with the island, Taiwan’s foreign minister made a tour of European capitals, and a Taiwanese trade delegation travelled to Lithuania, Slovakia, and the Czech Republic. In a speech to the European Parliament, European Commission Executive Vice President Margrethe Vestager described China’s displays of force against Taiwan as a potential threat to European security and prosperity. This week, members of the European Parliament’s special committee on foreign interference, led by French MEP Raphäel Glucksmann, will travel to Taipei in defiance of what EU officials described as immense pressure from Beijing.  “We just witnessed one of the strongest yes votes in the parliament’s history and we can’t ignore that,” one EU official said, referring to the endorsement of the Taiwan report. “The EU needs to get its ducks in a row on Taiwan. This is what we are trying to do.”

Talking Again

Despite all of this, the EU has also begun talking to China again after nearly half a year in which there was very little official contact between Brussels and Beijing. European Council President Charles Michel, who had requested a call with President Xi Jinping in August, finally got his wish in October. Now the two sides have agreed to hold a virtual summit, which is likely to take place in late November. “AUKUS happened and bingo,” the EU official said. “China saw a wedge issue and suddenly they were ready to talk.” This does not mean that the EU has big hopes—or even a specific agenda in mind for the virtual meeting. It is more about sending a signal, after an annus horribilis in relations, that dialogue between Brussels and Beijing is still possible.

Behind the scenes, European officials are girding for more tensions with Beijing. In addition to the Taiwan issue, the EU is expected to agree on a rollover of its Xinjiang sanctions and to unveil new supply-chain due diligence and anti-coercion legislation in December. Each of these moves has the potential to increase tensions with Beijing. I was told that even Hungary, arguably China’s best friend in the EU, has signaled that it will not stand in the way of a renewal of the sanctions. Prime Minister Viktor Orbán is facing a formidable cross-party challenge in parliamentary elections next spring, and any moves to cozy up to China could play into the hands of the opposition.

China's Red Lines

The last government coalition deal in 2018 talked about expanding Germany’s “strategic partnership” with China and described its economy as a “huge opportunity” for German business. Expect a very different tone this time around. People familiar with the early exchanges between the Social Democrats (SPD), the Greens, and the Free Democrats (FDP) told me that the new coalition agreement is likely to touch on all of China’s red lines—Taiwan, Xinjiang, Hong Kong, and Tibet. The working group on foreign policy includes prominent critics of China’s Communist Party, including Reinhard Bütikofer of the Greens, Gyde Jensen of the FDP, and Nils Schmid of the SPD.

A second senior German diplomat told me that outgoing Foreign Minister Heiko Maas, who is also part of the working group, has been charged with ensuring that the language on China does not go too far. “The SPD see that the Greens and FDP are very much aligned and Maas is there to ring-fence them,” the senior diplomat said. Merkel is also said to be concerned that the next government could end up torpedoing her China policy. I was told that, during a recent exchange, she asked European Council President Charles Michel to do everything in his power to prevent a further deterioration of ties with Beijing and ensure that the EU-China Comprehensive Agreement on Investment—already relegated to the deep freeze—does not collapse altogether. “Merkel is pushing behind the scenes. And the big German companies that are invested in China are making their views known too,” the senior diplomat added. “They are all concerned about the relationship heading south.”

The French Connection

French President Emmanuel Macron, who will host Merkel in Burgundy this week for what is likely to be a final one-on-one exchange between the two leaders on foreign policy, is the wild card in all of this. At the G20 meeting this past weekend, Macron met with President Joe Biden and signaled that France was ready to move beyond the ruckus over AUKUS. The two sides issued a robust joint statement committing to “systematic and in-depth consultation and coordination” going forward—including bilateral discussions on clean energy, emerging technologies, defense, and space. But this has all the markings of a fragile truce.

Macron is heading into an election campaign in which his opponents on the right and left are trying to portray themselves as the true defenders of French sovereignty. In that environment, the president will have little to gain from making nice with Washington or Brussels. In Berlin, the expectation is that Macron will push his strategic autonomy agenda all the more forcefully, sending a message that German support is vital if he is to stave off a challenge from the far-right and increasingly “France first” center-right. German officials say that there are already signs that Paris is trying to shape the EU’s upcoming defense and security strategy, known as the Strategic Compass, in such a way that strategic autonomy becomes “irreversible.” These concerns triggered an intervention from outgoing German Defense Minister Annegret Kramp-Karrenbauer last month, who in a farewell interview, issued an unusually frank warning about any push to distance Europe from the United States and NATO.

Squaring The Circle

“I expect the French to push very hard with a new German government,” one defense official in Berlin said. “They will find themselves under pressure from Paris from day one and it may be difficult to say no.” There is an element of déja vu here. Four years ago, the SPD and the Greens were sharply critical of Merkel for failing to respond to Macron’s Sorbonne speech calling for deep reforms in Europe. They will not want to leave Macron hanging, as she did. Whether the next German government can deliver is another matter. In the 12-page paper produced by the SPD, the Greens, and the FDP in preparation for their coalition negotiations, there is no mention of the NATO 2 percent of GDP spending aim that successive Merkel governments have supported. As the three parties look for ways to finance a green overhaul of the German economy and invest in digital infrastructure, defense spending seems destined to come under the axe. There are whispers that, desperate for funds, they are eyeing a sizable reduction in the number of German troops, which currently stand at roughly 185,000. This is significant because it could undermine NATO planning goals just as the alliance is mapping out a new strategic vision.

What does this all mean for China policy? It suggests that, while the next German government is likely to adopt a sharper tone with Beijing across a range of issues, there are big questions about whether it will back up this tougher rhetoric with policies that transform Germany—and Europe—into a more consequential geopolitical player. Whether the coalition parties can credibly square this circle is the biggest question hanging over the foreign policy of the first German government in the post-Merkel era. The picture should become clearer in the weeks ahead.