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By STUART LAU
with PHELIM KINE
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WELCOME TO CHINA WATCHER! This is Stuart Lau, and today in Brussels the EU is hosting a massive summit with Latin American countries, with the Europeans hoping to reconnect with the region as their focus turns to de-risking its relationship with Beijing. Plus, we will take a deeper look at Germany’s new China strategy. My D.C.-based colleague Phelim Kine will be with you on Thursday.
EU’S INVITE FOR LATAM
First, mark your diaries: Tomorrow, Richard Moore, the head of MI6, the U.K.'s Secret Intelligence Service, will speak to POLITICO's Anne McElvoy on the threats facing foreign intelligence, the current state of play in Ukraine and the impact of AI on global security. You can watch live here and register here.
DE-RISKING TAKES EUROPE (BACK) TO LATAM: Latin American leaders such as Brazil’s President Luiz Inácio Lula da Silva and his Argentinian counterpart Alberto Fernández are gathering in Brussels for a two-day EU summit with the Community of Latin American and Caribbean States. It’s been eight years since the last such summit took place, and the geopolitical backdrop is rather different this time. Back in 2015, China was overtaking the EU to become Latin America’s second largest trading partner; by 2020 China’s trade with the region had grown 26-fold in two decades, reaching $310 billion.
That’s a political headache for the EU, as China is also seeking a closer alliance with Latin America in a bid to reshape the global order. “Intensified economic relations between China and LAC [Latin America and the Caribbean] have been fostered by increased political cooperation over the last two decades,” the European Parliament noted in a report last year, adding: “China has also successfully used soft power instruments to expand its influence in LAC.”
Make no mistake, the gap is huge: Especially on Ukraine. Europe is shocked that its one-time Amazon hero Lula has become an amplifier for Kremlin’s propaganda, saying that Ukrainian President Volodymyr Zelenskyy is equally to blame as Vladimir Putin, the Russian leader, for the war. As of Monday evening, the EU’s hope of a joint statement for the summit was low, due to disagreements over the wordings on Ukraine.
Still, the EU sees a clear strategic need to step up engagement with the region thanks to China. “Latin America, the Caribbean and Europe need each other more than ever before,” European Commission President Ursula von der Leyen said during a conference with Latin American businesses in Brussels on Monday. “The world is taking a hard impact for the Russian aggression against Ukraine, and this happens against the backdrop of China’s growing assertiveness abroad.”
The supply of critical raw materials such as lithium is, well, critical. The EU gets 97 percent of its lithium from China, von der Leyen warned last week. It’s a focus shared by Czech Foreign Minister Jan Lipavský. "China's growing influence in Latin America is a great concern,” Lipavský told China Watcher on the sidelines of the summit. “We must make efforts to prevent China's monopoly and counterbalance its huge investments in Latin America in mining and processing of critical raw materials. Unlike China, the EU is not interested in making Latin America its vassal.”
For now, LatAm watches with cautious optimism: "Latin America and the Caribbean was not a priority for Europe," Argentina’s Undersecretary for Latin American & Caribbean Affairs Gustavo Martínez Pandiani told POLITICO on Friday, referring to the years since the last gathering in Brussels in 2015, billed as "a partnership for the next generation." Pandiani added: "We do appreciate that Europe is coming back to Latin America and the Caribbean. We don't want to limit that comeback just to the consequences of the war."
SATELLITES FOR TAIWAN
HOT FROM OUR PRESS: When the war in Ukraine started there was a lot said about the Ukrainians turning to Elon Musk's satellite-powered web Starlink to stay online. Quietly, Taiwan has been preparing for a similar contingency, amid reports and suspicions that China is already cutting subsea internet cables.
POLITICO spoke to multiple top-level Taiwanese officials when they visited Brussels last month and their pleas were clear: Taiwan needs to build up telecommunications and cyber resiliency. A satellite-based backup network is just one area where it wants to work with (European) "partners," while sharing cyber threat indicators is another.
Taiwan is open to many partners, it seems. The Taiwanese digital minister Audrey Tang visited U.K.-based OneWeb and that visit was followed by reports that it would be them providing a satellite web cover over the island. But there's also a partnership with a Luxembourgish satellite company for government cloud access in times of crisis and — maybe most intriguing of all — a June 30 meeting between Tang and the Commission's tech HQ, DG CONNECT. (The Commission didn't comment on whether the EU's satellite web system IRIS2 was discussed.)
