China has 'extreme' influence in 2024 European elections, Plus Zelensky lashes out at Beijing for supporting Russia's war -- China Boss News 6.07.24
Newsletter - Special EU elections issue: This post is free to read, please share!
What happened
2024 European Parliamentary elections are in full swing, and the stakes couldn't be higher.
The elections, held every five years, determine the composition of the 720 MEPs, chosen by the bloc's 373 million voters who will head to the polls between June 6 and 9 in each of the 27 Member States.
EP elections always play a significant role in shaping EU policies.
However, this year, a move to the populist right is not just shifting political winds across Europe, it's also showing potential to dramatically reshape relations with China, the EU's largest trade partner.
The significance of the outcome, which we will learn on June 10, cannot be overstated, as it may redefine the future of Europe and the international rules-based order.
Why it matters
International order up for grabs
In this month's edition of Watching China in Europe, a George Marshall Fund newsletter, Noah Barkin underscored the significance of these elections in the current geopolitical climate.
With the US elections also on the horizon, the global political landscape is set for potential shifts. For instance, a victory for Donald Trump could mark the end of American support for NATO and other transatlantic partnerships.
This, in turn, could have far-reaching consequences for the EU's position on China.
As Barkin also points out, EP elections will trigger "a months-long scramble to form a new Commission that will set the European policy agenda for the next five years."
That undertaking, coupled with a "G7 summit less than a week after the elections, will show how much consensus there really is among 'like-minded' countries on how to respond to mounting economic and security threats from China and Russia," he said.
And don't forget that the European Commission's decision on its China EV subsidies probe, which was delayed until after the elections, is, Barkin says, "playing out at a time when the leadership of the next Commission is still up in the air."
As German carmakers are apprehensive about Beijing's possible retaliation over 'plans to impose duties' on Chinese EVs, it becomes evident that "much more than the future European policy towards China is at stake."
According to Le Monde's Virginie Malingre, Commission chief Ursula von der Leyen must win the backing of influential national leaders, like France's Macron, Italy's Meloni, and Germany's Scholz, to retain her current position. Malingre says von der Leyen "has been crisscrossing Europe in search of support."
Fortunately, experts say, a serious rival to von der Leyen has yet to emerge.
But there is still time, and you can bet that Europe's pro-Beijing camp wants a more malleable replacement.
In addition to the Commission's EV probe, von der Leyen was also instrumental in shepherding through a legislative 'recalibration' in EU-China trade, with measures like Europe's Critical Raw Materials Act, the EU investment screening framework, the Carbon Border Adjustment Mechanism (CBAM), and a ban on products made with forced labor.
That has undoubtedly put Europe's most potent China hawk in Beijing's crosshairs, especially when, experts say, China is leaning into exports to avoid an economic crisis at home.
At the top
However, even if a successful competitor to von der Leyen cannot be found, the Commission's leader may face greater resistance to her China initiatives post-election.
In a recent issue of Politico China Watcher, Start Lau and Phelim Kine discussed the implications of an astonishing new report that found China has been "courting controversial far-left and far-right parties" and is now making significant gains in Europe.
Authors Kara Němečková and Ivana Karásková, who was until recently a special advisor to European Commission Vice-President Vera Jourová, are sounding the alarm over China's growing influence "not only on the national but also on the European levels."
Some of their more shocking findings include subtle pro-Beijing stances taken by French far-right leader Marine Le Pen and her allies and the more in-your-face political theatre by European Parliament lawmaker Thierry Mariani of the National Rally party, who railed against US House Speaker Nancy Pelosi's 2022 trip to Taiwan.
This influence could potentially reshape the political landscape of Europe, a prospect that should raise concerns.
The development has not made von der Leyen's campaign for reappointment any easier.
According to The Parliament, a monthly magazine focusing on the EU institution, von der Leyen has opened herself up to attacks from the left for promising to work with any group "pro-Ukraine, pro-NATO and pro-EU."
"This would seem to leave the door open to a coalition between the EPP and the right-wing European Conservatives and Reformists (ECR) group – which includes Meloni's Brothers of Italy (FdI), as well as Spain's Vox and Poland's Law and Justice (PiS) – as a possible governing majority in the European Parliament," political analysts wrote.
Although Von der Leyen did specify that she wouldn't work with the far-right Identity and Democracy (ID) group, which includes Wilders' PVV and Marine Le Pen's RN, as well as Italian Deputy Prime Minister Matteo Salvini's Lega," it's these groups—the same that Němečková and Karásková say are backed by Beijing—that are making the most significant gains in Europe.
As this story went to post, CNN analysts said that ID groups are "expected to finish fourth and fifth respectively in terms of [EP] seat numbers," and their "combined tally" could swell above 140.
Their increased number will no doubt have sway over the Parliament's agenda.
According to European Council on Foreign Relations experts, it will also influence "positions that the heads of state or government feel able to take in the months and years that follow the elections."
All this is to say that, after years of working at the local level to cause friction between Brussels and the member states, Beijing may have finally figured out how to overcome opposition at the top.
