China’s sometimes thuggish approach to foreign NGOs and foundations is now also enshrined in the investment agreement with the EU. Civil society is excluded from better standards, such as those achieved for companies. Beijing is thus sending a clear signal, as Amelie Richter reports.
Tensions in USA-China relations won’t ease even under the new US president Joe Biden, Felix Lee predicts. There will be undiplomatic bluster in front of the cameras, as at the meeting in Alaska. Moreover, Washington is forging new and old alliances to contain China. On the other hand, Jörg Wuttke, President of the EU Chamber of Commerce in China, writes in the Opinion that sanctions from the US side will not hurt Beijing. Xi Jinping enjoys strong support in the party and therefore has no pressure to give in to foreign demands.
China’s banks have become the largest in the world in recent years. But many experts wonder how many bad loans are lying dormant on their balance sheets. While China’s former finance minister Lou Jiwei urges a further reduction of credit risk, the rating agency Fitch attests Beijing good progress, as Gregor Koppenburg and Joern Petring report.
Working for foreign non-governmental organizations (NGOs), such as environmental movements and foundations, in China is already tough. Since the beginning of 2017, a strict law has been in force in the People’s Republic that severely restricts the possibilities of NGOs. Among other things, it has since placed the work of all foreign NGOs under the supervision of the Ministry of State Security, which is known for its often rude and arbitrary approach. Previously, the much more moderate Ministry of Civil Affairs was responsible.
It is therefore all the more surprising that a corresponding passage has now been included in the investment agreement between the European Union and China (CAI).
The CAI also details the treatment and thus crackdown on foreign NGOs by Chinese authorities – foreign investment in the organizations remains banned, as expected. China is using the text of the agreement to reserve further pressure on Chinese appointments to leadership positions. German foundation representatives consider this to be highly questionable.
A representative of a business-affiliated German foundation told China.Table that the debate on the CAI section was “still young”, as the annexes to the agreement had only just been published. However, it is clear that the Chinese side is attempting to control a certain narrative and readjust areas where the legislation is still permeable. For the NGO community, there would not be any major changes for the time being because of the listing in the annex, as the requirements have already existed since the introduction of the NGO law in China. However, the foundation representative is critical of the fact that this is obviously intended to send a “signal”.
The ninth entry of Annex II of the CAI, which the EU Commission published just over a week ago, states that China reserves the right to “adopt or maintain the following measures”: Unless otherwise approved by the Chinese government, investors from abroad cannot invest in “non-profit organizations in the territory of China“. Further, non-profit organizations established outside China are not allowed to set up representative offices or branches in China. To conduct temporary activities in China, foreign NGOs must cooperate with “domestic enterprises.” The cooperation is then limited to one year – up to this point, the CAI paragraph is in line with the requirements of the “Law on Administration of Activities of Overseas Nongovernmental Organizations in the Mainland of China”. It is added that senior executives of NGOs who are allowed to work in China must be Chinese citizens.
Bernd Lange, chairman of the European Parliament’s trade committee, said he had not previously been aware of the CAI withdrawal in question. “It’s not nice,” Lange said. However, Lange said it was clear that China would not open the doors further to NGOs under the agreement. There are also reciprocal stipulations from the EU, for example on investments in media companies. Regarding the requirement that Chinese citizens should fill leading positions, the SPD politician explained that in other areas, such as services, it would also be stipulated that leading positions or a certain proportion of the workforce had to be Chinese citizens.
The paragraph on non-profit organizations, however, clearly has a political background, Lange said. In the European Parliament, this would be discussed in detail before the agreement could be approved. One does not want to contribute to “stabilizing” the action against NGOs, Lange said. China.Table asked the European Commission’s Directorate-General for Trade for a statement, but no answer had been received by the editorial deadline.
Bertram Lang, a political scientist specializing in East Asia and China at Goethe University in Frankfurt, criticizes the exclusion of NGOs from the scope of the agreement, which is supposed to bring real progress for European investors. “It’s cynical to say we want better standards for European companies, but we leave NGOs and foundations under the table, and we allow China to simply not apply the provisions of the agreement for non-profit investment.” This example shows that Europe, with the CAI, is only concerned with profit-oriented companies.
