May 18, 2024

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The Chinese premier avoids “factional confrontation” with Europe on his first visit

The Chinese premier avoids “factional confrontation” with Europe on his first visit

China’s new premier has used his first trip abroad to pitch a new approach to Europe, focusing on areas where the two sides meet in an effort to avoid a repeat of Beijing’s strained relationship with Washington.

In Germany and France this week, Li Qiang launched a glamor attack with government officials and business leaders, vowing to focus on combating climate change and announcing a deal for Zambia’s debt relief at Emmanuel Macron’s climate finance summit – diplomat. victory for the French president.

Li’s approach indicated that Beijing is embarking on a two-track approach with Europe, trying to deal with trade relations and climate cooperation separately from thorny issues, such as China’s support for Russia in the Ukraine war.

By contrast, Chinese officials have often made climate cooperation with the United States contingent on foreign policy demands.

“Chinese elites view reassurance and engagement with Europe as a top strategic priority,” said Sefer Wang of the Breakthrough Institute, a California-based think tank. “Because of Russia’s war in Ukraine, Europe and the United States are more closely aligned strategically than they have been in decades.”

French President Emmanuel Macron, left, greets Li Qiang at the Elysee Palace on the sidelines of the New Global Financial Compact Summit in Paris © Ludovic Marin / AFP / Getty Images

Beijing’s new approach comes as the European Commission explores ways to “de-risk” its economic relationship by reducing its dependence on raw materials from China and limiting the export of cutting-edge technology to the Asian giant, which is being spurred on by the far-reaching United States. restrictions.

Chinese state media and diplomats have sharply criticized the term and warned European capitals not to get drawn too closely into US trade disputes.

In May, Chinese Foreign Minister Chen Gang warned his German counterpart that if the EU “seeks to detach itself from China in the name of ‘taking no risks’, it will detach itself from opportunity, cooperation, stability and development.”

But Li, whose brief covers address a stagnant Chinese economy that increasingly needs private investment, took a more conciliatory approach in Berlin. During a roundtable with German companies, Li said he “understands each side’s concerns about security,” and that “risk protection is not incompatible with cooperation.”

Since the concept of de-risking still leaves room for interpretation, the Chinese side is “trying to define the gap between rhetoric and action,” said Yu Jie, a senior researcher at the Chatham House think tank. “Political Europe talks about it all the time, while Business Europe is less keen.”

He addressed some of business leaders’ own concerns to me, warning them that “lack of cooperation is the greatest danger, not development is the greatest insecurity.” Martin Brodermüller, CEO of chemicals giant BASF, warned in March that although there are risks associated with working in China, “there is also a huge risk of not being in China.”

BASF is one of several large German groups, including chipmaker Infineon and the country’s leading automakers, that rely heavily on China for their sales and supply chains.

Li Qiang with German Chancellor Olaf Scholz, right, at the Federal Chancellery in Berlin

Li Qiang with German Chancellor Olaf Scholz, right, at the Federal Chancellery in Berlin © Kay Nietfeld / dpa

A growing number of CEOs, including those of Siemens and Mercedes-Benz, have publicly rejected calls from Berlin and Brussels to diversify away from China, arguing that the market is simply too big. In the words of one auto supply executive: “We are totally dependent on China.”

This development has turned German multinationals into “the most vocal and effective lobbying force in favor of greater economic engagement with China,” said Yanmei Zi, a European-China analyst at consultancy Gavekal Dragonomics.

On his trip to Germany and France, Li accompanied Chinese companies, including battery giant CATL, which has opened a German factory, and solar panel maker Longi, which hopes to build one in the country.

Li also praised France’s opposition to disengagement and “factional confrontation”, a thinly veiled reference to the US approach.

Last week, President Xi Jinping met Anthony Blinken, the first US secretary of state to visit Beijing in five years, and announced “progress” toward stabilizing relations. But just a day later, President Joe Biden infuriated Beijing by calling Xi a “dictator” at a private fundraising event.

By contrast, Li said during a roundtable with French business leaders: “The good level of political trust between France and China enables us to see common stability, certainty, and growth opportunities in our interdependence, rather than risks.”

On Tuesday, as Lee was on his way to dinner with a delegation of Bavarian officials and companies in a marble-clad hall, the European Commission said it would put forward a proposal to scrutinize outbound investments and improve the implementation of export controls — measures that have been seen. Like targeting technology links with China. However, EU member states remain cautious about such measures.

Commission President Ursula von der Leyen, one of the most hawkish European officials on China, urged member states to get behind the “de-risking” strategy. But she acknowledged that the “vast majority of trade and economic relations” with China would remain “business as usual”.

While the new commission’s proposals remain controversial, German executives remain convinced of the broader need to diversify supply away from China. Some say that the Chinese side exaggerates its ability to build an alliance with European companies against risk.

“What he tells me that the business community doesn’t want to de-risk is nonsense. We care,” a German executive told the Financial Times.

“We see clear signs of risk-off,” said Jens Hildebrandt, president of the German Chamber of Commerce in Beijing. He said some companies are shifting their production away from China to other Asian countries, to protect against future sanctions or export controls.

The reasons for not taking risks come from many quarters. The Chinese government does not have all the tools in its hands to tell German companies that they need to reduce risk aversion risks,” Hildebrandt added.

Climate change and green transition also featured heavily in the German Li meetings, where the two sides issued a memorandum outlining general principles on climate cooperation.

Beijing froze climate talks with the United States for several months last year, and attempts to restart them have made little progress. Europe’s more stable relationship with China “helps the West preserve its last stepping stone in working with China on climate change, which would not be meaningfully dealt with without talking to Beijing,” said Li Xu of Greenpeace Asia.

But both climate analysts and German companies warn that they have been waiting for Chinese action to cut emissions, rather than words, for too long.

“The time to deliver is now. We need to be realistic. There are some things they just can’t work out,” Hildebrandt added.

Additional reporting by Patricia Nilsson in Frankfurt

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