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By STUART LAU
with PHELIM KINE
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WELCOME TO CHINA WATCHER. This is Stuart Lau in Brussels and this will be the year’s round-up here from Europe. Phelim Kine will be with you from the U.S. on Thursday. As 2024 looks set to be an even crazier year for U.S.- and EU-China relations, don’t forget to share the sign-up link for China Watcher with everyone in your work and social circles, before your holidays begin! Thank you again for all the kind support and avid readership.
SCOOP: BELGIAN PM MEETS XI AMID SPY SCANDAL
BRUSSELS-BEIJING DIRECT: Prime Minister Alexander De Croo is set to visit Beijing on January 10-13, the second week of Belgium’s turn at the helm of the rotating, six-month presidency of the Council, his office told Stuart and Barbara Moens.
Long hiatus: This will be the first time in eight years that a Belgian leader visits, after Charles Michel, now the European Council’s president, went to Beijing in 2016.
During De Croo’s trip: On January 12, De Croo is expected to meet President Xi Jinping. Symbolically, the meeting will take place just a day before the Taiwanese presidential election, which Taiwanese experts fear could trigger a military reaction from Beijing if the victory goes to frontrunner William Lai, whom Beijing vehemently labels as pro-independence.
HIGH-STAKE VISIT: De Croo, who’s keen to make a mark on European politics as he’s set to face a tough election in June 2024, will travel to China still smarting from an embarrassing scandal of a three-year-long espionage operation by Beijing in Belgian politics.
Spy scandal: Frank Creyelman, a lawmaker from the far-right Vlaams Belang party, has been revealed to have been receiving money from a Chinese spy with the aim of influencing Belgian and European politics, according to investigations by the Financial Times, Le Monde and Der Spiegel. Creyelman, who’s since been expelled from the party, is also brother of the chair of the Belgian parliament’s armed forces procurement committee.
His task: According to the media reports, Creyelman was asked to attack Adrian Zenz, a prominent German scholar of Beijing’s repressive policies in Xinjiang, and to seek to derail a Belgian parliament bill designating a genocide against Uyghur Muslims. Additionally Creyelman was asked to disrupt a conference on Taiwan, and arrange for a European journalist to write favorably about events in Hong Kong, according to the FT report.
Belgian reaction: Belgium’s Defence Minister Ludivine Dedonder described Creyelman’s collaboration with a Chinese spy as “extremely worrying for our national security, our democracy and our institutions.”
De Croo himself focused his criticism largely on the far-right party, and has been less critical of Beijing’s attempts at domestic interference. He was aware of China’s spy operation 10 days in advance, VRT news reports.
More thorny issues: Belgium’s intelligence service, VSSE, in October stepped up scrutiny over Chinese ecommerce giant Alibaba’s control over the country’s largest cargo airport, in the city of Liège. VSSE said it’s working to “detect and fight against possible spying and/or interference activities carried out by Chinese entities including Alibaba” Reuters reported. Meanwhile, China continues to sanction Belgian lawmaker Samuel Cogolati for being too outspoken on the Communist government.
JIMMY LAI TRIAL BEGINS
HONG KONG TRIAL BEGINS: Pro-democracy media tycoon Jimmy Lai went on trial in Hong Kong Monday on charges related to national security and colluding with foreign forces. The 76-year-old, former owner of the now-defunct Apple Daily newspaper, denies all charges, and faces life in prison if found guilty by the court. The BBC reports that Lai, held in solitary confinement for the past three years, looked thinner than in earlier hearings.
INTERNATIONAL OUTCRY AS THE PROCEEDINGS BEGIN: U.K. Foreign Secretary David Cameron called on the Hong Kong authorities “to end their prosecution and release Jimmy Lai.” He also referred to Lai as a British national, dismissing the prosecution as “politically motivated.” European Commission spokesperson Peter Stano said the EU “deplores the charges brought against him”, with the trial “detrimental to the city's attractiveness and its position as an international business hub.”
STATE DEMANDS JIMMY LAI'S 'IMMEDIATE RELEASE': The State Department accused Hong Kong authorities of trampling on Lai’s rights. "Lai has been held in pre-trial detention for more than 1,000 days, and Hong Kong and Beijing authorities have denied him his choice of legal representation," State Department spokesperson Matthew Miller said in a statement on Sunday. Hong Kong authorities should "immediately release Jimmy Lai and all others imprisoned for defending their rights," Miller said.