“The fact that the European side has apparently not even formulated its criticism of this Chinese attitude to non-profit investment, or at least a renewal of its own more liberal principles as a counterweight, is regrettable,” says Lang, who deals with NGO work in the People’s Republic. For “own profit” investment is allowed in China, but for public interest, such as climate protection, one does not have the protection of the agreement, Lang says. “That to me is the absurdity of the story.”
Another representative of a political foundation with offices in China said he was “surprised” to find the passage on leadership appointments in the annex. Since there is a whole range of NGO actors, some with influence on the public debate, the intention was “probably to introduce a rough regulation” for leading positions, said the foundation representative. It had not been clear that such a paragraph would be found in the CAI. It would be disappointing if this were “accepted by the European side”, criticized the foundation representative.
The paragraph fits “well into the trend that you check in each case”, told another representative of a foundation China.Table. This is comparable to Hong Kong, where only “patriots” are allowed to run. Overall, the “control recently also goes in the direction of content influence”, which leaves an “uneasy feeling”, said the organization employee.
In general, the mood towards NGOs in China is increasingly “aggressive”, criticizes a concerned representative. The “civil society framework” for their work there is tightening more and more. Consultations with the NGOs concerned on the agreement paragraph had not yet taken place, said another employee of a political foundation with representation in China. Filling positions in the People’s Republic is already difficult today, she said, as this is regulated primarily by the granting of visas and work permits. In addition, it is becoming increasingly difficult to find personnel who are willing to work in China.
Joe Biden’s staff had already announced before his election as US president that he won’t treat China with kid gloves either. Like his predecessor Donald Trump, he will also regard the People’s Republic as a rival. But many observers did not expect Biden to choose an aggressive China policy right at the start of his presidency.
At the first top-level meeting between China and the US since the inauguration of the Biden administration, the two sides exchanged fierce blows on Thursday and Friday in Alaska (China.Table reported). China’s official news agency Xinhua was emphatically down-to-earth. Both sides had agreed to maintain dialogue between their countries “to prevent misunderstandings, conflicts and confrontations”. On Chinese state television, chief negotiator Yang Jiechi, a chief diplomat and influential member of the Politburo, described the talks as “constructive”. But anger at how it went was plain to see. Of course, there had been “differences”, Yang added. The US National Security Advisor Jake Sullivan found clear words. After the conclusion of the two-day talks, he spoke of a “tough and direct exchange“.
Unusual for diplomatic practice, the two sides clashed right at the start of the talks – on camera. Actually, only brief introductions had been planned. Then the delegations were to withdraw behind closed doors. But both US Secretary of State Anthony Blinken and Sullivan hurled sharp accusations at the Chinese guests right at the beginning. Including China’s human rights violations in Xinjiang, the dismantling of democratic institutions in Hong Kong, unfair trade practices, and unjustified claims to power.
Yang, in turn, did not take this lying down, pointing to racial problems and police violence in USA. The US delegation had no right to accuse Beijing of human rights abuses or condescendingly lecture on the merits of democracy, Yang countered the hosts. “Most countries in the world don’t recognize that US values represent international values.” Blinken then asked journalists to stay to witness the argument. The public exchange lasted for an hour. US President Joe Biden, who did not attend the talks himself, did not reprimand his chief diplomat for this undiplomatic behavior. On the contrary, he backed Blinken. “I am very proud of the Secretary of State,” the US President said. Was this a foretaste of his future China policy?
So far, Biden has not fully formulated his China policy. He wants to emphasize democratic values more strongly as well as accusations of Chinese human rights violations, according to sources inhis circles. In addition, he wants to strengthen the competitiveness of the US economy but by no means speak of “decoupling from China” like his predecessor Trump. However, Biden wants to keep the punitive tariffs that Trump has imposed on Chinese imports for the time being – as a bargaining chip.
Officially, this sounds diplomatic – but in practice he is forging a front against Beijing. A week before the Alaska meeting, Biden met with the heads of government of India, Australia, and Japan at the summit of the so-called Quad States (Quadrilateral Security Dialogue). They agreed to deliver around one billion vaccine doses against Covid-19 to countries in Southeast Asia in particular by the end of 2022 – as a counterpoint to China’s vaccination diplomacy in the region.
