EU-China Briefing - 26 October 2020
YOUR WEEKLY SHOT OF EU-CHINA NEWS
BY FLAVIAN BERNEAGĂ AND GRZEGORZ STEC
1. China Set to Be the Only Major Economy to Note Growth in 2020
On October 19, China’s National Bureau of Statistics published its data on Q3, indicating a 4.9% increase in GDP.
► These reported numbers would make the Chinese economy the only major one worldwide to experience growth in 2020;
► Foreign direct investment also saw YoY increase, namely 2.5% growth compared to Q3 2019;
► To further spur the dual circulation economy, a Politburo meeting announced a national strategy to integrate the economies of Chengdu and Chongqing into a single mega-economic hub.
Up & Above
After an uncertain first half of the year, China’s economy appears to be on a more stable (but not unshakeable) growth track.
Recall our briefing in April, when China’s Q1 data showed a 6.8% economic contraction and 5.9% unemployment (though it should be noted this data has been widely contested). It was China’s worst economic performance since at least the 1960’s, but the growth rebounded in Q2, reaching 3.2%. The 4.9% indicator in Q3 shows growth enters a somewhat more stable V-shaped recovery.
The growth can be attributed to increases in demand and retail spending (which grew above pre-pandemic levels for the first time), but equally important are the increases in exports of masks and other medical supplies (and the second wave of infections in Europe may trigger a parallel wave of mask diplomacy).
In a show of accelerated domestic demand, sales rose by 3.3% in September, while retail sales and online commerce had a YoY growth of 0.9% and 15.3%, respectively.
However, it’s not all rosy. The economy is not back to 2019 levels (7.4% in Q4 2019) and up to 30% of urban workers (130 million people) have lost their jobs, with 25 million of them having lost them for good in 2020. Moreover, there is also the danger that outbreaks may resurface.
At this pace, the IMF expects China’s economy to end 2020 on a 1.9% YoY growth, marking a contrast with other large economies, all of which are bound to experience contractions:
France (-9.8%), Germany (-6%), Italy (-10.6%), Spain (-12.8%).
Canada (-7.1%), India (-10.3%), Japan (-5.3%), UK (-9.8%) and US (-4.3%).
Importantly, while demand has increased, household consumption is not rising equally fast, given shortages in the labour and wage markets. In addition, there are challenges to supply chains, posed by second waves in the EU and US. If you’re interested in this, we strongly recommend this Economic Indicators report by the MERICS economy team.
What About FDI?
Investments into China witnessed a stunning 23.7% YoY increase, demonstrating that investors see China as a safe destination for capital amid growing global uncertainty.
In total, China received $14.25 billion of FDI in September, which brought the total FDI received by China in the first three quarters of 2020 to $103 billion. This constitutes a 2.5% increase when compared to the same period in 2019.
To put things in perspective, Vietnam, a potential competitor seeking to benefit from the advanced economies’ diversification from China, has managed to draw only $21.2 billion in 2020 by September, marking an 18.9% decrease over the same period in 2019.
FDI flowing through Hong Kong (an investment channel to the Mainland) saw a surge of 11%. We should note here that FDI coming from the Netherlands to China through Hong Kong experienced a YoY growth of 150%.
In exchange, China’s outward flow of investment decreased by 0.6% to $78.9 billion.
Chongqing-Chengdu Megaproject
On October 16, the CCP Politburo announced a national strategy to integrate the economies of Chengdu and Chongqing.
Recall that last week we talked about a similar project to integrate the Greater Bay Area, which would result in a coordination of 70 million inhabitants, producing 12% of China’s GDP incorporating big cities such as Guangzhou, Shenzhen, Hong Kong, and Macau.
Chengdu and Chongqing would form an economic ring which would widen the market, streamline production and supply chains, and build a development pattern for the dual circulation economy. In essence, regional integration should boost FDI and consumer demand.
Though the Politburo did not release a concrete roadmap for its plans to integrate the two cities were first suggested in early January, when Xi himself called for the creation of an economic ring.
TAKEAWAYS
► IT’S NOT ALL MILK AND HONEY
China is likely to end the year as the sole major economy that sees growth, with resumption of work at the office and massive traveling crowds during Golden Week, all under the close supervision of a state eager to contain any potential outbreaks (as happened in Qingdao).
That being said, the economic recovery has its flaws and shortcomings. According to Peking University professor Michael Pettis, out of the 4.9% growth, only 1.7% (about a third) could be attributed to consumer spending. Moreover, to protect the economy from collapsing, the government generated a fiscal stimulus that resulted in the level of debt striking a high 269.2% of GDP. These are worrying signs for an economy that was concerned about high debt even before the pandemic began.
