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By STUART LAU
with PHELIM KINE
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SCOOP — CHINA'S NO. 2 TO MEET EU CHIEF AMID TENSION: European Council President Charles Michel, who represents the 27 EU national leaders, is set to attend the East Asia Summit in Laos this Thursday and Friday, his spokesperson confirmed to China Watcher. Among a series of bilateral meetings, Michel is expected to sit down with Chinese Premier Li Qiang, just a week after the EU confirmed tariffs against Made-in-China electric vehicles. The timing could be additionally sensitive, as the Chinese military is reportedly planning drills around Taiwan after Taiwanese President Lai Ching-te‘s annual speech this Thursday, as reported by Reuters. We’ll have more EU-China news further down.
WELCOME. This is Stuart Lau with you this Tuesday, with all the hottest news on the Europe-China front. Phelim Kine will report from the U.S. on Thursday. Let’s start in London.
UK-CHINA
STARMER HIRES TIKTOK CHARMER: British Prime Minister Keir Starmer is struggling to reboot his Downing Street operations, as his inner circle totters under several scandals over recent weeks. His answer (for now): He has drafted in a senior communications expert from TikTok — owned by China’s ByteDance — that’s also fighting political battles throughout the West.
James Lyons, a veteran political journalist-turned-comms guru, joins the British government, after working as head of policy communications across Europe for TikTok for more than a year. Lyons will lead a new strategic communications team inside Downing Street as part of a wider shake-up of Starmer's top team, Noah Keate writes.
More bite than dance: Journalists who’ve dealt with Lyons recalled his aggressive approach in playing down links between China and TikTok.
Starmer’s appointment has raised eyebrows among some China hawks in the British parliament, given TikTok is banned on U.K. government phones amid security concerns. TikTok insists it has overhauled its data security practices since the ban on use by U.K. government devices was announced.
Tory attack: Conservative Party leadership contender Tom Tugendhat, who was sanctioned by China, accused his Labour opponents of playing "fast and loose with our nation's security." "The prime minister's latest decision to hire someone directly from the Chinese Communist Party's mouthpiece TikTok demonstrates, once again, that he cannot provide the leadership this country is crying out for," he said.
Before vs after: “In opposition Labour were great on China. Now they're in power they've junked their opposition policies, kicked the promised China audit into the long-grass, and even employ spin doctors working for companies under CCP control,” Luke de Pulford, of advocacy group IPAC, said.
Right of reply: Asked about the U.K, government's stance on TikTok in light of Lyons' appointment, the prime minister's official spokesperson said Monday: "The position remains as previously stated."
ANOTHER STORM FOR LABOUR — IN THE INDIAN OCEAN: The British government agreed on Thursday to hand power over Chagos Islands, the disputed Indian Ocean archipelago, to Mauritius. Nice move on decolonization, but top U.S. Republicans warn this could play to Beijing’s advantage — so what’s the deal?
1/ The island plays hosts a U.S. military base. A large amount of equipment, naval ships and long-range bomber aircraft are based there.
2/ Mauritius is getting closer to China: China is now the No. 1 trading partner for Mauritius, after the two signed a free-trade agreement in 2019. The current Chinese ambassador repeatedly vowed support for the Mauritian claim over the Chagos.
Under the terms of the deal: The military base Diego Garcia, used by the U.S. government to house navy ships and long-range bomber aircraft, will remain under U.K. and U.S. jurisdiction for at least the next 99 years.
Washington warning: The most senior Republican members of both the Senate and House foreign affairs committees warned the deal, struck Thursday, could put U.S. and U.K. security at risk. Emilio Casalicchio has the full story.
EU-CHINA AMID TARIFFS
BERLIN BACKS BEIJING, BUT FAILED TO SWAY BRUSSELS: EU and Chinese negotiators have weeks left to try to hammer out a deal over electric vehicles, after EU countries voted overwhelmingly not to block the European Commission’s proposal to hit these imports with up to 45 percent tariffs. German Chancellor Olaf Scholz overruled his cabinet colleagues to go for a “no” vote against Brussels, joining four others including Hungarian strongman Viktor Orbán and Slovakia’s Prime Minister Robert Fico.
For now, the talks focus on companies: Especially European companies that have joint ventures in China, with talks centering around minimum price. However, the talks won’t be easy, as each automaker makes several models with different specifications.
VW wants alternative: The CEO of Volkswagen Oliver Blume said the EU should focus on making allowances for investments made in Europe.
“Instead of punitive tariffs, this should be about mutually giving credit for investments. Those who invest, create jobs and work with local companies should benefit when it comes to tariffs,” Blume told Bild am Sonntag in an interview.
Investments are good, except… EU officials are understood to be following up on the Biden administration’s recent proposed ban on Chinese connected-car technology. They’re under pressure to quickly say whether they share the same concern, or otherwise Chinese investment plans in Europe, though welcomed by some member countries, could face an additional layer of uncertainty.
