By STUART LAU
with PHELIM KINE
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WELCOME TO CHINA WATCHER. We’ll take a deep dive into the EU’s new critical technology list that will be announced later today, as Europe gets serious about leakages of technologies that could end up empowering Beijing’s military advancement. But first, we’ll take a look at how China’s making inroads in shoring up political support from the center-right and far-right in Germany.
This is Stuart Lau reporting from Brussels. My D.C. colleague Phelim Kine will be with you on Thursday.
THE RIGHT AND FAR RIGHT
BEIJING TAMES THE HAWK: The leader of the German center-right, liberal Free Democratic Party, Christian Lindner, once billed himself as a China critic unafraid of showing solidarity with Hong Kong protesters while in opposition. Now that he’s German finance minister, Lindner is more focused on promoting Germany’s businesses in the Chinese market.
Meeting Xi’s man: On Sunday, Lindner held a high-level finance dialogue with He Lifeng, the Chinese vice-premier who’s the top economic aide (and a long-term confidant) for President Xi Jinping, in Frankfurt. And Lindner stuck closely to the script China would’ve preferred — and talked only win-win financial cooperation.
De-risking with German characteristics: He’s visit comes as Beijing seeks to shore up investors’ confidence, as the world turns bearish over the Chinese economy. And he’s not disappointed, as Lindner arranged for a group of German businesspeople to meet He. “For the first time, we have established a financial roundtable with representatives from important financial institutions and private companies,” Lindner wrote on social media.
And that’s not all: Contrary to the concerns raised by fellow G7 country Canada, Germany went all in to publicly state its support for the Asian Infrastructure Investment Bank, or AIIB, the Beijing’s based institution that’s currently the world’s second largest multilateral development bank after the World Bank.
“Both sides will continue strengthening coordination and comprehensive cooperation under the framework of AIIB, jointly supporting AIIB to operate in a sustainable and robust way along international standards and as an institution that is integrated into the international architecture so as to better serve its members' needs for sustainable development,” a German-Chinese statement said after the meeting.
Lindner’s backing comes at a crucial time as his Canadian counterpart, Chrystia Freeland, announced in June that all ties with the bank were to be frozen pending a government review over claims made by a former Canadian top executive at the bank, who reported widespread “communist dominance” within the institution since its foundation in 2016 — allegations that the AIIB denies.
Not making friends: There’s “not a single critical word by Lindner who celebrates lots of putative ‘successes’ in 25 point joint statement,” wrote Thorsten Benner, director of the Berlin-based Global Public Policy Institute. Reinhard Bütikofer, a European Parliament lawmaker from the Green Party, another part of the coalition government in Berlin, also criticized the finance minister, saying: “Lindner is lost … He acted as if foreign affairs could be ignored. Now he allows the Chinese to play on his vanity and his ignorance.”
OVER TO THE FAR-RIGHT: It’s even more eye-opening.
China-cheerleader-in-chief gets top AfD ticket: The far-right party Alternative for Germany (AfD) has picked Maximilian Krah as its lead candidate in next year’s EU elections. Several German media outlets then reported that people close to Krah — a vocal supporter of the Chinese Communist Party since joining the European Parliament in 2019 — have been receiving money from China. T-Online detailed the relationship between Krah, his assistant and business activities in China. He’s denied any conflict of interest, adding that the media reports were “without any proof.”
Beijing’s poster boy: Krah has repeatedly been featured in Chinese state media. In 2021, he was featured in an interview with Global Times, which reported him as praising Angela Merkel‘s China policy. “I was never a fan of Angela Merkel, especially since she opened the borders for more than a million of migrants in 2015. But in her policy on China, she was smart, reliable, and consistent.” Krah went on: “Western, left-liberal NGOs” that define human rights, saying: “To overcome it, we need much more intellectual and ideological work especially from China.”
TALKING OF FAR RIGHT: Italy’s Deputy Prime Minister Matteo Salvini attended the National Day celebration hosted by the Chinese embassy in Rome last week, Il Foglio reports. Apparently, Salvini invited the Chinese ambassador to lay the first stone of a planned bridge over the Messina Strait separating Sicily from the Italian mainland.
EU STEPS UP TECH LEAKAGE SCRUTINY
GANG OF FOUR TECHS: In a few hours, the European Commission will formally announce a list of critical tech, in a move that resembles the White House list of critical and emerging technologies against China. Under the EU list, an early draft of which was seen by my colleague Jakob Hanke Vela, advanced semiconductors, artificial intelligence, quantum technologies, and biotechnologies are listed as the four areas “considered highly likely to present the most sensitive and immediate risks related to technology security and technology leakage.”
To be decided: According to the draft, six other technologies were not immediately included in the list, though later additions could still happen, according to EU officials.
It's about Ch***: While the commissioners involved may not refer directly to China, the list is privately acknowledged by EU officials close to the file as a key follow-up action to von der Leyen's China speech in March stressing the need to prevent tech leakage.
Inputs from capitals: The European Commission is also expected to say that it will carry out collective risk assessments with the 27 member countries. Already, the Netherlands has reached a deal with the U.S. to ban the export of advanced microchip-making equipment to China earlier this year, though on the basis of national security, it did it on its own accord, instead of seeking an EU-wide decision.
But but but: A key issue is what purpose this list will actually serve: Is it to restrict access or outbound investment? To protect specific sectors? To subsidize and promote them within Europe and abroad? For now, the EU doesn’t have an answer.
As with most of the EU’s fledgling ‘economic security’ dossiers, the Commission is split along the classical line of a French interventionist approach versus a free-market attitude of safeguarding the bare minimum. "For this list to be useful, it needs to be much more dense in order to identify risks and possible mitigating measures and to avoid shielding technologies for which openness is actually beneficial to promote our European champions," an EU diplomat said.
