China Direct: Xi to Putin: ‘Let’s drive the change’ — Is CAI back? — Bye for now
Exploring Europe’s diplomatic and commercial relationship with China.
By STUART LAU
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DEAR READERS: THANK YOU SO MUCH. This is your host Stuart Lau, filing the last China Direct, as our two-year journey comes to an end. We’ll be making a new beginning next week: From March 28, together with my U.S.-based colleague Phelim Kine, we’ll bring you a twice-a-week newsletter, China Watcher, delivering a transatlantic deep dive into the state-of-play of China policies every Tuesday and Thursday. Thank you again for all the feedback, follow-ups and, yes, correction requests over these wonderful two years. Do stay in touch, and see you on Tuesday! (Or, if you’d rather drop out, please update your newsletter preferences.)
DRIVING THE DAY: EU COUNCIL SUMMIT
CHINA IN THE BACKGROUND — AND ON THE TABLE? The European Union’s 27 leaders are gathering in Brussels today and on Friday for a summit on Europe’s competitiveness and economic strength. While a major part of that debate is centered on Europe’s position in relation to the U.S. Inflation Reduction Act, China will also form part of the big picture, according to EU officials briefing about the summit.
THE BIG QUESTION: Will there be any mention of the long-dormant EU-China investment agreement? The deal, as you may remember, remains unratified in the European Parliament due to Beijing’s sanctions against the legislative body, imposed in a tit-for-tat dispute over China’s rights abuses against the Muslim Uyghur minority in Xinjiang. Some, though, say Beijing seems poised to give Europe a sweet offer in order to pull that 2020, Merkel-era deal back from the grave. So far, none of the major economies have publicly asked for the deal to be revived.
ORIGINAL ASK: Since his arrival in Brussels in December, China’s Ambassador to the EU Fu Cong has repeatedly quizzed European policymakers whether it’s possible for Beijing and Brussels to remove sanctions against each other at the same time. EU officials, unimpressed, turned him down in private settings. And then he seemed to have lowered the price further…
Quid pro quo? “There are rumours swirling around Brussels and other EU capitals that China has made an ‘offer’ to the EU: China would lift the sanctions which it imposed on 10 Europeans and 4 entities 2 years ago, if EU would guarantee ratifying the presently shelved investment agreement,” Reinhard Bütikofer, chair of the European Parliament’s delegation on China, said on Wednesday.
He named European Council President Charles Michel as “pushing” for the deal to be discussed. “To whom has this insulting proposal been made? To @eucopresident, when he visited China? Why is @eucopresident pushing to include CAI on a future EUCO agenda?” Bütikofer continued in the tweet.
EU officials respond: An EU official said trade “and naturally trade with China” would be discussed at EUCO we will talk about trade and naturally about trade with China. Another EU official echoed the sentiment, saying: “Whether to move on CAI, on how we address this relationship with China, it’s a discussion of leaders. I’m not sure tomorrow [Thursday] is the time to … have a clear strategy; I think more work is needed.”
But but but: The EU official added that the Council could ask the European Commission as well as the diplomatic arm of the EU to “prepare … data or strategy to address” questions about CAI. “There’s no intention to push in one [direction or the other].”
AS IT HAPPENS: The European Council last discussed China in October, when EU leaders began calling for “de-risking,” paving the way for a gradual re-think over the long-term relationship with China.
Michel is open to the deal, but ‘push’ could be a strong word, according to another EU diplomat: “Michel is in favor of that, but we don’t experience a particular push. There’s no massive move or maneuver going on to push the member states in that direction.”
In any case, there’s not much appetite from member countries. “I know the Chinese have mentioned interest in reviving the CAI, but in the present circumstances I believe it’s wishful thinking,” another EU diplomat said.
THE MAJOR CONCERN — WASHINGTON: Cosying up to Beijing for a deal would no doubt be interpreted as a betrayal to the U.S. at a time when Europe — and Ukraine — counts on American support against Russia, a diplomat noted. The Biden administration tried to intervene, to no avail, when the EU agreed the deal with China just weeks before Joe Biden was inaugurated in the White House. “As far as I know Washington hasn’t shifted from that position,” the diplomat said.
