The trade dispute between Lithuania and China remains unresolved. This now inadvertently pushes the relationship between Brussels and Beijing onto the agenda of the French EU Council presidency. As far as foreign policy is concerned, Paris is focusing on the Indo-Pacific. And there is yet more to come for EU-China relations.
By Amelie Richter
AI powerhouse Sensetime is first hit by sanctions and is now postponing its IPO indefinitely. The Chinese AI star company has lost its innocence as a tech pioneer by supplying surveillance equipment.
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Sanctions from and against China determine the political and economic everyday life between the People's Republic, Europe and the USA. The Table.Media editorial team provides all relevant news on this topic.
The dispute over sanctions against China dates back to 2018. At that time, Donald Trump, the former president of the United States, imposed punitive tariffs on imports from the People's Republic. This affected goods worth $50 billion. But the trade dispute between Beijing and Washington escalated. Just one year later, Donald Trump had imposed punitive tariffs on goods worth 500 billion dollars. The total import volume. Because China only imported goods worth around 125 billion dollars, the People's Republic was unable to respond adequately. The background to the dispute was Trump's accusations. He accused China of unfair trade practices. The punitive tariffs were intended to reduce the enormous trade deficit. But there is also a geopolitical strategy behind this. The People's Republic wants to become an economic and political world power. The USA sees the world's second-largest economy as an adversary. The EU Commission also called China a "systemic rival" in March 2019. The country's aggressive economic diplomacy in particular has led to this assessment.
The escalation of the trade dispute between the USA and China occurred in 2019, because on December 1, 2018, Meng Wanzhou was arrested in Canada. She is the daughter of Ren Zhengfei, the founder of Huawei, and chief financial officer in the telecommunications group. She is accused of circumventing U.S. sanctions against Iran. Huawei is also alleged to be using its 5G technology for espionage. Donald Trump, the U.S. president at the time, declared a National Telecommunications Emergency on May 15, 2019. This law allows the American government to ban business with companies from "adversarial" countries. In this case, China. The point is to avoid "unacceptable risks" and guarantee the "safety of Americans," as Trump put it.
Germany also responded to the U.S.-China trade dispute. In particular, to the accusations that Huawei was using its 5G technology for espionage. Thus, the German government passed the "Second Act to Increase the Security of Information Technology Systems." Behind the unwieldy name are additional hurdles for companies that want to participate in the 5G expansion in Germany. In principle, Huawei was not excluded from the expansion of 5G technology in Germany, but this made it considerably more difficult for the Chinese company to gain market access in Germany. In Europe, Huawei supplies Deutsche Telekom, Vodafone and Telefónica with antennas for WLAN broadband networks. Huawei has also modernized Deutsche Bahn's GSM-R mobile network.
But even beyond the problems with Huawei and the trade dispute between the U.S. and China, there are massive political and economic differences between Europe and Germany on the one hand and China on the other. Human rights violations in China dominate reporting in this country. Above all, the persecution of Uyghur minorities in Xinjiang, their forced labor (also for suppliers of German companies), the suppression of the democracy movement in Hongkong, the censorship of the media and the military threatening gestures toward Taiwan are a constant point of contention. In addition, there is an unequal trade relationship. While Chinese companies benefit from the open market in Europe, European companies in China have to cope with massive restrictions and requirements. A compulsion to transfer technology, various investment obstacles and restricted market access are among the greatest difficulties.
Despite these enormous political disagreements, trade relations between Europe and the People's Republic are very good. China is the EU's most important trading partner, if we consider only trade in goods. Excluding services, the trade volume between China and Europe amounted to around 586 billion euros in 2020. Of this, 202.5 billion euros were accounted for by exports to China and 383.5 billion euros by imports from the People's Republic. The economically most important trading partner for China within the European Union is Germany by a wide margin. The trade volume between Germany and China amounted to around 212.1 billion euros in 2020. This is more than one third of the European volume. Of this, 116.3 billion euros was accounted for by imports from China and 95.9 billion euros by exports to China.
In March 2021, the European Union adopted sanctions against China. The foreign ministers of the 27 member states want to take action against human rights violations in the People's Republic. With the measures, the EU is taking action against four Chinese who are allegedly largely responsible for the oppression of the Uyghurs, a Muslim minority in the Xinjiang region. The four individuals include Chen Mingguo, the director of the Xinjiang Public Security Bureau, in addition to three representatives of the Xiangjing Party Committee. The institution has been fully placed on the EU sanctions list. They are banned from entering the EU. In addition, all assets belonging to them or legal entities related to them are frozen. They are also no longer allowed to be provided with resources.
In response to the EU sanctions against China, the Communist Party reacted immediately. It too imposed sanctions on four institutions and a total of ten individuals. In the future, they will not be allowed to enter China or do business with companies from the country. The individuals include MEPs Reinhard Bütikofer (Greens) and Michael Gahler (CDU). Also on the list are Uighur researcher Adrian Zenz, as well as the EU's Political and Security Committee and the German Mercator Institute for China Studies. The government of the People's Republic showed itself extremely indignant because of the EU sanctions against China. The Foreign Ministry in Beijing announced that the sanctions were based on "nothing but lies and disinformation. If they were not withdrawn, Beijing would "resolutely show further reaction."
In June 2021, China passed the sanctions defense law, the Anti-Foreign Sanctions Law. China's Anti-Sanctions Law is a legal framework to respond to U.S. or EU sanctions. Responses can affect both individuals and companies doing business in China. The Anti-Sanctions Law is considered a response to the ever-escalating trade dispute with the U.S. and EU sanctions over human rights violations. China's Anti-Sanctions Law states when Chinese authorities will intervene and in what manner should sanctions be imposed against the People's Republic. The Anti-Sanctions Law supplements the already existing sanctions measures against the EU and the U.S. and lists additional punitive measures.
China's Anti-Sanctions Law holds some interesting and critical passages for foreign companies. Of key importance is article three. It states that individuals and organizations involved in "discriminatory measures against Chinese citizens" or "interference in China's internal affairs" can be punished. They will be blacklisted. Further, Article Five of the Anti-Sanctions Law states that this also applies to spouses and immediate family members of the individuals. Anyone on the blacklist can be expelled from the country. The issuance of a visa can also become problematic. Article twelve is also critical. It states that Chinese citizens and organizations have the right to sue people and organizations for damages if they are on the blacklist.
China's anti-sanctions law is just one of many measures the People's Republic has taken in response to the ongoing trade dispute with the United States since 2018 and EU sanctions against China for human rights abuses. Among the individuals against whom China has already adopted sanctions are U.S. politicians Marco Rubio, Ted Cruz, Josh Hawley and Tom Cotton. In addition to the aforementioned Reinhard Bütikofer (Greens) and Michael Gahler, Canadian politician Michael Chong and members of the European Parliament's Human Rights Committee are also affected. European academics and NGOs such as Human Rights Watch, Merics, Freedom House and the National Endowment for Democracy are also affected.
As far as companies are concerned, the Chinese government has so far been very reluctant to impose sanctions. So far, the Chinese Communist Party has only punished defense companies that have supplied Taiwan. These include Lockheed Martin, Boeing Defense and Raytheon. China's anti-sanctions law on the one hand, and EU and U.S. sanctions on the other, will accompany the economic and political relations of the great powers for a long time to come. The Table.Media editorial team provides all relevant news on this topic.
