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By STUART LAU
with PHELIM KINE
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HI CHINA WATCHERS. This is Stuart Lau in Brussels, recovering from an overnight shift watching the EU elections. Phelim Kine will be reporting from the U.S. on Thursday.
LEADING THE WEEK: AFTER EU ELECTIONS
PARIS AND BERLIN IN SHOCK: The surge in far-right support over last weekend’s European Parliament elections is set to shake up politics in Germany and France — and EU-China relations in the long run.
In Germany, Chancellor Olaf Scholz‘s center-left socialist party suffered its worst electoral performance in a century, after the far-right Alternative for Germany (AfD) party won second place, beating the socialists into third. The rightward tide is even more emphatic in France, where Marine Le Pen‘s National Rally party came first, forcing President Emmanuel Macron to dissolve parliament, call a snap election and send the whole country into political chaos.
The paradoxical fact is that while these far-right groups have complex relationships with authoritarian regimes like China, they also advocate against the globalist agenda on which China’s all-important business ties with Europe are based. Besides, Macron and Scholz are among the G-7 leaders most amenable to a conciliatory stance with an ever more assertive China. In fact, just a day before the crushing defeat for his party, Scholz was defending China’s electric vehicle industry, openly questioning Brussels’ plan to impose tariffs. Their waning influence — even in return for ideologically pro-authoritarian alternatives — is not a good sign for Beijing by default.
View from China: A few senior Chinese scholars and advisors to the government do not seem convinced the far-right trend would be a welcome in Beijing. “The rise of the right wing means that the EU will speed up with its de-risking strategy and reduce dependency on China,” said Zhao Ke, head of Russia and Europe at the Central Party School of the Communist Party. “With the EU adopting the geopolitical lens to look at its relationship with the world, this creates challenges to China-EU relations.”
In the same interview, published on Chinese web media The Paper, another senior scholar echoed that view. “The EU could take an even more conservative view on the economic policy with China,” said Ding Chun, the lead Europe scholar at Fudan University in Shanghai.
Another China-EU scholar at Fudan, Yan Shaohua, takes a more nuanced view, saying that while the far-right groups will promote a “narrow-minded protectionist policy in trade,” there’s also “a lack of unity on the China agenda” among the different far-right parties. “The right-wing populist parties are also relatively pragmatic, and not so ideological,” Yan said.
The only time where Le Pen’s right hand man Jordan Bardella voted critically on China in the European Parliament was exactly on Beijing’s influence over Europe’s critical infrastructure, according to French broadsheet Le Monde. He otherwise didn’t have any issue with human rights issues, a top focus for the Brussels-based legislature.
“Although French far-right parties may align with Macron on pursuing a more defensive trade policy including investigations into Chinese subsidies, their stance on Russia and their unwillingness to boost Brussels' geopolitical competencies could impact the trajectory of de-risking,” Grzegorz Stec, head of Brussels office of Merics think tank, said.
And then there’s the biggest question of the year: Europe — led by the left or right alike — will adjust its China policy if Donald Trump wins the U.S. presidency in November. “The EU’s approach to China will not see any big changes for now, after the elections, as the center parties will continue to become more realistic … [But] if Trump wins the U.S. election, the EU’s polarization on China policy is likely to grow,” said Gunnar Wiegand, a retired top EU diplomat on Asia, who’s now a fellow at the German Marshall Fund think tank.
For now, Brussels is relatively at peace (compared to Paris.) The most coveted prize in the upcoming EU top job reshuffle — presidency of the European Commission — is likely to stay with the incumbent Ursula von der Leyen, whom Beijing regards as one of the main characters behind the EU’s recent hawkish turn on Chinese trade practices. (It emerged yesterday that Macron prefers keeping her in the job.)
First test case: As soon as Eurocrats returned to work on Monday after the weekend elections, they pressed on with the final preparation for the European Commission’s long-awaited anti-subsidy probe on made-in-China electric vehicles, an issue that will ignite a consequential series of trad war between Beijing and Europe.
A day before the crushing defeat for his party, Scholz launched a thinly veiled attack on the Commission’s plan, telling the German auto industry on Saturday: "We do not close our markets to foreign companies, because we do not want that for our companies either." Bloomberg has more. For now, he has worse headaches to take care of, domestically.
Time line: Regardless of Scholz’s intervention, the expectation is that the Commission will this week unveil the level of tariffs on these EV imports from China. (Reminder: the U.S. set it at 100 percent; Turkey announced an additional 40 percent.) It would be highly unusual for the decision to be pushed back into November, POLITICO’s Morning Trade reports.
“European China policy has emerged as a rather consensual issue at the European Parliament and this will continue, especially under a likely second von der Leyen mandate,” said Abigaël Vasselier, an expert on EU-China relations at the Merics think tank.
And especially if China retaliates.
EU-CHINA PIG FIGHT
CHINA IS DRIVING A WEDGE BETWEEN EU AND FARMERS: In anticipation of EV tariffs imposed by the EU, Beijing is gearing up to hammer European agricultural imports with retaliatory tariffs.
The trick is not new: Hungary’s strongman Prime Minister Viktor Orbán has perfected the art of stoking unease among farmers skeptical of the EU’s environmental regulations. Adding another grievance — losing a share of the Chinese market — will unquestionably widen the wedge between EU politicians and the farming constituents with whom they try so hard to repair ties, with little effect so far.
Prone to pork: "The Chinese market is so crucial for the European pork sector … [because it] is so big that no one can ignore it," Joris Coenen, manager at the Belgian Meat Office, an export coordinating body, told my colleague Alessandro Ford.