As always, there is also the question of validity. According to the lead trade analyst of the Economist Intelligence Unit, Nick Marro, “the September figures were smoothed by quietly altering the historic basis of comparison; basically, some of the numbers from September 2019 were re-apportioned into October of that year, in order to lower the comparison base”. The difference between the two is not large, but it does exist, and it points to the fact that growth may have been a tad smaller than what the statistics bureau indicated.
READ MORE
前三季度经济增长由负转正, China’s National Bureau of Statistics, Oct 19
China reports surge in long-term investment inflows despite talk of decoupling from US, SCMP (Zhou Xin), Oct 16
China’s economic recovery picks up pace, MERICS (Max Zenglein, Maximilian Kärnfelt, François Chimits), Oct 23
2. Commission Proposes the EU Global Human Rights Sanctions Regime
On October 19, the European Commission released its proposal for a sanctions regime on human rights, akin to the US’s Magnitsky Act and which could also extend to Chinese government officials.
► The proposal would not eliminate existing sanctions and would amount to a global mechanism applicable around the globe;
► In a similar line of pushing for a values-based approach, the Commission also started an investigation to tackle the issue of golden passports.
Making Good on SOTEU Promises
The EU Global Human Rights Sanctions Regime would confer the Commission greater leverage in applying and monitoring human rights sanctions.
FYI: In her State of the Union Speech roughly one month ago, Ursula von der Leyen pledged the Commission will bring forward a proposal for a regulation akin to the US Magnitsky Act.
Namely, the proposal suggests establishing a single EU framework to impose travel-bans and asset-freezes over serious human rights violations worldwide, moving past a country-by-country approach. This would “give, for the first time, the Commission oversight on the implementation of the travel bans”.
Under the new framework, any existing sanctions (i.e., on Syria, Belarus, Venezuela) will not be replaced, but the new mechanism could be used for future offenses or to create joint European responses.
The file is already being stalled by some member states, in the Council where it is being discussed. Greece, Cyprus, Hungary, and Italy, among others, would prefer not to use the name ‘Magnitsky’, out of fear that it would jeopardize their ties with Russia.
The topic is thorny, but the German Presidency stated it seeks to finalize the file by the end of the year, which is when its time in the rotating presidency will end. Until then, we invite you to take a look at this comprehensive map of current EU human rights sanctions.
Tackling Golden Passports
In the context of pursuing a more values-based approach, the European Commission is looking to ban member states from granting ‘golden passports’ to wealthy foreign nationals.
‘Golden passport’ refers to the scheme present in some of the member states offering EU citizenship (with all its mobility rights) to foreign nationals that invest some sum of money in the respective member state.
To put it in perspective, in 2018, the EU saw 6000 new citizens and almost 100,000 new residents through the process of granting ‘golden passports’. These ‘programs’ generated €7 billion since 2013 in Cyprus and €800 million in Malta.
Along with Russian and Arab businesses people, some of the main beneficiaries of this custom include wealthy Chinese. In Greece, for example, 74% of golden passports go to Chinese nationals.
On October 14, a scandal in Cyprus emerged after two major lawmakers were caught by hidden cameras to have promised EU citizenship to representatives of a fictitious Chinese investor pitched by a team of Al-Jazeera journalists.
As a result of the scandal, the European Commission announced it will launch an investigation to uncover the entire scheme and deconstruct it. Commission spokesperson Christian Wiegand was scornful, stating the EU “watched in disbelief how high-level officials were trading European citizenship for financial gains”.
Importantly, the Commission’s active involvement contrasts to 2013, when Malta’s golden passport scheme was met with a Commission statement on member states having “full sovereignty to decide to whom and how they grant their nationality”.
For now, the Commission has sent a ‘letter of formal notice’ to Malta and Cyprus. After 2 months, it is able to issue a ‘reasoned opinion’. If Valletta and Nicosia don’t budge, the Commission could send them to the Court of the EU in Luxembourg. Ultimately, Wiegand said that “whether or not Cyprus or Malta decided to revoke individual buyers' passports after reviewing their eligibility still remained up to them”.
Reacting to the Commission’s initiative, Cyprus announced on October 13 that it will scrap the golden passport program starting November 1. As for Malta, the government changed the legislation, requiring applicants to reside in the country for one year, but argued that citizenship remains a member state competence (and a lucrative one, as it provides money for "social housing, healthcare equipment, and upgrading of health centres”).