The Congressional Executive Commission on China echoed that message. "Charges against Jimmy Lai should be dropped and he should be released with over 1,000 other political prisoners," commission chair Chris Smith (R-N.J.) and co-chair Sen. Jeff Merkley (D-Ore.) said in a statement on Sunday.
BEIJING PREJUDGES LAI’S GUILT: "He is an agent and pawn of the anti-China forces, and the person behind the riots in Hong Kong," Chinese Foreign Ministry spokesperson Wang Wenbin said on Monday. “The U.K.’s backing of an anti-China, Hong Kong destabiliser who broke the law constitutes flagrant interference in a case that has already entered judicial proceedings,” the Chinese embassy in the U.K. said.
WASHINGTON BLASTS HK ARREST BOUNTIES: Meanwhile, the State Department has also criticized Hong Kong authorities' move on Thursday to post $128,000 arrest bounties for five self-exiled pro-democracy activists. The U.S. "rejects the PRC's attempt to use these cash awards to threaten and harass those advocating for freedom and democracy," Secretary of State Antony Blinken said in a statement on Saturday. The leaders of the House Select Committee on China want punishment for the officials behind those arrest warrants. "The Administration must immediately sanction the Chinese Communist Party and Hong Kong officials responsible for the imposition of these bounties," committee chair Mike Gallagher (R-Wis.) and ranking member Raja Krishnamoorthi (D-Ill.) said in a joint statement.
That criticism reflects U.S. efforts "to interfere in Hong Kong's affairs and undermine the rule of law in Hong Kong," the Foreign Ministry's Wang said on Monday. Hong Kong announced similar bounties for eight other pro-democracy activists in July.
EUROPE-CHINA 2023/24
AS 2023 DRAWS TO A CLOSE, China Watcher takes a quick look at the ups and downs in Europe-China relations this year…
Derisking for sure, but how? When European Commission President Ursula von der Leyen first floated the idea of “derisking, not decoupling” in March, Beijing responded furiously. The concept was then adopted among the G7 leaders two months later, with the Commission now focused on drafting an economic security strategy. China has toned down its opposition, especially when EU officials started reminding their Chinese counterparts that Beijing’s own “dual circulation” plan had a pretty clear path of self-reliance, too. However, many European businesses are not heeding the call, and are focusing instead on building an increasingly insulated presence in China in order not to get hit in future.
EU dialogues mostly achieve little: Call it a Year of Dialogues Galore. With Beijing resuming or starting official dialogues with the EU on trade, digital, environment, human rights … and even circular economy, there’s hardly a month without an EU commissioner visiting China in the second half of the year. (Sometimes, two EU commissioners were in Beijing on the same days.) Instead of jointly agreed deliverables, most of these became mere talk shops. The one exception is Věra Jourová‘s digital dialogue — she managed to persuade Beijing to change course on data flow regulations over an 11-course dinner.
EV trade war on the horizon: European Commission’s trade lawyers deserve a quiet Christmas break — as they’ll surely return to the Berlaymont in January to continue working on the closely-watched probe into state subsidies behind made-in-China electric vehicles, a top concern for Beijing leaders. European officials have criticized Beijing for allowing exports of Chinese EVs below production cost, a claim Chinese manufacturers deny. Journalists hate making predictions, but all the debates about this looming trade war — merci beaucoup, Emmanuel ! — will definitely not go away next year.
Macron’s bombshell interview: Talking of the French, the April interview President Emmanuel Macron did with POLITICO still offers much food for thought when it comes to France’s push for Europe’s strategic autonomy — which will only accelerate, as Europe once again frets about a Donald Trump presidency. "The paradox would be that, overcome with panic, we believe we are just America's followers," he said in the interview conducted in Chinese airspace. Paris is also planning celebrations as its diplomatic ties with Beijing reach the 60th anniversary in 2024.
Spies in London — plus Cameron’s return: London never ceases to be a fountain of wonder, and 2023 was no exception. A researcher close to the Parliament’s foreign affairs committee chair turned out to be a suspected spy. Meanwhile, the architect of the U.K.-China Golden Era, ex-Prime Minister Cameron, is back to British politics as foreign secretary, now fully on board with the current government’s line that the good old time is gone. Still, Cameron faces questions over his financial dealing with the Chinese state in his inter-ministerial years.