Part of the concern stems from the possibility of China disrupting Taiwan’s subsea cables in the event of war. Asked about such danger, Taiwan’s Vice Minister of Economy Chern-Chyi Chen said that "there's contingency training," but added that he didn't see "an immediate military concrete threat."
Read the full story here by Pieter Haeck and yours truly.
BERLIN-BEIJING GUESSING GAME
GERMANY’S GOT A PLAN: After months of internal bickering in Berlin, the German Foreign Ministry finally pushed through its long-awaited China strategy, officially marking a break from former Chancellor Angela Merkel‘s business-über–alles approach to the systemic rival. China observers in Germany predominantly welcome the paper, while Beijing — and German businesses — are not thrilled to see it.
First — the overall tone: The German policy focuses as expected on de-risking, which it now says is “urgently needed.” It also goes beyond the EU language in saying that cooperation with China has increasingly given way to “rivalry and competition.”
Analyzing dependencies: Drawing a reference to the painful Russia lessons, it says: “A concentration on a few countries or only one country of origin in the case of primary, intermediate and end products can give rise to dependencies in critical areas … In the case of China, there are dependencies in numerous areas, e.g. various metals and rare earths, lithium batteries and photovoltaics, as well as (veterinary) pharmaceutical substances (incl. antibiotics).”
Don’t say we didn’t warn you: There’s a clear concern in Berlin that a Taiwan emergency could result in unimaginable economic consequences for heavily China-dependent German businesses. “The Federal Government is working to de-risk economic relations with China. Companies must take geopolitical risks sufficiently into account in their decision-making,” the document states. “The costs of concentration risks must be more strongly internalised on the part of companies so that state funds do not have to be tapped into in the event of a geopolitical crisis.”
Symbolic setting: Like von der Leyen’s hawkish China speech ahead of her Beijing visit, German Foreign Minister Annalena Baerbock also unveiled the policy in MERICS, a think tank sanctioned by Beijing for apparently being too outspoken on the Communist Party. My colleague Hans von der Buchard was there and came back with this dispatch.
CHINA TAKES NOTES: An analysis report on Xinhua, China’s state news agency, pours cold water on Berlin’s plan. “If the German government want to carry out what is in essence decoupling in the name of de-risking, then the first to take the hit would be Germany’s own interests,” it says.
Beijing’s strategy for now is wait-and-see. “It’s too early to draw a conclusion, as it depends on how the strategy will be implemented in future,” it notes.
Interestingly: The Xinhua report cited a MERICS comment. A goodwill gesture, perhaps?
WHERE IS QIN GANG?
MISSING FOR THREE WEEKS AND COUNTING: With Chinese Foreign Minister Qin Gang still mysteriously out of action since his last public appearance on June 25, China's top diplomat, Wang Yi, stepped in to represent Beijing at the ASEAN foreign ministers' meeting in Jakarta last week.
For now, the ministry offered little by way of explanation, apart from saying that it’s due to “health reasons” — remarks that were later removed from its official transcript of the daily press conferences.
Rumor mill is on: His prolonged absence prompted all sorts of rumours. “Given China's status and influence in the world, it's indeed very strange that its foreign minister has not appeared in public for more than 20 days," Deng Yuwen, a former editor of a Communist Party newspaper told CNN. “If anything unusual happened to a senior official, people will wonder if their relations with the top leader have soured or whether it is a sign of political instability.”
Better treatment for the West: Qin’s absence in Jakarta was not at all bad news for U.S. Secretary of State Antony Blinken or EU foreign policy chief Josep Borrell, as they got to meet the more senior foreign policy guru Wang Yi.
— The chat with Blinken saw a "candid and constructive conversation on a range of bilateral, regional, and global issues," the U.S. secretary of state told reporters on Friday. Beijing issued a less conciliatory readout of the meeting. "Wang urged the U.S. to stop interfering in China's internal affairs or undermining China's sovereignty and territorial integrity, stop suppressing China’s economic development and science & technology advancement, and lift the illegal sanctions against China," China’s Assistant Foreign Minister Hua Chunying tweeted last week.