TAKEAWAYS
► COMMISSION OF VALUES
The Global Human Rights Sanction Regime and the Commission’s infringement into ‘golden passports’ are the latest proof of a Commission that is more grounded in fairness and values. This can also be seen internally in the push for rule of law conditionality in the Next Generation EU and in Hogan’s departure following his failure to comply with quarantine rules.
The shift towards this approach is partially the Commission’s design based on ongoing global issues (Hong Kong, Xinjiang, Belarus, etc.), but it should also be perceived in light of Ursula von der Leyen’s brand of leadership. At the time of her SOTEU speech, we told you how she delivered commitments in a high number of policy areas, which demonstrated her attempt to maintain good relations with all political factions in the Parliament and Council. These recent developments on human rights (and, broadly speaking, values-based approaches) are her attempt to succeed in areas where the previous Commission didn’t.
Sure enough, some still view the Commission as not doing enough to promote values, as we saw with delays in adopting stances on Hong Kong, Xinjiang, or, even closer to ‘home’, in Belarus. We should recall that such stalls are also owed to the complicated institutional landscape of the EU, as well as the competences the Commission enjoys. The push for a more values-based leadership is notable, nonetheless, and this may lead to greater tensions with China. In this context the new human rights sanctions regime is worth observing closely. Still, it is also unlikely for the EU to be open to driving a values-first based China policy, given the wide range of its strategic priorities in relations with Beijing.
READ MORE
Sanctions and Human Rights: towards a European framework to address human rights violations and abuses worldwide, European Commission, Oct 19
Cyprus scraps ‘golden passport’ scheme in a blow to rich Chinese nationals, SCMP (AP, Stuart Lau), Oct 14
EU declares war on Malta and Cyprus passport sales, EU Observer (Andrew Rettman), Oct 21
3. EU and US Launch Dialogue on China
On October 23, Josep Borrell and Mike Pompeo announced the beginning of a much anticipated bilateral China dialogue between Brussels and Washington.
► Prior to the announcement, a group of MEP’s addressed a letter to the Commission and the EEAS requesting closer cooperation on China between the EU and US, amidst developments on the rule of law in Hong Kong;
► The dialogue comes more than four months after Borrell initially suggested the format, during a videoconference on June 15;
► The MEP letter on Hong Kong also landed just as the UK announced essential developments on its visa policy for Hong Kong BN(O) passport holders.
MEP Lobby
On October 16, a group of 21 MEP’s signed a letter showing their full support for an initiative by US senators Marco Rubio and Benjamin Cardin calling for enhanced US-EU coordination on China.
The letter was signed by MEP’s from 5 political groups (EPP, S&D, Renew, Greens, ECR) and it was addressed to Ursula von der Leyen and Josep Borrell.
The letter highlights that recent developments on rule of law and human rights in Hong Kong have pushed the signatories to form an informal Hong Kong Watch group in the Parliament.
The letter also stresses that aforementioned developments require the EU to start cooperating with Washington before, not after, the US election in November, since the “situation in Hong Kong and China’s broader human rights record transcend political divides”.
Finally, signatories asked von der Leyen and Borrell to conclude the Global Human Rights Sanction Mechanism as fast as possible, and to slap sanctions on officials responsible for human rights violations in Hong Kong.
Dialogue Takes Its First (Baby) Steps
Following a call between Borrell and Pompeo on October 23, the former announced the launch of the bilateral dialogue on China. Here are the two readouts of the call: EU, US.
Recall that Borrell pitched the initiative way back in June. Sometime after the initial proposal from Borrell, the two sides agreed to have the format finalized by the end of September, but now we see that the plans were delayed until the end of October.
The dialogue was launched through a phone call between the two. It was only one of the multiple discussion topics on an agenda that also included an exchange of views on the Nagorno-Karabakh ceasefire and the situation in Belarus.
The details of the dialogue are still unclear. The two officials only said it will be a “dedicated forum for EU and U.S. experts to discuss the full range of issues related to China”, particularly on human rights, security, and multilateralism. The next call between Borrell and Pompeo will take place in mid-November (after the US elections).
On the other two topics, the two leaders stated their support for Belarussian civil society and called on Armenia and Azerbaijan to engage in peace talks under the supervision of the OSCE.
In the Meantime...
On October 23, the British government announced a new type of visa for Hong Kong BN(O) holders, which amounts to the first step in granting them the right to live and work in the UK.
