CENTRAL EUROPE WARMUP
CHINA EYES BETTER TIES: Hungary, Poland and Slovakia have pledged better ties with Beijing over the past week, as China seeks to rebuild a largely dormant platform with Central and Eastern European countries known as the “14+1.”
Hungary, which is in charge of chairing the EU Council of Ministers meetings from July until the end of the year, said it would use its presidency to promote a better relationship with China. That doesn’t come as a surprise as Prime Minister Viktor Orbán has been embracing Chinese investments despite the EU’s call for derisking. The same message was amplified by Slovakia, where Prime Minister Robert Fico is set to visit China after recovering from an attempted assassination.
But it’s not just the pair of leaders currently viewed as the EU’s pro-Russian wild cards that are playing this game. Poland’s President Andrzej Duda, a much tougher critic of Moscow’s war against Ukraine, also just concluded a state visit hosted by his counterpart Xi Jinping in China.
Why it matters? “China is again on a charm offensive in Central and Eastern Europe,” Matej Šimalčík, executive director of the Central European Institute of Asian Studies, told China Watcher. “The goal is to revive cooperation on [the] bilateral level with individual CEE states, as well as on the level of the 14+1 platform.”
Clearest sign in Bratislava: China’s 14+1 envoy Jiang Yu was in the Slovakian capital late last week, where she held talks with the Foreign Ministry’s State Secretary Rastislav Chovanec (a junior minister, if you will). The Slovak government confirmed in a press release that, during Fico’s visit to Beijing in the fall, he would sign a joint statement with Chinese Premier Li Qiang “on the promotion of Slovak-Chinese relations to a strategic partnership.” Šimalčík said Slovakia could go even further. “I would not be surprised if at some point there was a suggestion to have the next [14+1] summit be in Bratislava,” he said.
Inconvenient delay: Fico was initially scheduled to visit China last month. Following the shooting attack against him in May, the Slovak Foreign Ministry said he would now postpone the trip of the business delegation.
OUTLIER ORBÁN: A new study out Friday from the European Think Tank Network on China says Hungary is an “outlier” regarding national measures on derisking from China, Pieter Haeck writes in to report.
Orbán “has strongly opposed derisking measures, describing them in a matter consistent with Chinese positions,” the report reads. “While other countries intensify scrutiny of Chinese investments, Orbán’s government takes pride in attracting a growing number of Chinese investors to the country.”
Collision course: Hungary takes over from Belgium as the presidency of the EU Council for the rest of 2024, at a time when trade relations between Beijing and Brussels have reached a new low point. The EU executive is to announce provisional duties on made-in-China electric vehicles on Thursday, which take effect the day after. Hungary, meanwhile, is the location of a new factory owned by Chinese EV-maker BYD — one of the targets of the Commission’s probe.
DUDA’S UNPOLISHED LECTURE: Meanwhile, more details of the Polish president’s visit to China last week emerged, with his speeches in Beijing, Dalian and Shanghai now available online.
Duda, who is due to step down next year after two terms, had this message about European democracy to the Chinese students at Fudan University: “In our country, according to the constitution, one can be president for two successive terms, and then that’s it; then you have to leave, you’re an ex-president. So, someone else will come in my place.” Let’s hope nobody nodded and got face-recognized by surveillance cameras.
Driving a wedge between Beijing and Moscow, Duda sought to invoke a sense of Chinese nationalism. “When I look at a map of today’s China and a map of the Qing Empire, I see differences and I see territories lost … through the actions of neighbours,” Duda said, in reference to the Tsarist annexation of Outer Manchuria, which is still a sore point for many in China.
Don’t show the Philippines or Taiwan: “What is it, then, that makes today’s China … immune to revanchism, not tempted to question the independence of its smaller neighbours and ready [to] recognize its borders, even those that one would perhaps judge unfavorable?” Duda said in the Fudan speech, without naming Russia or Ukraine in his bid to rally the Chinese audience behind his criticism of Moscow.
He added: “I think it is a question of responsibility and a full awareness [in China] that the role of the state is not to build myths.”
ALL OVER EUROPE
ELECTION IN THE UK: The Labour Party is widely expected to win the British parliamentary election on Thursday, ending 14 years of Conservative rule which saw a sharp decline in U.K.-China relations after an initial golden era. Labour has promised to conduct a “full audit across Whitehall” of Britain’s relationship with Beijing. Read Graham Lanktree‘s explainer here. David Lammy, who is set to become the new British foreign secretary, has pledged that Labour ministers will be more active in arranging official visits to China than the current government.