This Week's China News
The Big Story in China Business
EMERGING MARKETS 'TAKE ON' CHINESE OVERCAPACITY: The issue of Chinese overcapacity is causing concern in emerging markets such as Brazil, India, and Mexico, as reported by the Economist. The publication noted that 'non-tariff barriers and import bans' aimed at China are on the rise among these economies, highlighting the global significance of this issue.
Jorge Guajardo, Mexico's former ambassador to China, expressed a grave concern to the Economist, stating that "[t]he biggest threat of Chinese overcapacity is to developing countries."
Economist staff explained that "the market share of Chinese-made vehicles has grown from next to nothing in 2016 to a fifth" in Mexico.
The situation is replicated elsewhere across sectors, causing other developing countries to levy "import restrictions on Chinese goods" as they press "for free trade elsewhere with more mature economies, like the US and Europe's.
"Their success depends on the sustainability of China's approach, as well as the deftness of their own," news staff said.
No end in sight: Co-founder of J Capital Research and the author of "Wild Ride: A Short History of the Opening and Closing of the Chinese Economy," Anne Stevenson-Yang last month wrote a scintillating op-ed in the New York Times in which she explained how "[t]he tide of Chinese exports will continue" due to the "Communist Party's excessive control of the economy and because "Xi's [domestic] policy options" for averting a total economic meltdown "are dwindling."
"With the real estate market imploding, the government can no longer risk goosing the property sector. It has begun touting a revival in domestic consumption, but many Chinese are merely hunkering down and hoarding assets such as gold against an uncertain future. So the government is again falling back on manufacturing, pouring money into industrial capacity in hopes of pushing out more products to keep the economy going. With domestic demand anemic, many of those products have to be exported," Stevenson-Yang wrote.
"But the era when China was able to take over whole industries without foreign pushback is over," she said, and "[m]any countries are now taking steps to protect their markets from Chinese-made goods."
‘New China shock’: In March, the Financial Times reported that Brazil had launched anti-dumping probes into several Chinese industrial products after local industries demanded protection.
"At the request of industry bodies, the ministry has in the past six months opened at least half a dozen probes on products ranging from metal sheets and pre-painted steel to chemicals and tires. The Brazilian measures come at a time when the world is bracing for a flood of exports from China as the world's second-largest economy struggles with excess capacity amid a property sector slowdown and weak domestic demand," news staff said.
But, say experts, India takes the top prize in the number of anti-dumping claims against China.
Even Indonesia is joining in "the backlash," according to the Wall Street Journal.
Prama Yudha Amdan, a spokesman for a large Indonesian textiles firm, told news staff that "normally priced products can't compete" and that his firm lost 27% of net sales in 2023, which he "attributed in part to perceived dumping by Chinese competitors."
WSJ analysts dubbed the deluge of Chinese products now hitting global markets as a "new China shock" that "is stoking tensions in a global trading system already showing signs of fraying, thanks to Russia's invasion of Ukraine and efforts by the U.S.-led West to boost domestic industries and untangle parts of their economies from China."
"The pressures risk accelerating a fragmentation of the global economy into countries determined to ease China out of their supply chains and those locked into its orbit," they said.
Arthur Budaghyan, chief emerging markets and China strategist at BCA Research in Montreal, told news staff a closed US market meant that "China will be flooding the rest of the world with cheap goods."
"We are just seeing the beginning of it," he warned.
Law and International Xi
US AND ALLIES MAY 'ACT' AGAINST CHINESE FIRMS, BANKS FOR SUPPORTING RUSSIA'S WAR: A top US official last week told Reuters that the US and other countries may "act against Chinese firms and financial institutions" due to "Beijing's backing for the Russian war against Ukraine."
Deputy Secretary of State Kurt Campbell also revealed that the US and its allies are "primarily focused on Chinese companies that have been involved in a systematic way in supporting Russia" and that officials have "also looked closely at financial institutions. "
The US allies mentioned who are also taking steps to punish China for topping up the Russian military's procurement system and bolstering Russia's war economy are most likely Japan, South Korea, and the European Union.
Pacific allies hold summit with China: The New York Times reported that on May 27, Japan and South Korea held a trilateral summit with China, their first since 2019.
At the summit, finance ministers sought common ground to reset economic cooperation "after years of souring relations."
However, news staff added that the talks "were overshadowed by heightened tensions between China and the United States, Seoul, and Tokyo's most important military ally."
Less than a week later, defense ministers of Japan, the US, and South Korea met on the sidelines the Shangri-La Dialogue security conference, held every year in Singapore, where they "announce[d] a series of new initiatives that will help formalize their burgeoning trilateral defense cooperation," and "agreed to develop a framework to institutionalize trilateral cooperation within the year," according to Japan Times.
Working on a coordinated response: According to Reuters, Campbell - who made his remarks after a meeting with Japanese and South Korean officials, "said his talks with his South Korea and Japanese counterparts would prepare the way for a trilateral leaders' summit later this year."