Recall that Boris Johnson pledged this policy back in early June. The suggestion at the time was that BN(O) holders could reside for 12 months in Britain to live and work, but there were no details on citizenship wait times or financial thresholds associated with gaining UK citizenship.
Now, more details have been provided. All BN(O) holders and their close relatives will be able to apply for the special visa starting January 31. After 12 months of residence (complete with living and working rights), Hongkongers will be able to apply for citizenship.
If they choose not to apply for citizenship, they will have the opportunity to live and work in the UK for 30 months (a period that could be extended to another 30 months after). Applicants will be required to prove they can sustain themselves financially for 6 months and will not receive access to social welfare programs.
TAKEAWAYS
► LOOKING CLOSER
The dialogue on China is only at the beginning and it clearly needs some more substance from the leaders themselves to gain a proper contour. Both sides released press briefs with the same body text, but if we examine them closely, we notice a nuanced difference in layout.
The US press release is boldly titled “Launch of the U.S.-E.U. Dialogue on China”, even though the call contained more time-constraining questions on Belarus and Nagorno-Karabakh. On the other hand, the EU press brief’s handle simply states “EU/US: Joint press release by the EEAS and Department of State on the phone call between J.Borrell and M.Pompeo”. Similarly, in the US statement, the portion on the China dialogue is separated from the rest of the text by a row of asterisks; in the EU statement, it is incorporated in a single paragraph with all other issues discussed.
These are subtle yet notable differences that reinforce what we told you in a previous takeaway: the EU and US agree on the China challenge, but disagree on the level of intensity with which they want to respond. From the get-go, it appears the dialogue will not be all rosy and it will be very interesting to see how efficient the dialogue will be during the next Borrell-Pompeo call in mid-November. By then, the former should know if the latter will be gone from the White House starting in 2021.
READ MORE
Letter by MEPs to Commission President and High Representative on Hong Kong
EU/US: Joint press release by the EEAS and Department of State on the phone call between J.Borrell and M.Pompeo, EEAS, Oct 23
Britain announces new class of visa for Hong Kong BN(O) passport holders as first step in new track to earning citizenship, SCMP (Ng Kang-chung , Danny Mok, Stuart Lau), Oct 23
4. Borrell Talks China and Climate
On October 23, Josep Borrell released a blog post, commenting on China’s pledge to become carbon neutral by 2060.
► Borrell started the post by comparing China’s current track record on greenhouse gas emissions to the EU’s commitments as part of its Green Deal;
► He welcomed China’s pledge, but also argued that China needs to start assuming more responsibility and stop pretending it is a developing country;
► Tsinghua University released a proposed roadmap of how China could meet its climate goals.
Problematic History
Before delving into China’s pledge, Borrell mentioned the difficult road that predated the 2015 Paris Climate Accord.
Borrell noted the EU’s ambitious Green Deal, which aims for carbon neutrality by 2050 and is negotiating to achieve it by 2030. However, Borrel argues that, even with a 2030 deadline within Europe, multilateral commitment is still necessary to reach global targets.
He specifically pointed out that the EU emits only 7% of global greenhouse gases, whereas this figure is much higher for China (27%) and the US (14%), with India emitting only 7%.
The targets set in Paris were only achieved after decades of negotiation on the role of developing countries. In Rio 1992, developing countries claimed the burden of carbon neutrality should be shouldered by developed countries, which made the US pull out of Kyoto 1997.
However, even the pledges made by countries in Paris are not enough to keep the global temperature from rising over 2°C by the end of the 21st century.
Borrell on China’s Commitment
Borrell argued that China’s decision to claim developing country status makes climate negotiations a challenge.
Namely, he said: “Given China’s technological prowess (space exploration, cutting-edge military technology, AI), its continued self-definition as a ‘developing country’ looks more and more anachronistic and self-serving: China is an international player ready to step up on its responsibilities.”
Nonetheless, Borrell appreciated China’s participation in the Paris Climate Accord and welcomed Xi’s pledge, which sets to reach peak emissions by 2030 and carbon neutrality by 2060, marking the first time that China has proposed a long-term commitment for its greenhouse gas targets.
Borrell reiterated skepticism about ‘selective multilateralism’, arguing the EU “will watch whether this announcement was tailored for international consumption or whether carbon neutrality becomes really a key feature in the upcoming Five Years Plan”.
One of the main challenges for China is that 44% of its investment in the BRI relates to energy, which resulted in the construction of many fossil-fuel plants. However, this also offers the opportunity to provide green technologies. Borrell noted that China produces 70% of the world’s solar modules, 69% of lithium-ion batteries, and 45% of wind turbines.