— As for the EU, Borrell said he told Wang about “the EU's expectations as to China’s role to help ending Russia’s war against Ukraine.” He continued: “We also discussed Taiwan, and I reiterated the EU's One China policy.” China, on the other hand, doesn’t seem pleased with the EU. “The EU side should … clarify the positioning of the strategic partnership between the two sides, and promote China-EU relations to move forward,” Wang was quoted by China’s Foreign Ministry as telling Borrell. Pieter Haeck has the story.
TRANSLATING WASHINGTON
— TAIWAN VP VISIT THREATENS US-CHINA THAW: The Biden administration is bracing for potential Chinese government reprisals for U.S. transit stops by Taiwan's Vice President Lai Ching-te as he travels to and from Paraguay's presidential inauguration next month. Beijing "should not use as a pretext any transit by Vice President Lai for brazen coercion or other provocative activities [and] should not be a pretext for interference in Taiwan's election either," said a senior administration official Sunday, who spoke to reporters on condition of anonymity.
Lai's profile is doubly problematic for Beijing because he is vying to replace outgoing President Tsai Ing-wen in the self-governing island's January 2024 elections. He has reinforced his pro-Taiwan independence credentials by declaring in January that Taiwan "is already an independent and sovereign nation." And with an eye to a possible election victory — polling last month put Lai, the Democratic Progressive Party candidate, as the front runner — he said last week that elected leaders of Taiwan should be welcomed to the White House. Read Phelim's full story here.
— TRUMP: 'TAIWAN TOOK OUR BUSINESS AWAY': The GOP's leading candidate for the Oval Office in 2024, President Donald Trump, declined to confirm if he would defend Taiwan from a potential Chinese invasion and instead accused the self-governing island of predatory business practices. Trump dodged the question on Taiwan's defense by saying: "If I answer that question it will put me in a very bad negotiating position." He was speaking in an interview with Fox News' Maria Bartiromo on Sunday. "That being said, Taiwan did take all of our chip business — we used to make our own chips now they're made in Taiwan. Taiwan took our business away. We should have stopped them, we should have taxed them, we should have tariffed them," Trump said. Taiwan Semiconductor Manufacturing Corporation produces more than 90 percent of the world's supply of the most sophisticated semiconductors.
— FOXCON'S GOU SIGNALS TAIWAN PRESIDENTIAL AMBITIONS: Taiwanese industrialist Terry Gou, founder of the Foxconn Technology Group whose China-based operations produce most of the world's supply of Apple's iPhones, penned a Washington Post oped on Monday implicitly signaling his ambitions in Taiwan's January 2024 presidential election. Gou positioned himself as a China-friendly potential candidate by declaring that avoiding conflict across the Taiwan Strait requires the self-governing island to be "working with China directly" using Beijing's "One China framework" that Beijing says makes the island an "inalienable part of China's territory."
— SULLIVAN: BEIJING'S EXPORT RESTRICTIONS 'SELF-DEFEATING': U.S. national security adviser Jake Sullivan dismissed the importance of Beijing's recent move to restrict exports of the minerals gallium and germanium that are essential to semiconductor production. "I think it’s a self-defeating move, because I believe that it will only reinforce the determination of many other countries in the world to de-risk, to find ways to reduce dependencies and increase the resilience of their own supply chains," Sullivan told CBS News' Margaret Brennan on Sunday. China imposed the mineral export restriction earlier this month as an apparent reprisal against a U.S. move in October to choke off China's access to high-tech semiconductors.
MORE HEADLINES
Bloomberg: Mitsubishi Motors suspends China business after sluggish sales.
Financial Times: Multinationals in China accelerate push to decouple data.
Guardian: China to 'fill the gap' in Solomon Islands budget as PM blasts Australia and U.S.
Reuters: Pope visit to China’s neighbor Mongolia will be a balm to sufferers of harsh Communist rule.
Washington Post: Indictment paints tale of Chinese interests and 2016 Trump campaign.
MANY THANKS TO: Editor Tim Ross, reporters Pieter Haeck, Gregorio Sorgi, Hans von der Burchard, Barbara Moens, Camille Gijs, Suzanne Lynch and producer Giulia Poloni.
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