NEW: China and EU hurtling towards trade war, business chief fears

Caught up with EU Chamber in China chief Jens Eskelund in Brussels yesterday

scmp.com/news/china/art… The chamber expects EU duties on Chinese EVs this summer, and China to respond

“Based on historical precedence, I fear there will be retaliation."

Asked if he was confident a trade war could be averted: “I really wish I could give you an emphatic yes. And I don’t think I can."

As Xi Jinping heads to France, China seeks chance to sway one of EU’s most powerful members

Reupping this longread from the weekend

scmp.com/news/china/dip… Macron's China policy can often seem contradictory and confusing - few have embodied that enigmatic triptych of “partner, competitor, rival” more than he.

“He is neither pro-China nor anti-American. Macron is pro-European,” said MEP ally @MariePierreV

Feels like a pretty seismic week in EU-China relations. I get the feeling that we're not in Kansas anymore

Here is a summary of the major events that have happened, let me know if I missed any, bearing in mind it's still only lunchtime on Friday... Monday:

German federal prosecutors announced that three German nationals had been arrested on “strong suspicion” of spying for Chinese intelligence services.

(UK also charged two men under the Official Secrets Act over allegedly spying for China)

scmp.com/news/china/dip…

A fiery session of the WTO's Committee on Subsidies and Countervailing Measures (SCM) on Tues that demonstrates the divisions between China and the West

The EU, US and China clashed on a number of important topics, ranging from overcapacity to Brussels' EV probe.

A thread 🧵 Per Geneva trade source, there were "sharp exchanges" between the US and China over the topic of industrial overcapacity.

China was challenged for insisting the term "overcapacity" get taken of the agenda for a discussion on "Subsidies and Capacity"

🚨 More huge news in Germany

An assistant to the far right's lead candidate in the European elections is arrested, suspected of spying for China.

zeit.de/politik/deutsc… Zeit Online:

"investigators accuse Jian G. of having spied on the Chinese exile opposition in Germany. He is said to have worked in various positions in opposition groups and collected information about Chinese dissidents. He reported this to China"

Wang Yi about to speak at Munich Security Conference now, in conversation with @MSCheusgen.

Then Blinken, Baerbock, Jaishankar share a panel immediately after.

🧵I will post some of the main points in a thread here... @MSCheusgen Wang says in 2023, the "global economy was weighed down by protectionism and the abuse of the security concept and the international system was impaired by unilateralism and bloc politics"

China's "universal periodic review" is underway.

A peer-review process under the UN Human Rights Council, 163 countries are expected to speak for 45 seconds each on China's human rights record since 2018. Chinese envoy Chen Xu says all "56 ethnic groups in China are equal", talks up the Belt and Road Initiative as advancing human rights through development", and says claims all "200 million religious believers in China... exist in harmony"...

Wild, wild story.

After an audit found that Volkswagen's Xinjiang plant had no forced labour, the firm's official LinkedIn account posted a note distancing itself from the findings.

Note below, story from FT

ft.com/content/46b37a…
In a week when the EU is trying to finalise its Corporate Sustainability Due Diligence Directive (it also hopes to conclude a forced labour ban in the new year), instances like this show the challenges facing any company with a presence in Xinjiang.

Scoop: Xi Jinping told EU leaders that Europe is a "vassal" of nobody, debunking an accusation often levelled by China's state media and diplomats on the ground

Inside account of yesterday's EU-China summit

scmp.com/news/china/dip… There are few deliverables but EU sources felt they were - finally - being listened to by Beijing, even if expectations are very well managed on the long-term trajectory of the relationship

On trade and Russia, no major movement, but EU wasn't totally shut down as feared

NEW Extensive language on China in G7 leaders' statement, on eve of EU-China summit

"We're not decoupling or turning inwards. At same time, we recognize economic resilience requires de-risking and diversifying... will reduce excessive dependencies in our critical supply chains"



"We will seek to address the challenges posed by China’s non-market policies and practices, which distort the global economy. We will counter malign practices, such as illegitimate technology transfer or data disclosure"

Scoop!