He believes an “ambitious long-term goal will provide a further spur for the development of these technologies. Instead of a petro-state, the People’s Republic may become an “electro-state”.
Borrell also reiterated the complex nature of EU-China relations, arguing that the cooperation required to tackle global challenges on climate change is just as important as the systemic rivalry fueled by Beijing's actions in Hong Kong and Xinjiang. The two coexist and cannot be reduced to a “binary choice”.
Is China Getting There?
On October 12, the Tsinghua University’s Institute for Climate Change and Sustainable Development (ICCSD) published a detailed roadmap outlining what steps China can take to reach its targets.
Recall that, after Xi’s announcement, we told you China’s prospects are worrisome, given its reliance on coal and its recently reinvigorated support for its fossil fuel industry.
According to the Tsinghua report, China must hit net zero carbon dioxide emissions by 2050 if it wants to achieve carbon neutrality by 2060. This would mean that 90% of greenhouse gas levels in 2020 would have to be cut within 30 years.
The timeframe is split into two intervals: before and after 2030. Before 2030, an “enhanced mitigation scenario” would see China increase efforts to cut emissions, but without fully hitting the 2°C target. After 2030, much tougher measures ought to be implemented to hit the 1.5°C. This would result in a later, yet steeper decline, compared to other countries’ plans.
For the 14th Five Year Plan, researchers suggest reaching a 20% share of non-fossil fuels employed in primary energy consumption by 2025 and a carbon emission cap of under 10.5 billion tonnes.
This roadmap implies that all gases will be included in the 2060, but Xi did not explicitly mention that (thus making experts wonder if non-CO2 greenhouse gases will be part of the pledge). It remains to be seen if the official documents of the 14th Five Year Plan will mention this in more detail.
The report was launched by the high-profile Wang Yi, in his capacity as a member of the Standing Committee of the National People’s Congress and vice director of the Chinese Academy of Sciences’ Institute of Science and Development. Wang pointed out the need for adjustment in the legal framework, including an energy law (currently being drafted), an energy-saving law (currently under revision), and a law on combating climate change (currently under preparation).
Notably, Wang pledged the “Law on Combating Climate Change will only reach the statute books if a carbon cap is at its core – if not, it loses a raison d’etre”.
TAKEAWAYS
► NOT JUST EMISSIONS
As we said before, the key variable with Xi’s pledge will be the 14th Five Year Plan, which will be discussed between October 26-29 during the Fifth Plenum. We will observe it closely.
In talking about carbon neutrality, it is important to think broader than just cutting emissions and take a holistic approach. To that end, we would like to recommend two very insightful documentaries (you can find them on Netflix!), which are even better catered to those who do not follow environmental policy closely. The first one is “David Attenborough: A Life on Our Planet”, which focuses on the crucial role of shrinking biodiversity. The second one is “Kiss the Ground”, which talks about the link between modern agriculture and climate change.
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China carbon neutrality in 2060: a possible game changer for climate, EEAS (Josep Borrell), Oct 23
Researchers unveil roadmap for a carbon neutral China by 2060, China Dialogue (Ma Tianjie), Oct 13
5. Sweden Bans Huawei and ZTE Not Mincing Its Words
On October 20, the Swedish Post and Telecom Authority (PTS) announced it will ban Huawei and ZTE from providing telecom equipment in Sweden’s 5G network.
► The decision was based on reports by the army and secret service, which called China “one of the biggest threats against Sweden”;
► In response, the Chinese government accused Sweden of lacking factual proof to demonstrate risk and warned of economic repercussions;
► This past week, Huawei also celebrated a landmark in Hungary, while similarly receiving bad news from Italy, Czech Republic, and the Western Balkans.
The Inevitable Happened
The Swedish agency argued its decision was based on reports by the army and secret service, which called China “one of the biggest threats against Sweden”.
Specifically, Klas Friberg, head of Swedish security services, argued that China poses a threat to Swedish national security through its “extensive intelligence gathering and theft of technology, research and development”; these became key determinants in deciding to part ways with Huawei.
The breadth of the ban will extend to Sweden’s entire network, a much harsher step than the gradual phase-outs taken by other EU governments seeking to avoid escalation with China.
Swedish operators are given until 2025 to completely remove already existing equipment, including from critical infrastructure, such as the radio access network, the transmission network, and the core network.
Implicit bans of some form or another already exist around Europe (although they are communicated in a technocratic/low-key way), but Sweden’s move is meant to show publicly that Stockholm is disavowing Huawei.