A few days before the Alaska meeting, Washington also delivered the secret technology promised by Trump some time ago to Taiwan for eight submarines with which the democratically governed island republic is significantly upgrading its navy. This is a particular thorn in the side of the leadership in Beijing, which regards Taiwan as a renegade province and is threatening military intervention. Biden is making it clear that he will not allow this to happen and that he will focus much more strongly than his predecessor on defending Taiwan. In addition, Blinken and US Defense Secretary Lloyd Austin paid visits to the governments in Seoul and Tokyo before the Alaska meeting and assured Japan of US support in the ongoing dispute with China over the Senkaku/Diaoyu Islands.
Biden’s desire to waste no time pursuing his agenda for a free and treaty-based world order is also demonstrated by his statement last week about Russia’s President Vladimir Putin: Yes, he is a murderer, Biden replied when asked by a journalist.
These are tones that one might not expect from such an experienced foreign policy expert as Biden. But a closer look shows that Biden has not been reticent in dealing with authoritarian regimes like China and Russia in the past. The focus on Asia (Pivot to Asia), which the US administration under Barack Obama proclaimed in 2011, can be traced back to him, among others, as vice president at the time. But this policy proved to be unsuccessful. Many in the US saw it as a failure that the US government had already failed to put a stop to China’s power play.
The Biden administration, however, does not seem to be focusing solely on confrontation. Both sides have agreed on a joint working group on climate change, at least Xinhua claims, and highlights this as a positive result of the summit. What is also striking here is that the US side has so far not confirmed this alleged progress.
US President Joe Biden and his Chinese counterpart Xi Jinping spoke on the phone for the first time on February 11. After the conversation, it seemed that USA-China relations were now back on track. The two leaders had drawn clear lines and opted for a no-nonsense, pragmatic approach. The belligerence and bluster of Biden’s predecessor seemed passé. On Thursday, high-ranking representatives of the US and China met in Alaska for the first time since Joe Biden was sworn in. The tone was frosty, the talks lacked substance – both sides served the home front with strong gestures.
The official White House report on the February phone call between Biden and Xi indicated that Washington agreed to the “three-list approach” proposed by Beijing. This involves the two countries defining a list of issues on which they can cooperate constructively. A second list includes issues that require dialogue. The third list includes points of conflict that the two countries must manage. The White House report specifically identified four points of criticism – corporate coercion, Hong Kong, Xinjiang, and Taiwan – and four areas of cooperation: COVID-19, health security, climate, and arms proliferation.
The implied emphasis on balance seems consistent with Biden’s general approach to policy. For example, the South China Sea and Tibet – two issues that are no less important to US strategic interests and values – were not specifically mentioned in the announcement. However, Beijing’s announcement on the phone call warned the US to be cautious on issues related to China’s core interests: Taiwan, Hong Kong, and Xinjiang.
Compared to Trump’s China policy, which has been characterized by pushing for concrete results and unilaterally imposing broad sanctions, the Biden administration has so far seemed guided by a higher purpose: Answering China’s development model with a liberal-democratic alternative. According to national security adviser Jake Sullivan, to win such a contest, the US first needs domestic renewal to “renew the (…) fundamental underpinnings of our democracy,” followed by “investment in allies” to “modernize those alliances to deal with the threats of the future”.
Right now, America is not on the winning side. From pandemic control to infrastructure investment, Beijing’s centralist approach seems far more effective. On the international stage, Washington’s traditional alliances, marked by the shared pursuit of a “free world” that characterized Biden’s generation, are not sacrosanct either. China’s enormous market appeal and political consistency, guaranteed by a leader freed from the burden of uniting a divided country, pose difficult choices for US allies in Europe and the Asia-Pacific.
It is hard to imagine what short-term, tangible results the Biden administration could achieve in this environment. For Beijing, the goal is quite simple. It doesn’t want to outmaneuver the United States, but it does want to prove that there is more than one “right side of the story.” China’s goal is to ensure that its political model gets a permanent and uncontested seat at a table dominated by liberal democracies.