EU TO GET NEW TOP TEAM: EU leaders endorsed late last week the renomination of European Commission President Ursula von der Leyen — who has led calls on derisking from China exposure in the last five years and developed alternative initiatives to confront Beijing in the developing countries.
Former Portuguese PM Antonio Costa, a Goa-born India aficionado, will chair the European Council. Estonia’s PM Kaja Kallas — who said the EU “can’t afford” to make China “our adversary” given the need to tackle Russia — is named as nominee for EU chief diplomat.
NEW DUTCH GOVERNMENT: The Netherlands’ new, right-wing government is starting its work Tuesday, led by former spy chief Dick Schoof. It has vowed to support EU policies that “help reduce strategic dependencies, for example with regard to China on critical raw materials.”
DERISKING CORNER
RARE EARTHS GETS EVEN RARER: The Chinese government has tightened its grip on rare earth elements, Gabriel Gavin writes in to report.
In a list released by the country’s State Council on Saturday, Beijing declared that the lucrative natural resources used in everything from electric cars to wind turbines are the property of the state and warned “no organization or person may encroach on or destroy rare-earth resources.”
From Oct. 1, when the rules come into force, the government will operate a rare earth traceability database to ensure it can control the extraction, use and export of the metals.
Major supply: China currently produces around 60 percent of the world’s rare earth metals, and is the origin of around 90 percent of refined rare earths on the market.
Beijing has already prohibited exports of rare earth refining and magnet manufacturing technologies. In January, it banned the export of gallium and germanium, both highly sought after by the computer-chip industry.
Read Gabriel’s full story here.
CHIPMAKERS CHIPPED: The European Commission is raising concerns that its chipmakers are at risk of losing substantial market share in China as Beijing hikes investment in the semiconductor industry and tries to achieve self-sufficiency in critical technologies. Bloomberg has the story.
HELP HYDROGEN: European manufacturers of hydrogen equipment have urged the EU to step in to help the industry compete with cheaper Chinese producers. Reuters has the scoop.
TRANSLATING WASHINGTON
BLINKEN: CHINA’S FENTANYL IS GOING GLOBAL: The U.S. is a “canary in the coal mine” in its struggle to stop the flow of Chinese precursor chemicals to Mexico that cartels process into fentanyl and ship to the U.S., Secretary of State Antony Blinken said Monday. Illegal synthetic opioid markets “are so saturated here that the criminal enterprises that are engaged in this have worked to make markets in other places — in Asia, in Europe and Latin America and you’re going to have more and more countries insisting that [China] engage responsibly in dealing with this challenge,” Blinken said at a Brookings Institution event Monday.
Despite a U.S.-China Counter Narcotics Working Group launched in January to reduce Chinese precursor chemical exports, Blinken complained in April that Beijing isn’t doing enough. China’s Ambassador to the U.S. Xie Feng told the director of the White House’s Office of National Drug Control Policy, Rahul Gupta, last month that the U.S. opioid overdose epidemic “is not China’s problem, nor was it caused by China,” per Chinese state media reporting.
BEIJING REJECTS STATE’S RELIGIOUS FREEDOM CRITIQUE: The Chinese government has rejected allegations of gross violations of religious freedom in the State Department’s annual International Religious Freedom Report. The report “ has no factual basis — it is filled with lies and disinformation and reeks of ideological bias,” Chinese Foreign Ministry spokesperson Mao Ning said Monday. Blinken reasserted State’s position that China is committing “genocide and crimes against humanity” against Muslim Uyghurs in Xinjiang in the report’s rollout last week.
LAWMAKER: STATE BUDGET CUTS BENEFIT BEIJING: A proposed 12 percent cut in the State Department’s Indo-Pacific-focused funding in the House Republicans’ State, Foreign Operations, and Related Programs funding bill will undermine U.S. efforts to diplomatically compete with China, a senior Democratic lawmaker said Friday.
The proposed funding reduction “is misguided and counterproductive — we can’t outcompete China if we are asking our diplomats and development professionals to enact more programming with fewer staff,” said Rep. Ami Bera (D-Calif), ranking member of the House Foreign Affairs Committee Indo-Pacific subcommittee in a statement Friday.
Bera’s GOP counterpart was more sanguine about the implications of that proposed funding reduction. “I have voiced concerns about the [Bureau of East Asian and Pacific Affairs] budget, but … we must deal with the reality of budget restraints and ensure resources are used as effectively as possible toward our top priorities in the Indo-Pacific,” subcommittee chair Rep. Young Kim (R-Calif) told China Watcher on Monday.