The ban is in line with wider Sino-Swedish fallout, which includes Swedish cities cutting ties with Chinese counterparts, calls for a rethink of China policy, and the general Swedish public’s negative view of China in the aftermath of the arrest of Swedish citizen Gui Minahi. We talked more about these in our podcast with Björn Jerdén.
Interestingly, as Tim Rühlig from the Swedish Institute for International Affairs has remarked, the PTS law does not provide a criteria defining national security. Instead, it relies on a law adopted in January that allows the secret services decision-making powers over the ban. This means the ban does not necessarily tackle cybersecurity threats, but helps to reduce tech dependence on China, which Sweden believes could be used against it in the future. If you’re interested in the challenge of tech and standard dependencies, you can find out more from our interview with Tim.
China’s Reaction
Understandably, news of the ban was received with disappointment by Huawei representatives and the Chinese government.
The Chinese Embassy in Stockholm issued a response, arguing Sweden lacks “concrete evidence” about Huawei’s status as a high-risk provider, thus impinging on market principles and fair competition.
Meanwhile, Huawei declared in a press release that it is “shocked and disappointed”, calling the ban “unfair” and “based on conjecture and speculation”.
The Chinese MFA Spokesperson Zhao Lijian took it up a notch, accusing Sweden of wanting to “politicize normal economic cooperation” and urging it to “correct its mistake and avoid negative impact on China-Sweden economic cooperation and the Swedish businesses operating in China”.
Repercussions could affect Ericsson’s operations in the Chinese 5G market. Recall that in April, Ericsson gained 11.4% of a tender on 5G network base stations awarded by China Mobile, the biggest Chinese operator. Moreover, Ericsson had won major contracts with the three largest suppliers in China to provide 5G equipment.
One Hot, Three (to Five) Cold
Huawei received bad news this week from Italy, the Czech Republic, and the Western Balkans, but it also celebrated an anniversary of its presence in Hungary with launching a new R&D center.
On October 23, the Italian telecom operator Fastweb was barred by Italian authorities from signing a deal with Huawei for its 5G core network. This marks the first direct tough measure Rome has undertaken to restrict Huawei’s access, as well as the first time that Italian authorities employ their “golden power” prerogatives targeting Huawei.
On October 19, Czech telecom operator CETIN awarded sole supplier status to Ericsson, to the detriment of Huawei. This came in spite of the fact that CETIN has been regarded as fostering close ties with China.
On October 24, Bulgaria, North Macedonia, and Kosovo signed agreements with the US on high-speed broadband security, thus adding their names to a long list of countries in Central and Eastern Europe with similar agreements on 5G with Washington.
On the other hand, on October 21, Huawei celebrated 15 years of operation in Hungary, marking the milestone with an event at which Hungarian Foreign Minister Péter Szijjártó called the Chinese company one of Hungary’s “strategic partners”.
Szijjártó also announced Huawei will open a new R&D center (the third in Hungary), which will employ 100 Hungarian engineers.
TAKEAWAYS
► STRONGER VOICES
Sweden is the first EU member state that decided to make a public case of its decision to ban Huawei. All other EU member states have followed in the Commission’s footsteps and avoided precipitating open confrontation with the Chinese company. Swedish authorities, nonetheless, decided to publicly label China a “threat”, which portrays a significant degree of politicization.
While Sweden is a very particular case—Ericsson, one of Huawei’s main competitors, is from Sweden, and Swedish public perception of China is strongly affected by the arrest of Gui Minhai—its move on Huawei and ZTE may also cause other EU countries to be more open in applying a public political stance, as opposed to a technocratic one. If that were to happen, chances increase that China will seek retaliation, which would likely, in turn, further solidify a feeling of unity among member states and may even encourage them to adopt similarly politically-motivated bans on Huawei. As was demonstrated with the case of the Czech Senate leader’s visit in Taiwan, member states may team up when one of them is threatened too intensely by China.
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Sweden bans Huawei, ZTE from upcoming 5G networks, Reuters (Supantha Mukherjee, Helena Soderpalm), Oct 20
Chinese Embassy Spokesperson's Remarks on 5G Issues Concerning Chinese Companies in Sweden, Embassy of China in Sweden, Oct 20
Italy vetoes 5G deal between Fastweb and China's Huawei: sources, Reuters (Giuseppe Fonte, Elvira Pollina), Oct 23
US signs 5G security deal with Bulgaria, North Macedonia, and Kosovo, DW, Oct 24