With regard to Hong Kong and Xinjiang, Beijing sees no need to compromise, as neither issue offers much room for escalation. Any potential sanctions involved won’t really hurt China, and Xi’s strong backing in the party means he has no pressure from within to give in to foreign criticism. For Xi, it is necessary for the “revitalization of the Chinese nation” that the West respects Beijing’s sovereignty and full authority over domestic issues such as Hong Kong and Xinjiang.
On Taiwan, the immediate risk of armed conflict is low. Xi may aspire to resolve the Taiwan issue once and for all, but he is in no hurry to take drastic action. Xi can stay in office until at least 2027, and possibly even 2032, which means he has many more years to find a solution for Taiwan without military invasion.
On the economic front, China will indeed continue to buy agricultural and energy goods from the USA – not necessarily to comply with the Phase 1 trade agreement, but rather because of the strengthening domestic economy. At the same time, Beijing will likely propose to resume negotiations on the Bilateral Investment Treaty (BIT) and use it as a framework for continued economic engagement. The EU-China Comprehensive Agreement on Investment (CAI) could serve as a blueprint for dialogue between Beijing and Washington, and the Phase 1 agreement would serve as a basis for future negotiations.
For now, there is a brief window of opportunity for Beijing and Washington to reset the rules of the game. But that delicate balance of power can shift rapidly if either side grows impatient and opts for shortcuts in the pursuit of victory, such as those suggested in the so-called “Longer Telegram”, reportedly written by a former senior US official who advocates the elimination of Xi Jinping as the goal of a “new China policy”.
For China, Washington’s explicit or implicit push for regime change is a fundamental threat that no climate agreement or investment treaty can offset. It will ultimately be up to President Biden to weigh the competing voices within Washington – a test he has faced since 1973.
Joerg Wuttke has been President of the EU Chamber of Commerce in China since May 2019 – he previously held the post from 2007 to 2010 and from 2014 to 2017. Wuttke is Chairman of the China Task Force of the OECD’s Business and Industry Advisory Committee (BIAC) and a member of the Advisory Board of the Mercator Institute for China Studies (MERICS) in Berlin. He has lived in Beijing for more than three decades.
China’s sometimes thuggish approach to foreign NGOs and foundations is now also enshrined in the investment agreement with the EU. Civil society is excluded from better standards, such as those achieved for companies. Beijing is thus sending a clear signal, as Amelie Richter reports.
Tensions in USA-China relations won’t ease even under the new US president Joe Biden, Felix Lee predicts. There will be undiplomatic bluster in front of the cameras, as at the meeting in Alaska. Moreover, Washington is forging new and old alliances to contain China. On the other hand, Jörg Wuttke, President of the EU Chamber of Commerce in China, writes in the Opinion that sanctions from the US side will not hurt Beijing. Xi Jinping enjoys strong support in the party and therefore has no pressure to give in to foreign demands.
China’s banks have become the largest in the world in recent years. But many experts wonder how many bad loans are lying dormant on their balance sheets. While China’s former finance minister Lou Jiwei urges a further reduction of credit risk, the rating agency Fitch attests Beijing good progress, as Gregor Koppenburg and Joern Petring report.
Working for foreign non-governmental organizations (NGOs), such as environmental movements and foundations, in China is already tough. Since the beginning of 2017, a strict law has been in force in the People’s Republic that severely restricts the possibilities of NGOs. Among other things, it has since placed the work of all foreign NGOs under the supervision of the Ministry of State Security, which is known for its often rude and arbitrary approach. Previously, the much more moderate Ministry of Civil Affairs was responsible.
It is therefore all the more surprising that a corresponding passage has now been included in the investment agreement between the European Union and China (CAI).
The CAI also details the treatment and thus crackdown on foreign NGOs by Chinese authorities – foreign investment in the organizations remains banned, as expected. China is using the text of the agreement to reserve further pressure on Chinese appointments to leadership positions. German foundation representatives consider this to be highly questionable.
A representative of a business-affiliated German foundation told China.Table that the debate on the CAI section was “still young”, as the annexes to the agreement had only just been published. However, it is clear that the Chinese side is attempting to control a certain narrative and readjust areas where the legislation is still permeable. For the NGO community, there would not be any major changes for the time being because of the listing in the annex, as the requirements have already existed since the introduction of the NGO law in China. However, the foundation representative is critical of the fact that this is obviously intended to send a “signal”.
