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China tensions spill over as Europe moves toward Biden's side

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Yet by late March, the EU had joined the U.S., Canada and the U.K. in imposing sanctions on China over alleged mistreatment of Muslim Uyghurs in Xinjiang, including forcing them to work. Beijing responded with its own sanctions, while a public backlash saw Swedish fashion retailer Hennes & Mauritz AB subject to an unofficial boycott.

“The EU has recently added more agenda items tied with human rights, ideology, democracy,” said Zhang Monan, senior fellow at the U.S.-Europe Institute at the China Center for International Economic Exchanges in Beijing. “This kind of opposition and friction is expected to continue.” She added that the EU is expected to formulate policy independently since it doesn’t want to be subordinate to the U.S.

The European Commission is now proposing rules to levy fines and block deals targeted at foreign state-owned companies, while Merkel’s cabinet approved additional powers over foreign investment last week aimed at high-tech sectors including artificial intelligence and quantum computing. Both measures would hinder China.

China had hoped to separate economic issues from political issues and to bind Europe with its huge consumer market, but that’s increasingly impossible now, said an academic at a Chinese government-affiliated think tank. Ratification of the CAI has become more challenging, said the person, who is not authorized to comment publicly due to rules on speaking to foreign media.

Signs of the tensions were on show during the virtual talks led by Merkel and Li. In a departure from usual practice, the opening remarks were not live-streamed and there was no concluding press conference. A transcript posted several hours later by Germany showed that Merkel addressed human rights, saying there were differences of opinion particularly over Hong Kong.

“China and Germany have different views on some issues, this is a fact,” Li told Merkel, urging Germany not to interfere in internal matters, according to a statement from the Chinese Foreign Ministry. Li said he hoped they could “eliminate unnecessary distractions” to maintain “healthy and stable” bilateral ties.

 

The shift in Europe has not been lost on Washington. A Biden administration official said there’s been a sea change in European thinking, coming on board with the U.S. stance on China. There’s been real evolution in Germany too, the official said.

That change could get more pronounced if the Greens convert their opinion poll lead into a strong showing or even victory in September, with Merkel set to step aside. While all coalitions involve policy trade-offs, the Greens have a harsher line on China than the current administration, calling for an end to Beijing’s “blatant human-rights violations” and for closer European and transatlantic coordination on China.

A coalition with the conservatives as suggested by polls would see continuity in German foreign policy but with “different nuances” on China, said Jana Puglierin, head of the Berlin office of the European Council on Foreign Relations. “The Greens would clearly advocate a less mercantilist policy than we have seen under Merkel,” she said.

For now, Europe is determined to avoid decoupling entirely with China. French President Emmanuel Macron and Merkel held a joint call with Xi in April, and a report in China’s Global Times on April 28 referred to “optimism and confidence in China-Germany cooperation” despite the risk of “some impacts” after the election. Merkel’s would-be successors and business leaders know the “great potential” of Europe working with China, “so they need to ensure healthy ties won’t be interrupted by any third party or internal conservative forces.”

Still, Wuttke at the European trade chamber said that China underestimates the concern over human rights in Germany. Especially after the departure of Merkel, who favored engagement with China, that’s likely to “translate into possibly more assertive policy in Berlin,” he said.

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