Europe’s China Policy: Too Many Cooks in the Kitchen?
But also — ChatGPT, Critical Raw Materials, Nuclear Energy, Chips
Hi! This is Wednesday, 17 April 2023, and here’s the EU news you need this week. Feel free to share this newsletter with friends and colleagues, and follow us on Twitter and Linkedin.
The Briefing
Europeans are struggling to find a unified voice concerning Beijing. After Emmanuel Macron's visit to China, it was German foreign minister Annelna Baerbock’s turn to meet with her Chinese counterpart.
On Taiwan and defence, she presented a stricter position than that of France, trying to mitigate the diplomatic consequences of Emmanuel Macron's recent remarks.
FIRMNESS • Visiting Beijing from April 13 to 15, the head of German diplomacy adopted a tougher tone than that of France. During a press conference, she did not hesitate to oppose her Chinese counterpart Qin Gang head-on on the Taiwan issue, the war in Ukraine and human rights violations.
On Taiwan, Annalena Baerbock said that the use of force by China would be "unacceptable" for the EU. She described the possibility of military escalation in the Taiwan Strait as a "horror scenario", recalling that 50% of the world's trade passes through there every day.
Qin Gang replied that China defends its sovereignty in the same way as other countries and that it will not tolerate any foreign intervention, viewing Taiwan as a strictly internal problem.
Concerning the war in Ukraine, the German foreign minister was also critical. She called on China to use its unparalleled influence on Russia to ask Vladimir Putin to simply end the conflict.
She also reiterated that China should not supply Russia with weapons. However recent negotiations between Russia, China and Iran could signal that China is willing to help Russia obtain the materials it needs to manufacture missiles from Iran.
Finally, on human rights, Annalena Baerbock expressed concerns about the treatment of Uyghurs. Qin Gang retorted that he would not accept lessons from the West on the subject, arguing that there are no universal standards on human rights.
FRANCE • "Impressive clarity. Macron could learn something from Baerbock," commented Ian Bond of the Centre for European Reform on Twitter. Indeed, the general reactions from the European sphere concerning Baerbock's visit clearly diverge from the ones after Emmanuel Macron's recent statements.
However, it is important to note that the two visits were not of the same nature. Emmanuel Macron was on a state visit to China — where he exchanged with Xi Jinping — whereas Anna Baerbock did not meet with the Chinese head of state, but with his foreign minister.
As a reminder, the French President said the following on his return flight: "Is it in our interest to accelerate the issue of Taiwan? No. The worst thing would be to think that we Europeans should be followers on this issue and adapt to the American rhythm and to a Chinese over-reaction".
CRITICISM • This statement sent shockwaves through Europe. For many Eastern European countries, this reevaluation of transatlantic unity comes at a bad time, as American aid is indispensable in the Ukrainian conflict.
On April 11, Polish Prime Minister Mateusz Morawiecki called the alliance with the United States the "absolute foundation" of Europe's security. "Some leaders dream of cooperation with everyone, with Russia and some powers in the Far East," he said, implicitly targeting Emmanuel Macron.
The same goes for the Lithuanian foreign minister, whose country has suffered trade sanctions from China for allowing Taiwan to open an "embassy." "Unfortunately, our geopolitical blindness has not yet been cured. We chose not to see the threat of Russian aggression, and we choose not to see the threat of Chinese aggression," he tweeted.
The criticism was felt throughout the EU, notably through the Inter-Parliamentary Alliance on China.
The French president's statements coincided with Chinese military encirclement exercises around Taiwan in response to Taiwanese President Tsai Ing-wen's visit to the United States and Central America.
DIVISION • Emmanuel Macron does not seem to have succeeded in preserving the European unity he had planned to project during his visit with Ursula von der Leyen, who had presented her view in a speech to the Mercator Institute for China Studies (MERICS) and the European Policy Center (EPC) on March 30.
However, the French president seems to maintain his position, which he was asked about at a press conference in Amsterdam. "It is not because we are allies of the United States that we should be against China. We want to build European independence," Economy and Finance Minister Bruno Le Maire said on French radio station Europe 1.
BALANCE • For the past few months, the EU seems to have had difficulty formulating a clear position on China, after multiple individual visits by European leaders like Charles Michel, Olaf Scholz and Pedro Sanchez.
Many countries remain concerned about maintaining industrial ties with China while reducing their dependence on the Asian leader in other areas. The debates on the Anti-Coercion Instrument (ACI) — on which the Parliament and the Council recently reached an agreement — exemplify the exercise’s complexity.