Unease in the water: Tension is growing over the Taiwan Strait and the South China Sea. With the Taiwanese presidential election set for January 13, many Taiwan experts fear Beijing could ramp up military pressure or coercion. In the meantime China is also not backing down in ongoing maritime clashes with the Philippines, mocking Manila for siding with Washington. Both the Dutch and German navies say they plan to deploy to the Indo-Pacific in 2024, while the U.K.’s carrier strike group will return to East Asia in 2025.
SURVEY TIME: German think tank MERICS is gathering surveys from China experts for the annual China Forecast Survey. You can take part here.
TRANSLATING WASHINGTON
STATE OKAYS TAIWAN MILITARY COMMS SALE: The State Department has approved another multimillion dollar defense equipment sale to Taiwan. The sale items include "Command, Control, Communications, and Computers Life Cycle Support and related equipment," for an estimated cost of $300 million, State's Defense Security Cooperation Agency said in a statement on Friday. Beijing isn't pleased. The sales "harm China's sovereignty and security interests and threaten peace and stability across the Taiwan Strait," said Chinese embassy spokesperson Liu Pengyu.
LAWMAKERS ASK DOJ TO PROBE APEC VIOLENCE: The Congressional Executive Commission on China wants the Department of Justice to probe the alleged role of Chinese state-backed goons in violence against anti-Xi Jinping protesters at APEC in San Francisco last month. The commission wants to know "whether the civil rights of the peaceful protestors were violated and what steps will be taken to hold perpetrators accountable," commission chair Smith and co-chair Sen. Merkley said in a letter to Attorney General Merrick Garland published on Monday. The Chinese embassy in Washington has denied any state-backed involvement in that violence and has counter-accused anti-Xi protesters of harming pro-Xi "Chinese welcoming communities."
BURNS DOWNBEAT ON U.S.-CHINA TIES: U.S. Ambassador to China Nicholas Burns is pessimistic about the prospects for the bilateral relationship. “I don’t feel optimistic about the future of US China relations. I feel that we need to see how things develop," Burns said at a Brookings Institution event on Friday. China's increasingly aggressive posture in the Indo-Pacific is fueling that pessimism.
“In the Indo-Pacific we see China pushing out illegally in the South and East China Seas, claiming territories that is not theirs, that the International Court of Justice ruled clearly in favor of the Philippines in July 2016 —that’s irrefutable," Burns said. Both Manila and Washington last week criticized Chinese Coast Guard units that deployed "water cannons" and "acoustic devices" against Philippine ships operating in Philippine waters near the Scarborough Shoal and the Second Thomas Shoal (also known as the Ayungin Shoal). Beijing has rejected an international tribunal's ruling in 2016 that reaffirmed Manila's sovereignty over that area.
XIE SLAMS U.S. 'CHINA THREAT' NARRATIVE: Chinese Ambassador to the U.S. Xie Feng lashed out at the Biden administration's export restrictions on high tech semiconductors and other measures as "baffling" national security overreach. "Some people have been hyping up a so-called China threat, advocating cutting China off from chips [and] slapping new sanctions," on Chinese firms, Xie said in a speech at a U.S. China Business Council event on Thursday. The Biden administration is unapologetic. High technology items that Washington wants to keep out of Beijing hands will evolve "into a new generation of military technology and we don’t plan to be the number two in that technology battle in the future," U.S. Ambassador to China Burns said on Friday
YELLEN: TREASURY TO TACKLE FENTANYL: The Treasury Department will work with relevant Chinese agencies to curb "illicit finance" fueling China's role in the U.S. fentanyl crisis. "With the focus on disrupting the flow of precursor chemicals used to make fentanyl, we’re already seeing progress and the Treasury Department and Chinese economic policy makers have a key role to play in taking aspects of this cooperation forward," Treasury Secretary Janet Yellen said on Thursday at a U.S.-China Business Council event. President Joe Biden hailed a revival of counternarcotics cooperation with Beijing last month aimed to address China's role in the U.S. opioid overdose epidemic.
IN OTHER HEADLINES
AP: U.S. Indo-Pacific commander is ‘very concerned’ about escalation of China-Russia military ties.
BLOOMBERG: China's iPhone ban accelerates across government and state firms.
GLOBAL TIMES: China-Russia trade ties will never submit to U.S. influence.
REUTERS: German firms’ China worries pushing up costs, Bundesbank finds.
SCMP: China ex-central bank adviser calls for cutting U.S. Treasury bonds in ‘orderly’ fashion.
MANY THANKS: To editor Christian Oliver, reporters Barbara Moens, Emilio Casalicchio, and producer Seb Starcevic.
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