 |
By STUART LAU
with PHELIM KINE
Send tips here | Tweet @StuartKLau or @PhelimKine | Subscribe for free | View in your browser
WELCOME BACK TO CHINA WATCHER. This is Stuart Lau reporting from Brussels, with great content also coming from Paris and Berlin. Phelim Kine will join you from an un-eclipsed U.S. on Thursday.
Fun fact this week: German Chancellor Olaf Scholz is a new arrival on TikTok, whose parent company is based in Beijing. He does have one pledge to avoid cringe moments: “I won't dance. I promise.” And you can take Scholz’s promises seriously — as long-range-missile-deprived Ukraine has learned.
BREAKING NEWS FROM EU
HEAVY BLOW: The European Union’s executive body is set to announce today a fresh anti-subsidy probe into China’s sprawling wind turbine industry, taking yet another direct swing at Beijing’s plan to seize global supply chains around the world’s accelerating green transition.
Turbines taken to task: The European Commission is launching an investigation into Chinese suppliers of wind turbines — specifically concerning wind parks in five EU countries: Spain, Greece, France, Romania and Bulgaria. This comes as the EU continues with the probe into made-in-China electric vehicles, as well as solar panels.
EU BIG GUN VOWS ACTION: The EU is making full use of the tools in its possession, Commission Executive Vice-President Margrethe Vestager is expected to say in a speech in the U.S. later today, referring to the new tool known as the Foreign Subsidies Regulation.
That new law yielded its first success just a couple of weeks ago, when it forced a leading Chinese train-maker to withdraw what the EU considered a grossly discounted bid to supply Bulgaria with electric trains.
Inconvenient timing 1: The EU’s — and four national — climate special envoys just arrived in Beijing hoping to set up a new diplomatic track on climate diplomacy.
Inconvenient timing 2: China’s Trade Minister Wang Wentao started his trip to Europe this week, with a view to talking Paris out of the EV probe launched by the EU.
EXPERT SEES NECESSITY: The Chinese wind complex “is a beneficiary of direct and indirect subsidies across the entirety of the value chain,” according to Joseph Webster, senior fellow at the Atlantic Council’s Global Energy Center, a think tank.
“Beijing — and often provincial and even local governments — lavish subsidies to Chinese industrial players, including directly in the wind industry but also in complementary sectors, such as steel and shipbuilding.”
Market in a glance: China’s manufacturers supply nearly 60 percent of installed capacity worldwide in 2022, a sharp rise from 37 percent in 2018.
Who’s suffering? Denmark and Spain, whose companies used to be the market leaders. EU companies’ overall share fell from 55 percent in 2018 to 42 percent in 2022, having been overtaken by China in 2020. Nikkei has more.
Focus, focus: The EU’s anti-subsidy probe “should and very likely will concentrate on Chinese exports of components and Chinese investment into EU supply chains,” Webster says, adding that Chinese companies are increasingly dominant exporters of wind components, including castings, forgings, slewing bearings, towers and flanges.
THE SAD STORY: Vestager, the EU antitrust chief, is expected to say that the EU has already lost its chance on solar panels, referring to the EU’s lack of action a decade ago to stop subsidized Chinese solar panels in the name of free trade and green transition.
This time round, economic security takes center stage. The EU, she’s expected to say, cannot afford to see the solar panel story happening again on three particular areas: Electric vehicles, wind and essential chips.
Making friends: Vestager, who for the U.S. used to personify EU protectionism thanks to her uncompromising regulatory onslaught against American Big Tech, now pitches a different line: That Washington should work with Brussels to tackle Beijing.
Make clean tech the next… Huawei? In her speech today, Vestager is expected to call on like-minded partners, starting with G7 countries, to develop a list of trustworthiness criteria for critical clean technologies. Trustworthiness has been more closely associated with cybersecurity. For Vestager, the clean tech criteria can include environmental footprint, labor rights, cybersecurity and data security.
