EU connectivity initiative + Values issues + Lithuania

On July 12, the EU Foreign Affairs Council (FAC) issued its official conclusions about a “globally connected Europe.” The document calls for solidifying and branding a global European connectivity initiative – in part as a response to China’s Belt and Road Initiative (BRI).

What you need to know

• Vision: The document invokes the EU’s 2018 “Connectivity Strategy” by stating the initiative will be sustainable, comprehensive and rules-based. The new initiative will take a “geostrategic approach” to connectivity and link measures taken as part of other EU policies, including 2030 Digital Compass or European Green Deal.
• Plan: The Foreign Affairs Council wants to launch a dedicated Business Advisory Group, mobilize private-sector financing, and operationalize the EU’s connectivity partnerships with Japan and India, and the one anticipated with ASEAN. The initiative will work together with multilateral development institutions and like-minded countries, “in particular the United States”. The Council also wants to develop a distinct brand for the EU’s initiative, in part by taking stock of current projects and launching new ones that are “high impact and visible.” The Commission will now develop a concrete proposal, likely to be ready by the time of the autumn State of the Union speech by Commission President Ursula von der Leyen.
• China: While BRI is not mentioned explicitly, the conclusions noted the need for initiatives of “other key economies” to follow G20 financial sustainability and quality standards. Speaking ahead of FAC, German Foreign Minister Heiko Maas clearly stated that the EU needs to respond to an increase of Chinese influence in the connectivity sphere.

Quick take

The success of an improved, operational version of the Connectivity Strategy will depend on financing, branding and a clear definition of priorities. Comparative framing of the initiative as a response or alternative to the BRI would further boost China’s position. Instead, the initiative would benefit from being presented as an affirmative solution with a simplified bureaucratic structure that is tailored to needs of developing countries.

Read more

• Council of the European Union: Council Conclusions – A Globally Connected Europe
• Euractiv: EU’s counter-project to China’s Belt and Road
• MERICS: Competing with China's Belt and Road Initiative

On July 5, leaders of France, Germany and China talked by telephone to stabilize EU-China relations and express their support for the EU-China Comprehensive Agreement on Investment (CAI). However, several European institutions took steps to signal their interest in protecting European values in relations with China.

What you need to know

• EEAS’ call: On July 8, the EU’s High Representative Borrell had a “frank exchange” with Chinese Foreign Minister Wang Yi about sanctions and China’s human rights violations in Hong Kong and Xinjiang. Borrell expressed the hope that the EU-China Human Rights Dialogue could resume soon.
• EP’s resolution: On July 9, an overwhelming majority in the European Parliament passed a non-binding resolution on Hong Kong’s implementation of the National Security Law. The MEPs “strongly urged” the Council to enact sanctions against prominent Hong Kong officials (including Carrie Lam and Xia Baolong) for their human-rights violations, to introduce rules preventing European investments in Hong Kong companies “complicit in gross human rights violations,” and to bypass the Hungarian veto against a joint EU statement on Hong Kong with a “lifeboat scheme” for would-be immigrants. The Parliament also called on EU member states to suspend extradition treaties with the People’s Republic of China and Hong Kong and to “consider declining invitations” to Beijing Olympics unless China’s human-rights record improves.
• Commission’s guidelines: On July 12, the European Commission released a guidance document on addressing the risk of forced labor in companies’ operations and supply chains. The document was released in preparation for the upcoming legislation on Sustainable Corporate Governance and covered issues like state-sponsored forced labor and discrimination of ethnic and religious minorities, both which pertain to China.

Quick take 

EU-China relations are likely to remain in a state of perpetual balancing between stabilization and escalation in the coming months. Consequently, a near-term diplomatic solution that would allow to restart a political process of CAI ratification looks unlikely. 

Read more

• EEAS: High Representative Josep Borrell spoke to Foreign Minister Wang Yi
• European Parliament: Motion for a resolution on Hong Kong, notably the case of Apple Daily
• European Commission: Guidance on due diligence for e businesses to address the risk of forced labour in their operations and supply chains

Last week Lithuanian Foreign Minister Gabrielius Landsbergis called for a more “united format” for European China policy. However, the political momentum for such a solution may be limited.    