Indeed, Germany is one of the states that lobbied for member states to keep their hands on the ACI: a qualified majority in the Council is now required for "economic coercion" to be recognized, in contrast to the Commission's proposal in which it could unilaterally identify it.
In an op-ed for the FT, Alan Beattie explains: "Berlin instinctively shies away from confrontation that might damage German exports and investments abroad. There were also more principled objections from liberal member states including Sweden and the Czech Republic, suspicious of attempts to politicise trade policy."
At the same time, Germany is trying to balance its security interests: last year, ahead of a visit to China, Olaf Scholz encouraged the Chinese company Cosco to become a minority shareholder in a terminal in the port of Hamburg. But a few days ago, the terminal was categorized as a "critical facility" by the Federal Agency for Information Technology Security, which could prevent the Chinese investment.
IN BRIEF • The EU is therefore at a crossroads with its Chinese rival. Future developments will provide a better understanding of how the EU intends to adjust the dial in its “de-risking” policy.
In Case You Missed It
CHATGPT • On April 13, the European Data Protection Committee announced the launch of a working group on OpenAI, the company behind ChatGPT.
The creation of this group follows the temporary ban of ChatGPT in Italy by the Italian data protection agency. ChatGPT has until April 30 to comply with the agency's data protection requests.
In particular, Italy wants more information about how ChatGPT uses its users' personal data and for what purposes.
For OpenAI, this is just the beginning of the adventure in the European regulatory maze. Currently the company has no local headquarters in any EU country, which means it is likely to be the target of investigations and restrictive measures by all national data protection agencies.
In parallel, MEPs are days away from agreeing on their position on the Artificial Intelligence Act. They could propose an obligation for AI software developers to declare whether copyrighted data has been used to train the AI.
However, there seems to be some disagreement about the use of facial recognition, which some lawmakers want to see banned in all public places.
RAW MATERIALS • According to the FT, several European officials have asked the European Commission to explore the possibilities of extracting critical raw materials in European Overseas Countries and Territories (OCTs).
The EU has 13 of them, including Greenland (Denmark), six islands in the Caribbean (Netherlands) and the six French overseas departments. Among the French territories, New Caledonia possesses about 10% of the world's nickel resources and French Polynesia potentially harbours considerable reserves of rare earths.
As a reminder, under the Critical Raw Materials Act, the EU wishes to extract 10% of the critical raw materials used in the EU on its territory by 2030. However, the reopening of mines in the EU raises many environmental issues, which will be a real challenge for the bloc.
NUCLEAR • Speaking at Sciences Po Paris on April 5, the head of the International Energy Agency said that EU member states opposed to nuclear power "will have to sit down and do some serious self-criticism" when the war in Ukraine is over.
His remarks are notably aimed at Germany, whose dependence on Russian gas has been a weakness within the EU since the war in Ukraine began.
The remarks come at a symbolic time when Germany just shut down its last nuclear power plant, reigniting debates over the country's past decisions on energy.
CHIPS • Still in Germany, Olaf Scholz’s government is pushing Intel to be more ambitious with its new semiconductor chip factory in Germany.
The American group is planning to receive 6.8 billion euros in subsidies from Berlin to build a plant worth 17 billion euros. But Intel has asked that the subsidies reach a minimum of 10 billion euros, invoking rising energy and construction costs. According to the FT, the German government says that the subsidies can only be increased if Intel agrees to invest more — which could be very costly for the company.
The negotiations happen in the context of the race to build semiconductor manufacturing capacity between China, the US and Europe. The EU's response to the US decision to massively subsidise the sector was the European Chips Act, which sets out a legal framework for granting state aid for the construction of semiconductor manufacturing facilities.
Although it allocates €3.3 billion to R&D investment, the act relies on member states to provide subsidies to manufacturers. Intel's plant in Germany is therefore critical to the EU's ambition to increase its share of the global semiconductor market from less than 10 percent today to 20 percent by 2030.
What we’ve been reading
In a paper for the ECIPE, Matthias Bauer argues that Europe’s failure to find the path to strong and sustained growth is largely caused by the fragmentation of its ‘unsingle’ market and by wrongheaded competition policy.
For Bruegel, Christophe Carugati takes a critical look at the assertiveness shown by the German competition authority, the Bundeskartellamt (BKartA), in regulating large tech companies, which is turning the exercise into a competition with Brussels一leading to exactly the sort of regulatory uncertainty and fragmentation denounced by Matthias Bauer.
This week’s newsletter is brought to you by Augustin Bourleaud and Maxence de La Rochère. See you next Monday!