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By STUART LAU
with PHELIM KINE
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HI CHINA WATCHERS. This is Stuart Lau writing in from Brussels. Phelim Kine will report from Washington on Thursday.
PORK PROBE
CHINA HITS EU WITH PORK INVESTIGATION: Beijing unveiled its countermeasure on Monday, after days of threatening the EU with a strong reaction to tariffs against Chinese electric vehicles. It takes the form of an anti-dumping probe against EU pork and by-products, which is expected to hit France, Spain, Germany and the Netherlands particularly hard. Those countries seem to be well chosen, according to four EU officials and industry insiders.
Punishing France is out of necessity, since Paris was the one pushing the Commission to target Chinese EVs.
Putting Spain and Germany on the spot, on the other hand, was seen as Beijing’s bid to push Madrid into the camp of German Chancellor Olaf Scholz, who could use his influence in the European Council to try to block the EU tariffs on the EVs.
As for the Dutch: There’s still bad blood between The Hague and Beijing, after the former sided with the U.S. in imposing an export ban on advanced semiconductor machines.
CHINESE ARGUMENT: Cui Hongjian, a professor at the Beijing Foreign Studies University, told China’s state-run Global Times newspaper that starting in 2023, there has been a significant uptick in the EU’s exports of some pork and by-products to China.
But but but: EU exports of animal products dropped to a four-year low in 2023. Plus, European Union officials said they were sure its subsidies for the agrifood sector were in line with WTO rules.
In other words: "We do not believe there are any actual anti-dumping practices that can be attributed to our pig meat sector in Europe, but we have no choice now but to take part in this investigation, which is a costly process (lawyers, translations etc.) and will most likely in any case lead to loss of market in China," said Ksenija Simovic, senior policy adviser for trade at EU farm lobby Copa-Cogeca.
HAPPENING TODAY: China’s first Vice Premier Ding Xuexiang — a right-hand man to President Xi Jinping for whom he once served as chief of staff — will today hold talks with EU counterparts led by European Commission Executive Vice-President Maroš Šefčovič.
Talking off script: While environment and climate are supposed to be their main themes, EU officials expect Ding to raise the issue of EV tariffs with them.
HAPPENING THIS WEEK: German Economy and Climate Action Minister Robert Habeck will head to China later this week, where he's expected to visit Beijing, Shanghai and Hangzhou, after first traveling to South Korea. The whole trip is expected to last from June 19 to June 24, and was pushed back by two days.
No trade war, por favor: "Just as there can't be a trade war, there can't be a subsidy race either," said Spain’s Economy and Trade Minister Carlos Cuerpo during a conference in Santander. "We are already working through the European Union to find solutions that will provide a way forward without damaging the sector."
French fears: "We're mostly just in the phase of working out what questions will be asked and how we'll have to respond," said Anne Richard, director of France's pork exporter association, Inaporc. Richard lamented that it was already getting hard to compete with cheaper Brazilian and American meat. "They might've got the wrong target — maybe they should be looking at the Americans," she joked.
View from EU biz in China: EU Chamber of Commerce in China president Jens Eskelund said the body “encourages both sides to take action to depoliticize the business environment and find ways to address the underlying causes.” He added: “It will not be the first time that a probe announced in one jurisdiction is responded to in kind, so in view of the EU EV probe this is not a surprise.”
HUNGARIAN PRESIDENCY IN EU
READY FOR BUDAPEST? Hungary is unveiling the priorities of its EU presidency — a rotational job every half a year — later today. But in true speedy POLITICO style, our colleagues Camille Gijs and Jacopo Barigazzi already got fully briefing on all the highlights from Hungary's EU Minister János Bóka.
Staying on good terms with China: Developing a new relationship with Beijing will keep the Hungarians busy during the presidency which begins on July 1, against the backdrop of escalating tit-for-tat between China and the EU.
"There is a possibility for a meaningful and mutually beneficial economic partnership with China,” Bóka said on the sidelines of a meeting of EU leaders on Monday. “And I also believe that this will be the biggest challenge of the next institutional cycle on how this economic relationship with China can be shaped for the mutual interests of China and the European Union.”
'No such thing' as economic security: The EU's efforts on shielding strategic assets from foreign rivals, such as China, will not be topping the priority list.
"There is no such thing as economic security in general," the minister said. "If there are risks to our security, these risks must be specifically identified and addressed. If you speak of economic security in general, then you speak of decoupling. I think that we made the decision that we are not decoupling, we're de-risking."
Cars are welcome: With China's automaker BYD and battery-maker CATL making huge investments in the country, Budapest makes little secret of its skepticism about the European Commission's economic security strategy.
IN OTHER NEWS
NATO CALLS FOR COSTS ON CHINA: NATO Secretary-General Jens Stoltenberg calls on the West to impose cost on Beijing given its continued support for Russia. Speaking at the Wilson Center yesterday, a Washington-based think tank, he described Xi as "adamantly opposed to NATO."