SPAIN WANTS TO KEEP TALKING: Spain sees a “need [for] an open dialogue" as part of its decision to abstain in the EV vote in Brussels, Madrid's Minister for Trade and Economy Carlos Cuerpo told our colleague Carlo Martuscelli in Luxembourg on Monday.
Change of heart? Despite voting in favor in July and abstaining last week, Cuerpo claims Spain's messaging is consistent: "Our message of abstention is coherent with what we’ve been saying over the past weeks, in the sense of the need to continue with the negotiations, to continue an open dialogue with Chinese authorities, with Chinese producers, so as to hopefully end up in an agreed solution."
TRANSLATING WASHINGTON
TAIWAN DEMANDS RTX WEAPONS' SALE PROBE: Taiwan's Defense Minister Wellington Koo told a hearing of the island's legislature on Monday that Taipei has requested the Biden administration probe U.S. defense contractor RTX Corp. (formerly Raytheon) for allegedly overcharging for arms sales to the island. Koo said that Taipei wants the U.S. government to probe "all similar arms packages provided by RTX to make sure no irregularities are involved," Taiwan state media reported Monday. Koo's comments followed his assertion on Friday that RTX had agreed to "compensate" Taiwan for overcharging the island for the firm's weapon systems. RTX declined to comment.
The Pentagon declined comment and referred China Watcher to the State Department. The State Department is “committed to safeguarding the integrity of the military contracting process and holding accountable those who undermine the integrity of government procurement systems," said a State Department spokesperson granted anonymity because they aren’t authorized to speak on-record about foreign arms sales issues. But the spokesperson declined to comment on Koo's assertions and referred China Watcher to the Department of Justice. DOJ declined to comment. The Defense Cooperation Security Agency and Taiwan's diplomatic outpost in Washington didn't respond to requests for comment.
TIM WALZ'S EXCELLENT CHINA ADVENTURES: Democratic Vice Presidential candidate Tim Walz "misspoke" about being in Hong Kong during the June 1989 Tiananmen Massacre, but there's no disputing that he made multiple trips to the city and other parts of China over the past three decades. And four of the students who accompanied Walz on one of the school trips to China that he organized from 1994-2005 while a high school teacher in Minnesota and Montana have high praise for his tour guide chops, POLITICO Magazine's Catherine Kim reported Saturday. Walz structured those trips to enable his students "to appreciate people from another culture — chatting with them on overnight trains, riding bikes alongside their monuments, seeing their towns and homes up close," those students told Kim.
LAWMAKERS: BIDEN SHOULD SEEK PRISONERS' RELEASE: President Joe Biden should devote the remaining days of his presidency to negotiate the release of U.S. citizens deemed "wrongfully detained" by the U.S. State Department and others behind bars in China, the co-chairs of the Congressional Executive Commission on China, Rep. Chris Smith (R-N.J.) and Sen. Jeff Merkley said in a letter released Friday.
The lawmakers called for Biden to broker "the release of Kai Li and Mark Swidan….[and] other American citizens incarcerated wrongfully in China who deserve more focused action by your Administration, including Nelson Wells, Jr. and Dawn Michelle Hunt." The letter follows the Biden administration's successful negotiation last month in freeing California resident David Lin who had been behind bars since 2006 serving a life sentence for what the U.S. government said were bogus charges of contract fraud.
REPORT: TAIWAN VULNERABLE TO CYBER AND FINANCIAL ATTACK: Taiwan is at high risk of Chinese cyber-attacks on its physical and financial infrastructure aimed to "starve the island of resources and … to drain its resilience, the hawkish nonprofit think tank the Foundation for Defense of Democracies said in a report published Friday. Beijing has both the capability and intent to use those tactics to "win without fighting" in its pursuit to take control of the self-governing island, the report said.
THREE MINUTES WITH…
CANADA TRADE MINISTER MARY NG flew into Brussels on Friday — just as European Union countries voted on duties on Made-in-China EVs, weeks after Ottawa slapped 100 percent duties on the same product (and just a couple days after they came into force).
Serious concern: "We are, of course, concerned about the overcapacity and the oversubsidization for Chinese-made EVs. And in Canada, we are building our own industry, a very, very strengthened ecosystem for batteries [and] a robust EV industry," Ng told our colleague Stuart.
Ready for retaliation: As in the case against the European Union's pork or cognacs, China is also seeking to retaliate against Canada via agriculture. In this case, it's canola, a variety of rapeseed. "We're going to monitor that very carefully. Canadian companies are fair traders, so they comply with the rules," Ng said.
G7 chair next year: Canada will take the G7 presidency next year, and Ng said the group is key to collaborating on issues like economic coercion and addressing excess capacity.
HEADLINES
ECONOMIST: Interview with Michael Kovrig, former hostage of the Chinese state.
NEW YORK TIMES: How e-commerce is making China's deflation worse.
WALL STREET JOURNAL: China is big business for Western consulting firms.
MANY THANKS TO: Editor Christian Oliver, reporters Noah Keate, Emilio Casalicchio, Carlo Martuscelli, Catherine Kim and producer Dean Southwell.
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