POWER COUPLE IN KREMLIN
FEAST LIKE THE CZAR: Xi Jinping arrived at Moscow on Monday, and headed to the Kremlin for a (4.5-hour) courtesy call with Putin, before they sat down for a six-course state dinner. The menu included quail pancakes, sturgeon soup, Siberian salmon (or deer in cherry sauce for main course) — plus wine from the vineyard behind Putin’s Black Sea palace.
THEN DOWN TO BUSINESS: This time, Putin and Xi sat down for six hours of real, crunchy talks. Top of the agenda was Ukraine. The two men signed a joint declaration on resolving what they call the “Ukraine crisis.” There’s no mention of troop withdrawal, nor did Xi question Russia’s war, of course.
(EMPTY?) TALKS: Xi and Putin said they both back the idea of peace talks. “Russia reiterates efforts to resume peace talks as soon as possible, which is praised by the Chinese side,” said the statement, carried by China’s Xinhua news agency. “Russia welcomes China’s willingness to play a constructive role in resolving the Ukraine crisis through political and diplomatic means.”
NATO-BASHING: “Both sides oppose any countries or national blocs jeopardizing the reasonable security interests of other nations in the quest for military, political or other forms of superiorities,” the Putin-Xi statement adds.
XI’S PREDICTIONS: The Chinese leader also briefly turned election pundit. In an eyebrow-raising move, he expressed confidence that Russians would back Putin in next year’s presidential election.
“I know that next year there will be another presidential election in your country,” Xi told Putin at the start of talks in the Kremlin, the state-run TASS news agency reported. “Thanks to your strong leadership, Russia has made significant progress in achieving prosperity … in recent years. I am sure that the Russian people will strongly support Mr. President.”
The problem is, Putin hasn’t declared his candidacy yet … even though there’s little doubt he will. Xi’s remarks prompted Putin’s spokesperson Dmitry Peskov to say that the Chinese leader had not specifically said Putin would participate in next year’s election — even though the Kremlin shared Xi’s confidence in Russians’ support for Putin, Reuters reported.
ANOTHER KEY DEAL — THE ARCTIC: Russia and China will set up a joint working group for the development of the Northern Sea Route, Putin told Xi. “We see cooperation with Chinese partners in developing the transit potential of the Northern Sea Route as promising.” This is a strategic prize for China, which is keen to seek alternative routes to Europe away from the Suez Canal, the Indian Ocean and the Straits of Malacca.
CLOSING SCENE — ‘WE ARE THE ONES’: There was high melodrama in the script when the two said goodbye after the state dinner, Xi had this message for Putin before reaching his limousine: “Right now there are changes, the likes of which we haven’t seen for 100 years. And we are the ones driving these changes together.” Watch the dramatic footage.
AFTER VLADIMIR, PERHAPS VOLODYMYR? All eyes are now on whether Xi will call Ukraine’s President Volodymyr Zelenskyy after his Moscow trip. Ukraine is saying they’re ready for such a call. POLITICO’s Ukraine Correspondent Veronika Melkozerova has more.
SECRET JOURNEY: As Xi was feted by Putin, Japan’s Prime Minister Fumio Kishida, also rotating president of the G7, traveled to Kyiv to meet with Zelenskyy. Kishida made the unannounced trip after his visit to India.
NEVERLAND FOR ALL CHINESE APPS: The Dutch government issued new guidance Tuesday for its officials to uninstall apps from countries that wage an “offensive cyber program” against the Netherlands, including China, Russia, North Korea and Iran.
“The first step is to immediately dissuade officials of the national government to install or use apps on mobile work devices from companies originating from countries with an offensive cyber program against the Netherlands and/or against Dutch interests,” Minister of Digitization Alexandra van Huffelen wrote in a letter to lawmakers, seen by POLITICO. The guidance is based on advice from the country’s intelligence services.