"Publicly, President Xi has tried to create the impression that he is taking a back seat in this conflict, to avoid sanctions and keep trade flowing. But the reality is that China is fuelling the largest armed conflict in Europe since World War II. And at the same time, it wants to maintain good relations with the West. Well, Beijing cannot have it both ways.
"At some point – and unless China changes course – allies need to impose a cost," he said.
NEW RULES IN THE MAKING: Western officials point to a somewhat neglected paragraph in last week’s G7 statement: “Recognizing that economic resilience requires de-risking through diversification and reduction of critical dependencies, including those resulting from overcapacity, we will implement the principles on resilient and reliable supply chains, namely transparency, diversification, security, sustainability, trustworthiness and reliability. “
The key word is trustworthiness: The EU has been promoting the use of trustworthy green tech — as a phrase to hint at derisking from Chinese supplies, from wind turbines to solar panels.
Still early days: Here in Brussels, after the failure of EU leaders to agree to a new team of top jobs last night, all eyes are on next week’s European Council summit to see whether Ursula von der Leyen will get a second term. It is largely expected she will — and in her second mandate, there’s likely to be an even stronger focus on economic security, with further clarity on how the concept of “trustworthiness” — thus far applicable primarily to 5G network — could be extended to green tech.
TRANSLATING WASHINGTON
TAIWAN'S TOW MISSILE WAIT IS OVER: Taiwan's Defense Minister Wellington Koo said that a two-year delay in delivery of U.S. anti-tank Tow missiles to the island is almost over. Koo told Taiwanese lawmakers on Monday that 1,700 Tows and 100 launchers — delayed due to U.S. Army concerns about their performance quality — will arrive on the island by end-2024, per Taiwan state media.
BURNS BLASTS JAILING OF RIGHTS ACTIVISTS: U.S. ambassador to China, Nicholas Burns, took to social media to demand the immediate release of two human rights activists. A Guangzhou court "unjustly sentenced journalist and women's defender Huang Xueqin (Sophia) and labor rights activist Wang Jianbing for their peaceful advocacy work on behalf of citizens of China," Burns said in an X post on Saturday. The court sentenced Huang to a five year prison term and handed down a three-and-a-half-year prison sentence to Wang for "”subversion against the state" on Friday, per the BBC.
TAIWAN ENVOY PITCHES WASHINGTON SOFT POWER: Taiwan's diplomatic envoy in Washington, Alexander Tah-ray Yui, threw out a ceremonial first pitch at a special "Taiwan Day" event ahead of a Washington Nationals game on Saturday. The goal —to promote the major league baseball team's first ever "Taiwan Day" which brought together more than 500 pro-Taiwan baseball fans to Nationals Park in Washington, Taiwan state media reported Saturday. Yui is taking a page from the playbook of former Chinese Foreign Minister Qin Gang —who disappeared from public view a year ago —who as Chinese ambassador to the U.S. used home games of Washington's NBA team, the Washington Wizards, as a platform to tout closer U.S.-China ties.
BEIJING SLAMS PENTAGON VACCINE SCARE SCAM: China's Foreign Ministry has condemned allegations raised in a Reuters report published Friday that the Pentagon had "launched a clandestine program amid the Covid crisis to discredit China's Sinovac inoculation" in Southeast Asia, Central Asia and the Middle East. "When the U.S. wants to contain and suppress a country, it … launches smears and vilification'" said Foreign Ministry spokesperson Lin Jian on Monday. The vaccine disinformation allegations reflect a U.S. "obsession with supremacy and hypocrisy," Lin said.
U.S. DIPLOMAT IN TAIWAN CONDEMNS COERCION: The outgoing head of the U.S. diplomatic outpost in Taiwan warned Beijing on Friday against "coercive or provocative actions" around the self-governing island, Reuters reports. Those moves "run the risk of a miscalculation or an accident that could spark a broader conflict," said Sandra Oudkirk. The Chinese embassy in Washington clapped back. "The U.S. has repeatedly sold weapons to the region, conniving and supporting the 'Taiwan independence' separatist forces…this is the biggest threat to peace and stability across the Taiwan Strait," said embassy spokesperson Liu Pengyu on Saturday.
HEADLINES
BBC: Chinese officials appear to block freed journalist in Australia.
CNN: Adidas is investigating allegations of embezzlement and kickbacks in China.
New York Times: In China's backyard, America has become a humbler superpower.
NEXT WEEK: My colleague Pieter Haeck will write the European edition on Tuesday. Send him all your tips.
MANY THANKS: To editor Christian Oliver, reporters Alessandro Ford, Camille Gijs, Jacopo Barigazzi and producer XXX.
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