“China’s reach stretches across all continents and global institutions – and its ambitions are far greater still,” European Commission President Ursula von der Leyen said in Brussels on Thursday, ahead of her trip to Beijing with French President Emmanuel Macron next week.

“Defining a European strategy towards China (…) must start with a sober assessment of our current relations and of China’s strategic intentions,” she added, at the same time stressing that not engaging with Beijing was “neither viable – nor in Europe’s interest.”

Von der Leyen focused on economic risks for the EU, and how Europe should respond to them. She said that 9 percent of EU exports were going to China, while more than 20 percent of imports came from that Asian country. While this imbalance was growing, most trade did not pose risks, she said. But there were risks to economic or national security in some areas, von der Leyen added. Here, the relationship had to be rebalanced. According to von der Leyen, it was necessary to ensure that economic relations promoted the prosperity of both sides.

However, she also called out Chinese policies of intimidation and coercion, “Just as China has been ramping up its military posture, it has also ramped up its policies of disinformation and economic and trade coercion. This is a deliberate policy targeting other countries to ensure they comply and conform,” von der Leyen said.

In 2021, China had reacted angrily to Lithuania’s attempts to develop closer ties with Taiwan and excluded the Baltic EU member state from its customs system.

On Tuesday, the European Parliament and the 27 EU Member States agreed on a new defensive tool to shield against economic intimidation. Among the responses available within the scope of the anti-intimidation instrument are exclusion from the European Union’s single market and public tenders, as well as punitive tariffs on non-EU countries trying to interfere in EU political decision making.

Spain’s prime minister offers his country as “reliable partner”

While the Commission president wants to “de-risk but not decouple from China,” Spain’s Prime Minister, Pedro Sánchez, went to China a week ahead of her and offered Spain as a “reliable partner” for investment as well as multilateral collaboration in conflict resolution and the search for peace.

The main aspect of Sánchez’s speech at the opening ceremony of the Boao Economic Forum, which is considered the Asian Davos, was the political and economic trust in Spain. Sánchez stressed the importance of economic cooperation and advocated free, balanced and fair trade as well as rejecting protectionist tendencies. He said that recent investments by large Chinese construction groups in Spanish engineering companies had created opportunities for the development of joint projects in Latin America. Sánchez also encouraged further deepening of this cooperation, “respecting the sovereignty of each country and respecting the rules.”

Spanish Prime Minister Pedro Sánchez and Chinese Premier Li Qiang greet each other on Thursday in Boao, China, during the Boao Economic Forum, March 30, 2023. Photo: EFE/ Moncloa / Borja Puig de la Bellacasa

This meant creating a stable legal framework that allowed domestic and foreign companies to compete on a level playing field, he said, adding that the relations between Europe and China did not need to be confrontational, as there was plenty of room for cooperation that benefited both sides.

Sánchez pointed out that bilateral trade between Spain and China had doubled between 2017 and 2022 to 57.7 billion euros, adding that China was Spain’s first supplier and the largest market in Asia for Spanish companies. The number of Chinese citizens and companies visiting or working in Spain is increasing significantly.

China’s Belt and Road Initiative

In 2013, state and party leader Xi Jinping launched the Belt and Road infrastructure initiative, involving billions of euros of investments and intending to create trade corridors over land and over sea. This includes shares in a number of important ports along the shipping routes for trade to and from China.

The Chinese state-owned group Cosco, German logistics company HHLA and the port of Hamburg have now been waiting for the final approval to invest into a container terminal in the German city for 18 months.

In 2019, Italy became the first and only G7 country to endorse the controversial Belt and Road Initiative (BRI). Chinese investors focused mainly on strategic ports in Trieste, Venice and Ravenna. The memorandum of understanding, signed during a state visit by Xi to Rome, sparked concern in Washington and Brussels, which see the initiative as a way for Beijing to gain influence over strategic assets around the world. By the end of 2023, Prime Minister Giorgia Meloni would decide whether or not to renew the agreement. However, in a September 2022 interview with Taiwan’s Cna news agency, Meloni called Italy’s embrace of China a “big mistake,” adding that she “hardly sees the political conditions” for renewing the agreement.

Chinese investors showed strong aspirations to take ownership of the Slovenian Port of Koper a few years ago, but some politicians and the public opinion were not in favour, so the port became part of the Belt and Road initiative. Chinese builders also bid in some large infrastructure projects including the project for the construction of a new railway track between Koper and Divača, with an estimated volume of more than 1 billion euros, but were unsuccessful. The failed revival of Maribor Airport in north-eastern Slovenia, involving Chinese-owned SHS Aviation, also left the Slovenian public with a bad taste.

China’s influence in the Western Balkans

“Through the Belt and Road Initiative, [China] is the largest lender to developing countries,” von der Leyen said on Thursday. In early December, the Commission president referred to Russia and China vying for influence in the Western Balkans, “Wrangling is also noticeable in the Western Balkans – Russia is trying to exert influence, China is trying to exert influence,” von der Leyen said on December 6 in Tirana, Albania.

The EU wants to prevent other states such as Russia or China from gaining further influence in the Western Balkans. Among other things, these countries are trying to create dependencies through large-scale investments. In the European Union, this is viewed with great concern in many places, especially since the Balkan states lie in the middle of the EU and border on member states such as Greece, Bulgaria, Romania, Hungary and Croatia.

China as a trading partner for Belgium, Bulgaria and Slovenia

As for Belgium, according to the Belgian Foreign Trade Agency, China was the country’s 12th largest customer in 2022 (7.8 billion euros worth of exports) and its 4th largest supplier (35.3 billion euros in imports). This gives Belgium a negative trade balance of -27.5 billion euros in relation to China.

China was Slovenia’s sixth most important trading partner in 2022 with EUR 5.3 billion in goods. Chinese direct investment increased in 2018, when the multinational firm Hisense took over household appliances maker Gorenje. Chinese investments usually originate from Chinese subsidiaries and branches in Luxembourg. They are currently valued at over EUR 300 million.

As far as Bulgaria is concerned, there are no large Chinese investments in substantial local infrastructure projects. However, in 2022, China was the third most important source of imports to Bulgaria after Russia and Turkey. In January – November 2022, exports of goods from Bulgaria to third countries increased by 38 percent compared to the same time of 2021.

Belgium started screening foreign investments

As asked by the European Commission in 2020, the federal and regional governments of Belgium decided to screen foreign investments that could hold a risk for Belgium’s strategic autonomy in November 2022. The mechanism is aimed at preventing investors from outside the EU from gaining control, or becoming the owner or manager of critical infrastructure. The filter covers the following sectors: technology, the delivery of goods considered elementary for food security and energy, the access to and control of sensitive information, and media freedom and pluralism.

By 1 July 2023, a screening committee will be put in place (consisting of representatives of all governments) to verify all investments that would give foreign actors a stake of at least 25 percent in a Belgian company. For investments in the defense or energy sectors, the threshold will be lowered to 10 percent.

It is interesting in this context that when presenting the investment screening, Minister for Economy Pierre-Yves Dermagne explicitly referred to the intended investment by Chinese state-owned enterprise State Grid in the Belgian net operator Eandis in 2016. After the Belgian intelligence agency had warned of espionage and possible links between State Grid and the PRC’s People’s Liberation Army, the deal was cancelled, officially on competition grounds.

This article is published Fridays. The content is based on news by agencies participating in the enr.