Back story: Last month, China's state-owned Global Times reported that Chinese companies want the government to launch an anti-dumping investigation into imports of pork, which in 2023 accounted for 15 percent of EU agrifood exports to the Asian giant and over 1 percent of total EU exports. That's on top of Beijing's existing probe into cognac and armagnac, which only targets France but has caused a significant racket.
Limited impact: Only 10 percent of Europe's pork leaves the bloc, of which less than half goes to China. Beijing-bound exports of pig meat topped €7 billion in 2020, after an African swine fever epidemic forced the country to cull a quarter of its herds, but fell to under €3 billion last year as pig populations recovered and the cash-strapped Chinese ate less meat.
Piggybacking: Tariffs or not, the uncompetitive prices of European pork mean that figure will drop again this year, according to Commission estimates.
In threatening higher pork duties, Beijing is also "piggybacking" — trying to squeeze another benefit out of something they might do anyway due to domestic oversupply, said Jacob Gunter, a lead analyst on the economy at Merics. "This may be a good way for them to stabilize pork prices at home," he mused.
Here’s Alessandro’s story in full.
UK-CHINA
LIBDEMS GET TOUGH ON CHINA: The U.K.’s third-biggest party, the Liberal Democrats, set a tough tone on China in its newly published manifesto. Among other ideas include “building new diplomatic, economic and security partnerships with democratic countries threatened by China, including Taiwan.”
Yes, they did call Taiwan a country.
And on Xinjiang: The LibDems say the human rights abuses against the Uyghurs should be considered a genocide.
Marginal though the party may be, the LibDems are on course to get around 48 seats (out of 650). While dwarfed by Labour’s expected landslide win (pollster YouGov put it at 422) it’s still a big jump from the 11 seats it got in 2019.
And it’s the pressure: “The Liberal Democrats’ platform puts pressure on Labour,” Luke de Pulford, coordinator of the Inter-Parliamentary Alliance on China, said. He added that Labour has been reluctant to go too far on China because of the influence still enjoyed by Peter Mandelson, the Labour bigwig and former EU commissioner for trade.
UK EX-JUDGE SLAMS HONG KONG RULE OF LAW: British judge Jonathan Sumption who recently quit the Hong Kong top court has a stern message on the city’s rule of law. “Hong Kong, once a vibrant and politically diverse community is slowly becoming a totalitarian state. The rule of law is profoundly compromised in any area about which the government feels strongly,” Sumption wrote in the Financial Times. The Hong Kong government rebutted him in a lengthy press release, saying: “There is absolutely no truth that the … courts are under any political pressure.”
TRANSLATING WASHINGTON
BEIJING: U.S. STOKING INDO-PACIFIC 'ARMS RACE': China's Vice Foreign Minister Sun Weidong came out swinging against U.S. moves in the Indo-Pacific in an interview published Sunday, following a two-day meeting of senior ASEAN officials in Laos. Sun blamed rising tensions in the South China Sea on the U.S. rather than incursions by China Coast Guard units into Philippine waters. The U.S. is "manipulating bloc politics and camp confrontation for geopolitical purposes, advancing military deployments and operations in the South China Sea, instigating the intensification of disagreements and contradictions," said Sun. Sun warned that U.S. strategy in the region is raising the risk of war. The U.S. "has drawn the region into an arms race and placed the entire Asia-Pacific region under the shadow of geopolitical conflicts … jeopardizing the security of regional countries, and seriously undermining regional peace and stability," Sun said.
SULLIVAN UNEASY ABOUT CHINA'S NUCLEAR STOCKPILE : The Biden administration is worried about Beijing's rapid expansion of its nuclear weapons capacity. "We are concerned about the advancing nuclear arsenals of countries like China and Russia," National Security Adviser Jake Sullivan told CBS News' Face the Nation on Sunday. Sullivan said the Biden administration had made "no decision" on how to respond to that threat but will seek to ensure that the U.S. maintains a "credible nuclear deterrent." That follows comments on Friday by National Security Council senior director for Arms Control, Disarmament and Nonproliferation, Pranay Vaddi, that the growing nuclear weapons stockpiles of Russia, North Korea and China may require "an increase from current deployed numbers" of U.S. nuclear weapons. Beijing aims to more than double its current nuclear warhead arsenal to more than 1,000 by 2030, the Pentagon said in a report last year.
BEIJING BLASTS LATEST TAIWAN ARMS SALE: The Chinese government lashed out at the State Department's approval last week of the sale of $80 million in spare parts for Taiwan's F-16 jet fighters. The sale suggests that the "the U.S. is hellbent on helping advance" Taiwan authorities "attempt to seek independence through the use of force," said Chinese Foreign Ministry spokesperson Mao Ning on Friday. State's Defense Security Cooperation agency said the sale will help Taiwan "meet current and future threats by maintaining the operational readiness of the recipient's fleet of F-16 aircraft" in a statement last week.
EMBASSY: 'WESTERN MEDIA' CAUSING XINJIANG UNEMPLOYMENT: Beijing is blaming "western media" for creating joblessness among ethnic minorities in Xinjiang. "Western media have kept hyping #Xinjiang-related issues, fabricating 'forced labor' in its cotton industry —the groundless claims have forced many industry workers … to quit their jobs," the Chinese embassy in Washington said in an X post on Friday. That reflects a tactical pivot from Beijing's standard strict denial of well-documented allegations of forced labor of Xinjiang Uyghurs to a narrative of economic pain inflicted by sanctions (which parrots a position argued by a U.N. expert in China Watcher last month).
HEADLINES
BLOOMBERG: Chinese Premier Li Qiang to visit New Zealand this week.
DW: Latin American anger grows over China’s economic clout.
REUTERS: G7 plans to warn small Chinese banks over Russia ties.
MANY THANKS: To editor Christian Oliver, reporter Alessandro Ford and producer Dato Parulava.
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