The ninth entry of Annex II of the CAI, which the EU Commission published just over a week ago, states that China reserves the right to “adopt or maintain the following measures”: Unless otherwise approved by the Chinese government, investors from abroad cannot invest in “non-profit organizations in the territory of China“. Further, non-profit organizations established outside China are not allowed to set up representative offices or branches in China. To conduct temporary activities in China, foreign NGOs must cooperate with “domestic enterprises.” The cooperation is then limited to one year – up to this point, the CAI paragraph is in line with the requirements of the “Law on Administration of Activities of Overseas Nongovernmental Organizations in the Mainland of China”. It is added that senior executives of NGOs who are allowed to work in China must be Chinese citizens.
Bernd Lange, chairman of the European Parliament’s trade committee, said he had not previously been aware of the CAI withdrawal in question. “It’s not nice,” Lange said. However, Lange said it was clear that China would not open the doors further to NGOs under the agreement. There are also reciprocal stipulations from the EU, for example on investments in media companies. Regarding the requirement that Chinese citizens should fill leading positions, the SPD politician explained that in other areas, such as services, it would also be stipulated that leading positions or a certain proportion of the workforce had to be Chinese citizens.
The paragraph on non-profit organizations, however, clearly has a political background, Lange said. In the European Parliament, this would be discussed in detail before the agreement could be approved. One does not want to contribute to “stabilizing” the action against NGOs, Lange said. China.Table asked the European Commission’s Directorate-General for Trade for a statement, but no answer had been received by the editorial deadline.
Bertram Lang, a political scientist specializing in East Asia and China at Goethe University in Frankfurt, criticizes the exclusion of NGOs from the scope of the agreement, which is supposed to bring real progress for European investors. “It’s cynical to say we want better standards for European companies, but we leave NGOs and foundations under the table, and we allow China to simply not apply the provisions of the agreement for non-profit investment.” This example shows that Europe, with the CAI, is only concerned with profit-oriented companies.
“The fact that the European side has apparently not even formulated its criticism of this Chinese attitude to non-profit investment, or at least a renewal of its own more liberal principles as a counterweight, is regrettable,” says Lang, who deals with NGO work in the People’s Republic. For “own profit” investment is allowed in China, but for public interest, such as climate protection, one does not have the protection of the agreement, Lang says. “That to me is the absurdity of the story.”
Another representative of a political foundation with offices in China said he was “surprised” to find the passage on leadership appointments in the annex. Since there is a whole range of NGO actors, some with influence on the public debate, the intention was “probably to introduce a rough regulation” for leading positions, said the foundation representative. It had not been clear that such a paragraph would be found in the CAI. It would be disappointing if this were “accepted by the European side”, criticized the foundation representative.
The paragraph fits “well into the trend that you check in each case”, told another representative of a foundation China.Table. This is comparable to Hong Kong, where only “patriots” are allowed to run. Overall, the “control recently also goes in the direction of content influence”, which leaves an “uneasy feeling”, said the organization employee.
In general, the mood towards NGOs in China is increasingly “aggressive”, criticizes a concerned representative. The “civil society framework” for their work there is tightening more and more. Consultations with the NGOs concerned on the agreement paragraph had not yet taken place, said another employee of a political foundation with representation in China. Filling positions in the People’s Republic is already difficult today, she said, as this is regulated primarily by the granting of visas and work permits. In addition, it is becoming increasingly difficult to find personnel who are willing to work in China.
Joe Biden’s staff had already announced before his election as US president that he won’t treat China with kid gloves either. Like his predecessor Donald Trump, he will also regard the People’s Republic as a rival. But many observers did not expect Biden to choose an aggressive China policy right at the start of his presidency.
At the first top-level meeting between China and the US since the inauguration of the Biden administration, the two sides exchanged fierce blows on Thursday and Friday in Alaska (China.Table reported). China’s official news agency Xinhua was emphatically down-to-earth. Both sides had agreed to maintain dialogue between their countries “to prevent misunderstandings, conflicts and confrontations”. On Chinese state television, chief negotiator Yang Jiechi, a chief diplomat and influential member of the Politburo, described the talks as “constructive”. But anger at how it went was plain to see. Of course, there had been “differences”, Yang added. The US National Security Advisor Jake Sullivan found clear words. After the conclusion of the two-day talks, he spoke of a “tough and direct exchange“.