A second letter, sent from the intelligence services to the minister of interior affairs, detailed which countries the order affects and why the measure was deemed necessary. “In case an application is managed in a country with an offensive cyber program against the Netherlands or Dutch interests, there’s an increased risk of espionage,” the letter, dated February 23 and seen by POLITICO, reads. “Examples of countries with such an offensive cyber program are Russia, China, Iran and North Korea.” My colleague Pieter Haeck has the full story here.
Beijing yet to act: China is now threatening the Netherlands with possible follow-up actions, though nothing has so far been reported. “I will not speculate about counter-restrictions, but China will not simply swallow this,” the Chinese Ambassador to the Netherlands, Tan Jian, told Dutch newspaper Het Financieele Dagblad.
GERMAN MINISTER IN TAIWAN: This week, Bettina Stark-Watzinger, Germany’s minister for Education and Research, is on a two-day trip to Taiwan, reviving rumors about an investment by Taiwanese chips manufacturer TSMC in Germany.
What’s on her schedule: Chips is one of the topics on Stark-Watzinger’s agenda, her ministry spokesperson told reporters, adding that Taiwan was a “world leader in the development and production of semiconductors.” Both semiconductor research and the development of necessary skills is on the agenda, in a bid to boost “the expansion of the German and European ecosystem for microchips.”
Her party boss speaks out: Christian Lindner, the China hawk German Finance Minister and leader of the liberal Free Democratic Party, supported her trip to Taiwan. “The price of cooperation with China must not be the gradual loss of democracy and freedom around the world,” he tweeted.
FRANCE SEEKS EQUIDISTANCE: France may be skeptical of TikTok… but of course American apps are just as bad.
The National Assembly recommended that deputies “limit” the use of “social media” applications, in an email sent on March 20 and seen by POLITICO. “Given the increase in the possibilities of personal data being exploited for foreign interference, in particular by the evolution of the conditions of use of social media, such as Whatsapp, Telegram, Signal, Instagram, Snapchat, TikTok ( …) we would like to draw your attention to the use of these applications”, according to the letter.
L’ALERTE! These applications – mainly of Chinese and American origin – are considered “particularly exposed to a risk of use for the benefit of foreign countries outside the European Union”. They “can recover your data, and in particular your contacts, but also your photos, your videos, or even any other personal or professional document.”
HOW DID WE GET HERE?
THE LAST TWO YEARS has been full of twists and turns for EU-China relations. Let’s take a look at some of the best moments throughout our 100+ editions:
March 2021: Beijing is hit with human rights-related punitive measures from the EU for the first time since the Tiananmen Square massacre in 1989.
May 2021: Lithuania quits China’s “17+1” group, a decision followed by Estonia and Latvia a year later.
September 2021: European Commission President Ursula von der Leyen call for a “ban” of goods made with forced labor.
October 2021: Xi says goodbye to Merkel one last time, hailing her as an “old friend” to the Chinese people.
November 2021: #MeToo hits the Politburo as tennis star Peng Shuai accuses ex-official Zhang Gaoli of sexually assaulting her. European media give it massive coverage.
January 2022: MI5 identifies a Chinese spy in Westminster.
January 2022: EU sues China in WTO over Lithuania blockade
April 2022: Michel and von der Leyen hold “April Fool’s Day” online summit with Xi, with no joint statement and no deliverables. EU foreign policy chief dubs it “dialogue of the deaf.”
August 2022: China’s military encircles Taiwan in response to a visit by then U.S. House Speaker Nancy Pelosi.
October 2022: German Chancellor Olaf Scholz visits China, while he’s criticized for allowing the partial sale of a Hamburg port terminal to a Chinese state-owned company.
November 2022: Michel visits China alone, while anti-lockdown protests erupt nationwide briefly.
January 2023: TikTok CEO’s charm offensive tour takes him to Europe — shorty before EU institutions ban the app for staff.
February 2023: Xinjiang governor aborts a plan to visit Europe, as protesters threaten to sue him while officials decline high-level meetings.
THAT’S ALL FROM CHINA DIRECT. See you on next Tuesday with China Watcher.
MANY THANKS: To my editor Christian Oliver, reporters Jacopo Barigazzi, Barbara Moens, Pieter Haeck and Karl Mathiesen and producer Grace Stranger.
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