EU DERISKING
FRANCE WANTS GERMANY, ITALY TO GO TOUGH ON CHINA: French Economy Minister Bruno Le Maire on Monday tried to convince his German and Italian counterparts that the EU should get tougher on China. Le Maire hosted Germany's Robert Habeck and Italy's Adolfo Urso for a trilateral meeting of industry ministers on the outskirts of Paris. Giorgio Leali writes in to report.
The French wish: Le Maire wanted the bloc's three biggest economies to send Brussels a message: the EU should rebalance its trade relations with China in favor of local companies. "We have to show our teeth to economic adversaries who won't do us any favors," Le Maire told reporters ahead of the meeting, warning against American "protectionism" and Chinese "interventionism."
U.S., NETHERLANDS TALK CHIPS: U.S. and Dutch officials gather today for technical talks, reportedly aimed at another push to toughen the Dutch curbs on chip-producing gear.
Alan Estevez, undersecretary at the U.S. Department of Commerce, was dispatched to the Netherlands yesterday. The Dutch Foreign Ministry confirmed a meeting would take place "at the level of civil servants" to POLITICO’s Pieter Haeck.
RICH MIGRANTS, BEWARE: Spain’s Prime Minister Pedro Sánchez announced that it would scrap the so-called golden visa scheme, under which you could move to Spain if you made an investment of at least €500,000 in Spanish real estate. Elena Giordano has the story.
SWEDEN REPORTS THREAT: Swedish authorities have ordered the expulsion of a Chinese journalist, accusing the 57-year-old woman of posing a serious threat to national security, a lawyer representing the woman said on Monday. The suspect has lived in the country for almost 20 years and denied all the accusations. Reuters has more.
BERLIN-BEIJING
DELICATE CHINA MISSION: It is already the big topic in the corridors of many ministries and in the Bundestag: On Saturday, Olaf Scholz sets off on a four-day trip to Shanghai and Beijing. He will be accompanied by around a dozen German business leaders (which raises questions about “de-risking”) and three ministers (which is quite unusual). Hans von der Burchard reports from Berlin.
A lot has happened since the last visit: In November 2022, the Chancellor boasted his success in having secured disapproval of Vladimir Putin‘s nuclear threats from China’s President Xi Jinping on an open stage. In the meantime, however, there are growing indications that China’s (mostly partly state-owned) companies are intensively supporting the Russian war economy.
Fear of Chinese retaliation: Many German companies, including car manufacturers such as Mercedes, are against the European Commission’s interim tariffs against Chinese EVs.
BALANCING ACT: Scholz agrees with the business community and also rejects the tariffs, but must be careful in Beijing not to undermine the Commission in its ongoing investigation. He is pushing for a “level playing field”, for which China would have to independently remove subsidies and market barriers. (The EU has been calling for this for 10 years, with little success.)
Side projects: The three ministers traveling with him are likely to touch on issues like agriculture, circular economy and, surprise surprise, cars.
TRANSLATING WASHINGTON
YELLEN WARNS BEIJING ON RUSSIA SUPPORT: Treasury Secretary Janet Yellen warned Beijing that the U.S. is concerned about China's role in "Russia's military procurement" and that the Chinese banks who aid that effort could face sanctions, said a Treasury statement published Monday. That followed Yellen's announcement on Saturday of a new mechanism to address the risk of China's industrial overcapacity creating a flood of cheap imports to the U.S. Yellen and China's Vice Premier He Lifeng agreed to launch "intensive exchanges on balanced growth in the domestic and global economies," Yellen said in a Treasury Department statement released on Saturday. Those exchanges reflect Yellen's concern about the domestic impact of "large quantities of goods that China was exporting at artificially depressed prices," the statement said.
Beijing's rhetoric raises questions about the initiative's likelihood of success. "The accusation that China’s 'overcapacity' is posing threats to other countries is untenable," Chinese ambassador to the U.S., Xie Feng, said in an X post on Friday.
On illicit financing: Yellen and He also agreed to create a joint Treasury and People's Bank of China Cooperation and Exchange on Anti-Money Laundering aimed to fill "loopholes in the U.S. and Chinese financial systems to advance [criminals'] illicit activities," the statement said. Yellen told Chinese Premier Li Qiang that bilateral "tough conversations" are needed to address the issues facing the U.S.-China relationship, per CNBC on Sunday. That candor is likely to reinforce Yellen's stature in Beijing as "someone in Washington that they can actually talk to on substance and not be lectured to," said Harry Broadman, former U.S. Assistant Trade Representative and a senior advisor at WestExec Advisors.