EU lawmakers have written to the commission demanding to know how Chinese state-linked companies were given roles advising its answer to the Belt and Road Initiative.

scmp.com/news/china/dip… A cross-party group of MEPs sent questions to the commission on Thursday asking whether the firms will be excluded from the Global Gateway Business Advisory Board “within the context of de-risking from China”, according to correspondence that was shared with the Post.

NEW: EU reveals first four technologies in the crosshairs of its economic security strategy, as we reported last week.

Story:
scmp.com/news/china/dip… These are: advanced semiconductors, artificial intelligence, quantum, biotechnologies.

They are seen as pressing risks and the tech that can strengthen rivals' militaries, industries, and threaten human rights.

BREAKING: China removes Qin Gang as foreign minister, replacing him with his predecessor Wang Yi

scmp.com/news/china/dip… CCTV’S short statement said Wang Yi, who outranks Qin and serves as Xi’s top foreign policy aide, is the new foreign minister.

Decision to remove Qin made at special session of NPC Standing Committee, one day after the top decision-making body, the Politburo, convened on Monday.

New: Sat down with China's envoy to the EU @FuCong17 today, who said Beijing "did not commit" to stopping Chinese firms rerouting sanctioned European goods to Russia

scmp.com/news/china/dip… Comes after European Union diplomats agreed earlier this week to provisionally remove five Chinese entities from an export restriction list.

Sources said that came after a diplomatic commitment from Fu to exert pressure on the firms

scmp.com/news/china/art…

Waiting for EU internal market chief Thierry Breton, who is expected to back banning Chinese firms Huawei and ZTE from national networks, and banning them from the EU institutions' networks Breton says to date only 10 members have used EU prerogatives to restrict or refuse high risk 5G vendors.

Says this creates "serious vulnerabilities" for the EU

Exclusive!

Three Chinese / HK-based firms removed from EU sanctions list following consultations with Chinese diplomats in Brussels

scmp.com/news/china/art… Beijing has vowed to speak to the three firms that have been tentatively removed, and ensure that the flow of hi-tech goods to the Russian war machine stops.

European Parliament will tonight debate a resolution entitled:

"The deterioration of fundamental freedoms in Hong Kong, notably the case of Jimmy Lai"

🧵 The final text names three deteriorations

1. The national security law: "fundamental freedoms, rule of law, judiciary’s independence in Hong Kong have alarmingly deteriorated"
2. "Trumped up charges" on Jimmy Lai and refusal to allow British lawyer to represent him

Here's Germany's new, first ever national security strategy (in English)

It comes ahead of next month's China strategy and has, in total, six mentions of China

nationalesicherheitsstrategie.de/en.html Nothing too revelatory within those mentions.

1. "Some countries are attempting to reshape the current international order, driven by their perception of systemic rivalry. In this international context, China is a partner, competitor and systemic rival."

New: EU big hitters push back against von der Leyen's tough economic policy on China

scmp.com/news/china/dip… At a breakfast meeting in Brussels on Wednesday, officials from France, Germany, Italy and the Netherlands were among those expressing concern about “national security” references von de Leyen’s chief of cabinet, Bjorn Seibert, made in a presentation

62% of Europeans think their countries should remain neutral in a US China war over Taiwan, ECFR polling shows 43% of Europeans see China as a "necessary partner with which we must strategically cooperate", more than any other category

In his first public remarks since the storm caused by his questioning the status of post-Soviet states, China's ambassador in Paris Lu Shaye accused his interviewers of "violating journalistic ethics"...

scmp.com/news/china/dip… Remember in an unprecedented reaction, Beijing distanced itself from his remarks.

“Lu Shaye’s remarks on the Ukraine issue were not a statement of politics, but an expression of personal views during a televised debate," read a note on the Chinese embassy in France's website