"He said the date wasn't yet set, but the meeting was of the "highest priority," news staff noted.
In a May 27 briefing with a small group of media outlets, including Politico, during a visit to Brussels, Campbell also revealed that transatlantic partners are also "now hardening" against Beijing after a vigorous Biden campaign to "convince [them] about the scale of China's role in aiding Russia's war against Ukraine."
"It's fair to say that China's general goal has been not only to support Russia — in our view, to the hilt — but to downplay that publicly and try to maintain normal diplomatic and commercial ties with Europe."
"And I think what we were heartened by yesterday in the discussions at the NAC [North Atlantic Council, the main political decision-making body within NATO] was how many European countries spoke up clearly, with the view that it would be impossible to maintain a normal relationship with China if, at the same time, the Chinese were surreptitiously abetting the most destabilizing war in Europe since the Second World War," Campbell said.
Geopolitics
ZELENSKY LASHES OUT AT CHINA FOR ROLE IN RUSSIA’S WAR: Harsh accusations against China were made by Ukrainian leader Volodomyr Zelensky last week at the Shangri-La security summit in Singapore.
Topping the list was Zelensky's allegation that China is using its diplomatic might on Russia’s behalf to undermine the upcoming peace conference that will take place June 15-16 in Switzerland.
After urging Asia-Pacific to attend the summit, Zelensky remarked "that he was 'disappointed' some world leaders had not yet confirmed attendance" and that "Russia was seeking to undermine the summit by warning countries not to attend and threatening a blockade of agricultural goods and food products," The Guardian reported.
But during a press conference following his Shangri-La Dialogue address, Zelenskiy suddenly focused on Beijing, accusing it of intentionally undermining the peace summit.
"Russia, using Chinese influence on the region, using Chinese diplomats also, does everything to disrupt the peace summit," Zelenskyy said, according to Politico.
He also said that "Ukraine had evidence that China was assisting Moscow's war efforts, despite the fact that Chinese President Xi Jinping had promised him in a phone call a year ago that Beijing would not get involved."
Them's fightin' words: Beijing responded the following day by denying it had ever "fanned fire or fueled the flames" of Russia's invasion of Ukraine, according to Reuters.
Foreign ministry spokesperson Mao Ning told reporters at a news briefing that "China believes all efforts should be recognized in supporting peace measures around the Russia-Ukraine war and that "China attaches great importance to its relations with Ukraine and remains its largest trading partner."
That last bit about "remain[ing]" Ukraine's "largest trading partner" might seem off unless one considers it a veiled threat to Ukrainian businesses for Zelensky’s public scolding.
Maksym Skrypchenko, at the Carnegie Endowment for Peace, states, "[t]he Chinese market holds great importance for Ukraine."
Before Russia's attack, "China was its largest trading partner, accounting for 11.8 percent of exports and 15.1 percent of imports in 2021."
The townsfolk aren't happy: But Skrypchenko says ordinary Ukrainians "remain" skeptical of China, with many criticizing Zelensky's "cautious pragmatism" in maintaining good ties with Beijing.
“[K]eeping China invested in seeking a solution" to the war in order to deter Beijing from providing decisive economic and military support to Russia has been extraordinarily challenging for the embattled president.
It also isn't working.
US Deputy Secretary of State Kurt Campbell recently "hand-delivered [a] warning to European diplomats in NATO," explaining how Chinese firms have been making "a sustained, comprehensive effort that is backed up by the leadership in China that is designed to give Russia every support behind the scenes that will allow them to reconstitute elements of their military force, their long-range missiles, their UAVs [unmanned aerial vehicles, or drones], some of their capacities to track movements on the battlefield, long-range artillery and the like."
Campbell told a small group of news reporters that he "want[ed] to underscore that what we've seen from China to Russia is not a one-off or a couple of rogue firms."
Best Reads
How America Inadvertently Created an 'Axis of Evasion' Led by China (Ian Talley and Rosie Ettenheim, Wall Street Journal): Talley and Ettenheim shine a light on China's lead role in the new global shadow economy.
America's tech battle with China is about to get ugly (Linnette Lopez, Business Insider): Lopez explains what China's new "Xi Jinping thought Chatbot" means for the future of AI.
Thailand's China submarine deal for relations, not defense, say experts (Tommy Walker, VOA News): Thailand's new civilian government is struggling to free itself from a submarine deal with Beijing it doesn't want or need.
Middle Kingdom Surreal
HONG KONG ARTIST ARRESTED FOR AIR-WRITING JUNE 4TH: A video captured the moment when Hong Kong artist Sanmu Chen was arrested by police for signing June 4, 1989, to commemorate the 35th anniversary of the Tiananmen Massacre near Victoria Park. Credit goes to Fengsuo Zhou of Human Rights in China for sharing on LinkedIn.
Chen "also mimed the act of pouring wine on the ground to pay tribute to the dead, according to Chinese tradition," Zhou said.
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Enjoy your weekend.