Unusual for diplomatic practice, the two sides clashed right at the start of the talks – on camera. Actually, only brief introductions had been planned. Then the delegations were to withdraw behind closed doors. But both US Secretary of State Anthony Blinken and Sullivan hurled sharp accusations at the Chinese guests right at the beginning. Including China’s human rights violations in Xinjiang, the dismantling of democratic institutions in Hong Kong, unfair trade practices, and unjustified claims to power.
Yang, in turn, did not take this lying down, pointing to racial problems and police violence in USA. The US delegation had no right to accuse Beijing of human rights abuses or condescendingly lecture on the merits of democracy, Yang countered the hosts. “Most countries in the world don’t recognize that US values represent international values.” Blinken then asked journalists to stay to witness the argument. The public exchange lasted for an hour. US President Joe Biden, who did not attend the talks himself, did not reprimand his chief diplomat for this undiplomatic behavior. On the contrary, he backed Blinken. “I am very proud of the Secretary of State,” the US President said. Was this a foretaste of his future China policy?
So far, Biden has not fully formulated his China policy. He wants to emphasize democratic values more strongly as well as accusations of Chinese human rights violations, according to sources inhis circles. In addition, he wants to strengthen the competitiveness of the US economy but by no means speak of “decoupling from China” like his predecessor Trump. However, Biden wants to keep the punitive tariffs that Trump has imposed on Chinese imports for the time being – as a bargaining chip.
Officially, this sounds diplomatic – but in practice he is forging a front against Beijing. A week before the Alaska meeting, Biden met with the heads of government of India, Australia, and Japan at the summit of the so-called Quad States (Quadrilateral Security Dialogue). They agreed to deliver around one billion vaccine doses against Covid-19 to countries in Southeast Asia in particular by the end of 2022 – as a counterpoint to China’s vaccination diplomacy in the region.
A few days before the Alaska meeting, Washington also delivered the secret technology promised by Trump some time ago to Taiwan for eight submarines with which the democratically governed island republic is significantly upgrading its navy. This is a particular thorn in the side of the leadership in Beijing, which regards Taiwan as a renegade province and is threatening military intervention. Biden is making it clear that he will not allow this to happen and that he will focus much more strongly than his predecessor on defending Taiwan. In addition, Blinken and US Defense Secretary Lloyd Austin paid visits to the governments in Seoul and Tokyo before the Alaska meeting and assured Japan of US support in the ongoing dispute with China over the Senkaku/Diaoyu Islands.
Biden’s desire to waste no time pursuing his agenda for a free and treaty-based world order is also demonstrated by his statement last week about Russia’s President Vladimir Putin: Yes, he is a murderer, Biden replied when asked by a journalist.
These are tones that one might not expect from such an experienced foreign policy expert as Biden. But a closer look shows that Biden has not been reticent in dealing with authoritarian regimes like China and Russia in the past. The focus on Asia (Pivot to Asia), which the US administration under Barack Obama proclaimed in 2011, can be traced back to him, among others, as vice president at the time. But this policy proved to be unsuccessful. Many in the US saw it as a failure that the US government had already failed to put a stop to China’s power play.
The Biden administration, however, does not seem to be focusing solely on confrontation. Both sides have agreed on a joint working group on climate change, at least Xinhua claims, and highlights this as a positive result of the summit. What is also striking here is that the US side has so far not confirmed this alleged progress.
US President Joe Biden and his Chinese counterpart Xi Jinping spoke on the phone for the first time on February 11. After the conversation, it seemed that USA-China relations were now back on track. The two leaders had drawn clear lines and opted for a no-nonsense, pragmatic approach. The belligerence and bluster of Biden’s predecessor seemed passé. On Thursday, high-ranking representatives of the US and China met in Alaska for the first time since Joe Biden was sworn in. The tone was frosty, the talks lacked substance – both sides served the home front with strong gestures.