U.S, JAPAN, PHILIPPINES HOLD JOINT EXERCISES: The U.S., Japan, Australia and the Philippines held joint naval and air force exercises in Philippine waters on Sunday. The “maritime cooperative activity” aimed at "ensuring that all countries are free to fly, sail, and operate wherever international law allows," Defense Secretary Lloyd Austin said in a joint statement published prior to the exercise. That's code for a multi-country pushback against increasingly aggressive incursions in the region by China Coast Guard and Maritime Militia forces.
Beijing's responded by ordering a "naval and air strategic patrol" on the same day and in the same area as the joint maritime exercises, the Chinese military's Southern Theater Command said in a statement Sunday. Stay tuned for news of more U.S., Philippine and Japanese joint patrols in the region at their trilateral summit on Thursday in Washington.
MAYORKAS WANTS CHINESE ILLEGAL IMMIGRANTS OUT: Homeland Security Secretary Alejandro Mayorkas has been in talks with China's Minister of Public Security Wang Xiaohong to persuade Beijing to agree to the repatriation of thousands of Chinese illegal immigrants. The Biden administration wants China to "actually receive individuals whom we have determined are not eligible to remain in the United States," Mayorkas told NBC News on Friday.
The Department of Homeland Security declared China a "recalcitrant" country for its unwillingness to assist in the repatriation of Chinese nationals from the U.S. DHS estimated in 2021 that there were 40,000 Chinese citizens who had violated their visa conditions and were subject to removal from the U.S. That has domestic security implications. "Beijing's refusal to cooperate forces ICE to release hundreds of PRC nationals, many with convictions for violent crimes, into American communities, jeopardizing public safety and visa integrity," DHS said in a report published in 2021.
REPORT: CHINA SOWING ELECTION MISINFORMATION: Chinese Communist Party-affiliated actors are using fake accounts online to poll U.S. voters about what divides them most, part of a larger effort to create division ahead of the elections this fall, POLITICO's Maggie Miller writes in. Those are some of the findings of a Microsoft report published Friday that warned that Beijing is using artificial intelligence technologies as part of the effort, intended to sway voters in the presidential election. Microsoft emphasized that the social media posts had likely not been particularly effective at changing opinions.
The report also dives into the use of AI-generated content used by China to attempt to sway the Taiwanese elections earlier this year, which the company noted is the first time it had seen a nation-state actively using such content to disrupt elections. Microsoft researchers predict that with elections in the U.S., India and South Korea still to come this year, China will "at a minimum create and amplify AI-generated content" around those elections.
IN HEADLINES
AL JAZEERA: China turns to AI in propaganda mocking the 'American Dream'.
BLOOMBERG: Chinese investment in Australia sinks.
FINANCIAL TIMES: China now a rival rather than boon for South Korean exporters.
NEW YORK TIMES: Young people are giving up on saving for retirement in China.
REUTERS: Crowded Chinese wine market offers no lifeline for struggling global industry.
MANY THANKS: To editor Christian Oliver, reporters Hans von der Burchard, Giorgio Leali, Pieter Haeck and producer Seb Starcevic.
SUBSCRIBE to the POLITICO newsletter family: Brussels Playbook | London Playbook | London Playbook PM | Playbook Paris | EU Election Playbook | Berlin Playbook | Global Playbook | POLITICO Confidential | Sunday Crunch | EU Influence | London Influence | Digital Bridge | China Watcher | Berlin Bulletin | D.C. Playbook | D.C. Influence | All our POLITICO Pro policy morning newsletters
This email was sent to rouf@idiot.cloudns.cc
Unsubscribe from this newsletter, or
unsubscribe from all POLITICO SRL emails
POLITICO SRL · Rue de la Loi 62 · Brussels 1040 · Belgium
|
Comments
Post a Comment