(Bloomberg)
-- With a series of high-level summits culminating in a visit to
Germany in the fall by President Xi Jinping, this was supposed to be the
year of Europe-China diplomacy. Instead, Europeans are warning of a
damaging rift.
Diplomats talk of mounting anger over China’s
behavior during the coronavirus pandemic including claims of price
gouging by Chinese suppliers of medical equipment and a blindness to how
its actions are perceived. The upshot is that Beijing’s handling of the
crisis has eroded trust just when it had a chance to demonstrate global
leadership.
“Over these months China has lost Europe,” said
Reinhard Buetikofer, a German Green party lawmaker who chairs the
European Parliament’s delegation for relations with China. He cited
concerns from China’s “truth management” in the early stages of the
virus to an “extremely aggressive” stance by the Ministry of Foreign
Affairs in Beijing and “hard line propaganda” that champions the
superiority of Communist Party rule over democracy.
Rather than
any single act responsible for the breakdown, he said, “it’s the
pervasiveness of an attitude that does not purvey the will to create
partnerships, but the will to tell people what to do.”
While the
Trump administration has resumed its swipes at China, European officials
are traditionally less willing to be openly critical, in part for fear
of retribution. The fact that politicians in Berlin, Paris, London and
Brussels are expressing concern over Beijing’s narrative on Covid-19
hints at a deeper resentment with wide-ranging consequences. Already
some European Union members are pursuing policies to reduce their
dependence on China and keep potential predatory investments in check,
defensive measures that risk hurting China-EU trade worth almost $750
billion last year.
It’s a turnaround from just a few weeks ago,
when China emerged from the worst of its own outbreak to offer web
seminars on best practice gained from tackling the virus where it first
emerged. It also airlifted medical supplies including protective
equipment, testing kits and ventilators to the worst-hit countries in
Europe and elsewhere, in a show of aid-giving that contrasted with
America’s international absence.
The pandemic offered a chance for mutual solidarity. But it didn’t last.
“Now
the atmosphere in Europe is rather toxic when it comes to China,” said
Joerg Wuttke, president of the EU Chamber of Commerce in China.
Belt and Road
Concerns
were aired during a March 25 call of Group of Seven foreign ministers
about how China would proceed during the crisis and once it subsided.
Ministers were told that Europe and the G-7 must be on guard as Beijing
was likely to move “more self confidently, more powerfully” and in a way
that exploits its leverage when other nations were still in lockdown,
according to a European official familiar with the call.
In
public, Chinese officials have struck a conciliatory tone. “When
people’s lives are at stake, nothing matters more than saving lives. It
is useless to argue over the merits of different social systems or
models,” Foreign Ministry Spokesman Zhao Lijian said at a regular press
conference on April 17. China, he said, is ready to work with the
international community, including European countries, to “jointly
safeguard the health and safety of all mankind.”
Yet China’s means
of going about it has backfired in much of Europe. An anonymously
authored text posted on the website of the Chinese embassy in France
this month falsely accused French retirement home staff of leaving old
people to die. It was “an incredible accusation on one of the most
sensitive and tragic aspects” of the crisis in France, Mathieu Duchatel
of the Institut Montaigne wrote on Twitter.
The embassy website
comments rang alarm bells for the needless offense caused. China
underestimated the reaction to its conspiracy theories amplified by
propaganda outlets, according to two European officials in Beijing.
What’s more, China’s insistence that aid be accompanied by public thanks
and praise has undercut the goodwill it might otherwise have gained,
they said.
Vulnerable Companies
European governments have
become more wary of China over the past two years as Xi’s Belt and Road
Initiative on trade and infrastructure expanded across the continent,
snapping up strategic assets including ports, power utilities and
robotics firms from the Mediterranean to the Baltic Sea. While some
nations including Italy and Portugal have been enthusiastic backers of
Belt and Road, another program known as Made in China 2025, whereby
Beijing seeks to become the world leader in key technologies, is seen in
many quarters as a further threat to European industry.
With
stock prices tumbling on the coronavirus crisis, countries including
Germany that have investment screening regulations have tightened them
and extended their scope in response to concerns that China, among
others, could take controlling stakes in companies suddenly made
vulnerable. EU Competition Commissioner Margrethe Vestager suggested in a
Financial Times interview that governments go further and buy stakes in
companies themselves to stave off the threat of Chinese takeovers.
More
far-reaching still are proposals to curb dependence on China, not just
for medical supplies but in areas such as battery technology for
electric vehicles. EU Trade Commissioner Phil Hogan said last week
there’s a need for a discussion “on what it means to be strategically
autonomous,” including building “resilient supply chains, based on
diversification, acknowledging the simple fact that we will not be able
to manufacture everything locally.” Japan already earmarked $2.2 billion
from its $1 trillion stimulus package to help its manufacturers shift
production away from China.
Without mentioning China, EU trade
ministers agreed in an April 16 call on the importance of diversifying
to “reduce the reliance on individual countries of supply.” As a first
step, Berlin plans state funds and purchase guarantees to start
industrial production of millions of surgical and face masks by late
summer. China currently exports 25% of the world’s face masks.
Wuttke
of the EU trade chambers said the discussion on supply chains began
when Beijing shut its ports earlier this year, prompting fears that
pharmaceutical ingredients produced in China would not reach Europe, and
causing policymakers to realize that strategic products had to be
secured. According to another European official, even official suppliers
were breaking contracts for items such as ventilators and scamming
people, burning bridges along the way. “People want to have their eggs
in more baskets,” said Wuttke.
Burning bridges
Certainly,
the tenor of the political debate in Europe has shifted since. German
Foreign Minister Heiko Maas told Bild newspaper that China’s revising up
of the death toll last week was “alarming,” while French President
Emmanuel Macron said in an FT interview there were “clearly things that
have happened that we don’t know about.” U.K. Foreign Secretary Dominic
Raab said it can’t be “business as usual” with China once the pandemic
is over.
Spain’s Health Ministry has canceled an order of antigen
test kits from Chinese company Bioeasy after sending back a previous
batch, the country’s El Pais reported. Health authorities found that
both sets of kits were faulty, it said.
As a result of the
Covid-19 crisis, pressure is growing on the U.K. to reverse its decision
to allow Huawei Technologies a limited role in its fifth-generation
mobile networks, while France may be less inclined to give Huawei a
chunk of its 5G contracts after the embassy spat. Germany must make a
decision by around midyear on Chinese involvement in its 5G networks.
In
the battle of narratives, Germany is key, according to Janka Oertel,
director of the Asia program at the European Council on Foreign
Relations in Berlin. As well as Europe’s dominant economy, its trade
ties to China dwarf those of its neighbors: German exports to China in
2019 were higher than the U.K., France, Italy, Spain and the Netherlands
combined. It will assume the EU’s rotating presidency on July 1, giving
it the chance to turn the debate in Europe.
China could still win
back favor and help secure a greater global role by acceding to demands
to open up its markets and introduce a more level playing field for
international business, said Oertel. “That would be something that the
Europeans would very much appreciate,” she said. All the same, she
added: “I don’t think it’s very likely.”
(Updates with El Pais report in final section.)
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