The official White House report on the February phone call between Biden and Xi indicated that Washington agreed to the “three-list approach” proposed by Beijing. This involves the two countries defining a list of issues on which they can cooperate constructively. A second list includes issues that require dialogue. The third list includes points of conflict that the two countries must manage. The White House report specifically identified four points of criticism – corporate coercion, Hong Kong, Xinjiang, and Taiwan – and four areas of cooperation: COVID-19, health security, climate, and arms proliferation.
The implied emphasis on balance seems consistent with Biden’s general approach to policy. For example, the South China Sea and Tibet – two issues that are no less important to US strategic interests and values – were not specifically mentioned in the announcement. However, Beijing’s announcement on the phone call warned the US to be cautious on issues related to China’s core interests: Taiwan, Hong Kong, and Xinjiang.
Compared to Trump’s China policy, which has been characterized by pushing for concrete results and unilaterally imposing broad sanctions, the Biden administration has so far seemed guided by a higher purpose: Answering China’s development model with a liberal-democratic alternative. According to national security adviser Jake Sullivan, to win such a contest, the US first needs domestic renewal to “renew the (…) fundamental underpinnings of our democracy,” followed by “investment in allies” to “modernize those alliances to deal with the threats of the future”.
Right now, America is not on the winning side. From pandemic control to infrastructure investment, Beijing’s centralist approach seems far more effective. On the international stage, Washington’s traditional alliances, marked by the shared pursuit of a “free world” that characterized Biden’s generation, are not sacrosanct either. China’s enormous market appeal and political consistency, guaranteed by a leader freed from the burden of uniting a divided country, pose difficult choices for US allies in Europe and the Asia-Pacific.
It is hard to imagine what short-term, tangible results the Biden administration could achieve in this environment. For Beijing, the goal is quite simple. It doesn’t want to outmaneuver the United States, but it does want to prove that there is more than one “right side of the story.” China’s goal is to ensure that its political model gets a permanent and uncontested seat at a table dominated by liberal democracies.
With regard to Hong Kong and Xinjiang, Beijing sees no need to compromise, as neither issue offers much room for escalation. Any potential sanctions involved won’t really hurt China, and Xi’s strong backing in the party means he has no pressure from within to give in to foreign criticism. For Xi, it is necessary for the “revitalization of the Chinese nation” that the West respects Beijing’s sovereignty and full authority over domestic issues such as Hong Kong and Xinjiang.
On Taiwan, the immediate risk of armed conflict is low. Xi may aspire to resolve the Taiwan issue once and for all, but he is in no hurry to take drastic action. Xi can stay in office until at least 2027, and possibly even 2032, which means he has many more years to find a solution for Taiwan without military invasion.
On the economic front, China will indeed continue to buy agricultural and energy goods from the USA – not necessarily to comply with the Phase 1 trade agreement, but rather because of the strengthening domestic economy. At the same time, Beijing will likely propose to resume negotiations on the Bilateral Investment Treaty (BIT) and use it as a framework for continued economic engagement. The EU-China Comprehensive Agreement on Investment (CAI) could serve as a blueprint for dialogue between Beijing and Washington, and the Phase 1 agreement would serve as a basis for future negotiations.
For now, there is a brief window of opportunity for Beijing and Washington to reset the rules of the game. But that delicate balance of power can shift rapidly if either side grows impatient and opts for shortcuts in the pursuit of victory, such as those suggested in the so-called “Longer Telegram”, reportedly written by a former senior US official who advocates the elimination of Xi Jinping as the goal of a “new China policy”.
For China, Washington’s explicit or implicit push for regime change is a fundamental threat that no climate agreement or investment treaty can offset. It will ultimately be up to President Biden to weigh the competing voices within Washington – a test he has faced since 1973.
Joerg Wuttke has been President of the EU Chamber of Commerce in China since May 2019 – he previously held the post from 2007 to 2010 and from 2014 to 2017. Wuttke is Chairman of the China Task Force of the OECD’s Business and Industry Advisory Committee (BIAC) and a member of the Advisory Board of the Mercator Institute for China Studies (MERICS) in Berlin. He has lived in Beijing for more than three decades.