What you need to know

• Call for unity: Lithuania’s President Gitanas Nausėda separately called upon the Council to return to the project of an EU27 meeting with President Xi Jinping – advocating to arrange such a meeting this year still and make it a regular format. Nausėda and Landsbergis’ calls are part of a wider shift in Lithuanian China policy following the country’s departure from the 17+1 framework. The country is also supporting Taiwan’s vaccination efforts and plans to set up a new Taiwan trade office this autumn.
• Xi responds: On July 7 and 8, President Xi Jinping talked by telephone with Greek Prime Minister Kyriakos Mitsotakis and Czech President Milos Zeman, respectively. According to Chinese readouts, both European leaders expressed their continued interest in what is now the 16+1 initiative. While Czech and Greek readouts indicated both countries’ interest in maintaining cooperation with China, they made no explicit reference to the 16+1 format.
• Reminder: Czechia and Greece joined a group of other CEE states – comprising Croatia, Hungary, Poland, Slovenia, and Serbia – that has already held high-level exchanges with China following Lithuania’s departure from the 17+1.

Quick take

Lithuania’s gambit to use its departure from the 17+1 to push for more European China-policy unity appears to be facing challenges. The country is struggling to build a wider coalition that supports its stance. The litmus test for its success will be whether the idea of a 27+1 format makes it back on to the Council’s table. However, the Baltic state’s move might have been primarily aimed at improving ties with the US administration of President Joe Biden. If Lithuania fails to reap concrete benefits from its departure, the remaining 16+1 members may find little incentive to leave the format. That would keep it alive, if in a condition anything but vibrant.

More on the topic: Where does this leave the 17/16+1 framework and China’s cooperation with the Central and Eastern European countries? Be sure to read our latest MERICS EU-China Opinion Pool: The future of 17+1 after Lithuania's departure.

Read more

• Politico: Lithuania pushes for EU summit with China
• Global Times: Lithuania’s call for more unity on China has little impact on EU-China collaboration mechanism
• Office of the Prime Minister of the Hellenic Republic: Telephone communication between the Prime Minister Kyriakos Mitsotakis and the President of the People's Republic of China Xi Jinping
• Office of the President of the Czech Republic: The President of the Republic spoke with the Chinese President 

Germany plans a sharp increase in funding for China research

German Education Minister Anja Karliczek announced plans to boost funding for the development of “independent China competence” and earmarked EUR 24 million for related programs between 2017 and 2024.

• SCMP: Germany wants independent China experts as concerns about Confucius Institutes and Beijing’s influence over universities grows

University of Oslo faces controversy over Fudan University connection

The university has been criticized for its agreement to host the European Center of Fudan University, initially based at the University of Copenhagen. Critical voices were raised in the wake of a controversy about a Fudan campus in Hungary.

• University World News: University of Oslo under fire for hosting Fudan’s centre
• University of Oslo: The Fudan-European Centre for China Studies webpage

China abruptly stops imports of Spanish pork without clear explanation

China is the destination of 48 percent of all Spanish pork exports. The decision is likely linked to market volatility linked to Chinese outbreaks of African Swine Fever.

• El Pais [ES]: China cuts pork purchases and puts the sector on the ropes 
• Reuters: Swine fever surge hits small farms in China's Sichuan

Belgian Parliament passes a resolution on Xinjiang 

On July 8, the Belgian Parliament unanimously passed a resolution denouncing crimes against humanity and warning of the “serious risk of genocide” against the Uyghurs.

• L’Echo [FR]: Belgium takes a stance against Beijing on the Uyghurs
• Le Vif [FR]: The risk of genocide of the Uyghurs by China recognized by the Parliament

Montenegro restructures its China debt for Bar-Boljare highway

The Montenegrin government reached an agreement with two US banks and one from France. While China Exim Bank remains the creditor, Montenegro managed to secure a cut in the interest it has to pay from 2% to 0.88%.

• Euractiv: Montenegro PM: Serbia’s behaviour towards Montenegro not acceptable
• SCMP: Montenegro reaches deal with Western banks to restructure Chinese debt