Too early to worry: A person working on the file told POLITICO that "our approach to mitigate the risks is to promote, protect and partner — it's not because a technology is listed that it will be subject to export controls or outbound investment screening, it will depend on the individual risk assessment." Hats off to Sarah Anne Aarup, Clothilde Goujard, Mark Scott, Camille Gijs and Barbara Moens for the joint reporting.
US HOPEFUL TO SEAL STEEL DEAL WITH EU: The Biden administration is hopeful about sealing deals soon with the EU on critical minerals and on green steel, a senior U.S. official told Camille Gijs on Monday.
"We think we will get to an agreement," said Jose Fernandez, the U.S. State Department's undersecretary for economic growth. "We hope that [negotiations] will be finalized soon. We’re making progress. On critical minerals, it's clear that we both agree that we have to work on our vulnerability."
'Country-agnostic:' The agreement is widely seen as the transatlantic joint action against China’s excessive, subsidized supply of steel. "We have common concerns about non-market practices of third countries," Fernandez said. "We also have concerns with the environmental footprint of steel, with a global oversupply of steel. Negotiations are ongoing as we speak… We are confident that they will succeed."
TRANSLATING WASHINGTON
CHINA HOUSE LANDS LAMBERT AS LEADER: The U.S. State Department's China House — formally known as the Office of China Coordination — is rudderless no more following the departure of its inaugural coordinator Rick Waters in June after only six months. Deputy Assistant Secretary of State for China and Taiwan in the Bureau of East Asian and Pacific Affairs, Mark Lambert, has stepped up as the new China House coordinator, the State Department announced on Friday. Lambert's State Department experience includes stints in Bangkok, Beijing and Hanoi. Chinese authorities will know Lambert best for his work at State's Bureau of International Organization Affairs which earned him a Meritorious Presidential Rank Award for "designing a plan to defeat China's candidate to lead the World Intellectual Property Organization," the statement said.
STATE SOUNDS ALARM ON CHINESE DISINFORMATION: The State Department has issued a stark warning about the global destabilization potential of China's international "foreign information manipulation efforts." Beijing is spending billions of dollars on tools including censorship, and propaganda "to cultivate and uphold a global incentive structure that encourages foreign governments, elites, journalists, and civil society to accept its preferred narratives and avoid criticizing its conduct," State's Global Engagement Center said in a report published on Thursday. And the U.S. wants a global pushback campaign against those efforts. "This is not simply a matter of public narrative but a national security subject —our values and our interests are in jeopardy," said James P. Rubin, the center's special envoy in a press briefing. The report "is just another tool to keep China down and buttress American hegemony," Chinese embassy spokesperson Liu Pengyu said in response on Friday. China's foreign ministry pilednon by calling the U.S. "an 'empire of lies' through and through" in a statement on Saturday.
LAWMAKERS SPLIT OVER BIDEN'S BEIJING OUTREACH: The stream of Biden cabinet officials to China over the summer —starting with Secretary of State Antony Blinken in June and climaxing with Commerce Secretary Gina Raimondo in August — sparked a partisan divide at a hearing of the House Foreign Affairs Committee's Indo-Pacific subcommittee last week. "A number of senior officials have met with the Chinese Communist Party in recent months, while the CCP continues to double down on militarizing the South China Sea and acting aggressively toward the U.S. allies and partners" subcommittee chair Young Kim (R-Calif.) told a hearing on China's activities in the South China Sea on Thursday. Kim urged the administration to negotiate instead "from a position of strength."
Subcommittee member Rep. Brad Sherman (D-Calif.) begged to differ. "I think the meetings with high Chinese officials make a lot of sense — Ronald Reagan met with[then Soviet leader Mikhail] Gorbachev at a time when the Soviet Union had many thousands of nuclear weapons aimed at the United States, far more than China has," Sherman said. That exchange coincided with visiting Chinese Vice Foreign Minister for Asia, Sun Weidong, meeting in Washington with Assistant Secretary of State for East Asian and Pacific Affairs Daniel Kritenbrink and Acting Deputy Secretary of State Victoria Nuland. Sun bent Kritenbrink's ear on "the Taiwan question" and Beijing's concerns about Biden's "so-called 'Indo-Pacific Strategy,'" Liu, the Chinese embassy spokesperson, said on Friday on social media.
CHINA'S AMBASSADOR PLEADS FOR BETTER TIES: China's Ambassador to the U.S., Xie Feng, is urging the Biden administration to take "small, concrete steps" to improve bilateral ties. Xie's short list includes doubling the current number of direct flights between the two countries and a long-term renewal of the U.S.-China Science and Technology Agreement. Those initiatives will "help bring our relationship back to the right track," Xie said on social media on Thursday. Xie made no mention of Beijing's yearlong freeze on cooperation with the U.S. in areas including counternarcotics and transnational crime and its refusal to permit dialogues between senior U.S.-China military officials.
MORE HEADLINES
BLOOMBERG: Belt and Road shows the high price of Beijing's money
CNN: Evergrande's chairman has been detained
REUTERS: Xi, not premier, delivers National Day speech in break with convention
TAIPEI TIMES: Ex-President Ma Ying-jeou rejects National Day invite over “Taiwan”
WALL STREET JOURNAL: China blocks executive at U.S. risk advisory firm Kroll from leaving the country
MANY THANKS: To editor Christian Oliver, reporters Jakob Hanke Vela, Sarah Anne Aarup, Clothilde Goujard, Mark Scott, Camille Gijs, Barbara Moens and producer Seb Starcevic.
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