Cyber attacks + Merkel meets Biden + EU Parliament endorses new report

On July 19, the EU issued a statement criticizing malicious behavior in cyberspace that originated from China. The release was coordinated with the United States, the United Kingdom, Canada and NATO.

What you need to know

• EU’s take: The EU announced that several recent cyberattacks that it fell victim to originated from China but did not explicitly accuse Chinese authorities of orchestrating the attacks. The attacks included exploitation of the Microsoft Exchange server from March 2021 and alleged cases of IP theft and espionage by hacker groups known as APT 40 and 31. The bloc vowed to enhance cyber resilience by cooperating with international partners and urged China to not allow such operations within its borders.
• US’ and NATO’s takes: The US statement clearly named the People’s Republic of China (PRC) responsible for the attacks and announced criminal charges against four individuals linked to its Ministry of State Security. The statement named the EU as one of the partners “joining the United States in exposing and criticizing the PRC’s malicious cyber activities.” NATO’s statement both acknowledged Washington’s attribution of blame to the PRC as well as supported Brussels in calling for a constructive dialogue with Beijing on the issue.
• China’s response: Chinese MFA spokesperson Zhao Lijian questioned the evidence that implicates China and in turn accused the US of being “the world’s largest source of cyberattacks” alluding to the US wiretapping of European leaders. He stated that the fact that the EU now joins the US’ statement “contradicts strategic autonomy.”

Quick take

The coordination of statements shows the strong will of the transatlantic partners to act together on China and that the broad alignment was achieved during a lineup of summits last month. Still, the differences show that the details of coordinating China policies remain challenging – including within security cooperation within NATO framework. That is why the key task for transatlantic partners in the coming months is to convert this broad alignment into actionable plans.

In the upcoming issue of the MERICS EU-China Briefing, we will compare the EU’s and China’s defensive and offensive cyber capabilities - subscribe here.

Read more

• European Council: Declaration by the High Representative on behalf of the European Union urging Chinese authorities to take action against malicious cyber activities undertaken from its territory
• US Department of State: Responding to the PRC’s Destabilizing and Irresponsible Behavior in Cyberspace
• Ministry of Foreign Affairs of the PRC: Spokesperson's Regular Press Conference on July 20, 2021 
• MERICS: Mind the Gap: Priorities for Transatlantic China Policy

On July 15, German Chancellor Angela Merkel discussed policy coordination towards autocratic states with President Joe Biden. China was part, but not a top topic of discussion during what is likely to be Merkel’s last trip to Washington as a German leader. 

What you need to know

• Merkel-Biden: While acknowledging some divergences in interests with the US, Merkel stated that their approaches to China “ought to rest and do rest on our shared values.” However, the Chancellor expressed her support for the Comprehensive Agreement on Investment (CAI), endorsing its labor provisions, and rejected blocking Huawei from German 5G.
• Responsible coexistence: One day after the meeting, the Federation of German Industries (BDI) released a discussion paper on managing relations with autocratic systems through “responsible coexistence.” BDI advocates for European states to create red lines on political, environmental and human rights issues while maintaining cooperation with clear boundaries on global challenges. To avoid an uneven playing field for European businesses, BDI recommends to launch the new measures in coordination with other democratic market economies. The measures should aim to avoid unnecessary negative economic impact that could undermine the position of these like-minded countries in the long term. Measures such as sanctions should have a clearly defined exit strategy and be part of a wider foreign policy calculations. as “compartmentalization should be avoided”.
• BDI’s geopolitics: The paper takes an assertive stance on China calling the BRI a “hegemonic policy” and welcoming the G7’s plans to coordinate connectivity initiatives. It also endorses reinvigorated transatlantic ties but emphasizes the EU’s need to increase its sovereignty also in response to the US activity such as extraterritorial sanctions.

Quick take

China only played a minor role in Merkel’s farewell trip to Washington. The outgoing chancellor has always resisted US calls to move a joint China policy to the top of the transatlantic agenda. Still, the fact that Germany’s most influential industry association used the occasion to launch the concept of “responsible coexistence” signals a change in thinking and publicly talking about China. An alternative to compartmentalizing hot economics and cold politics, the paper provides a path to connect business and values-based politics in a way that still limits disruption for European companies. Depending on the outcome of the September elections, this concept may make its way into a new German China policy. 

Read more

• Politico: Washington farewells Angela Merkel
• BDI: Foreign trade policy cooperation with autocracies
• MERICS: Germany’s future China policy – a look into the election campaign

On July 15, the European Parliament’s Foreign Affairs Committee (AFET) endorsed a report mapping building blocks for a new EU strategy “to deal with China.” With 58 votes in favor, 8 against and 4 abstentions in AFET, the report has high chances to be adopted during a plenary session expected in September.

What you need to know

• Overview: The report follows the multifaceted approach found in the EU’s Strategic Outlook from 2019. It highlights the importance of systemic divergence with China while it endorses cooperating with China on addressing global challenges such as climate, health and on supportsing multilateral organizations in tackling such issues.
• Covid-19: Investigate the origins of the virus phrased in an unconfrontational manner: “Ask China to allow an independent investigation.”
• Investment agreements: Ratification of CAI cannot start as long as sanctions against MEPs and EU institutions remain in place. MEPs call on the Council and the Commission to proceed with an investment agreement with Taiwan.
• Systemic challenges: Call for a regular EU-China human rights dialogue to address Xinjiang, Inner Mongolia, Hong Kong and Tibet and to set clear benchmarks for their progress. Develop measures to support EU companies that may face pressure from Chinese authorities when adhering to EU forced labor rules.
• Tech and security: Develop global tech standards with like-minded countries, for instance, in the telecom sector. Create a dedicated Far-East StratCom Task Force within the European External Action Service (EEAS) with a mandate to monitor Chinese disinformation efforts.

Quick take

The report indicates the most likely EU trajectory on its China policy in the coming months. While the overall combination of cooperation, competition and rivalry will remain in place, greater emphasis is going to be put on its assertive aspects. Still, the pace of those changes will also be dependent on Beijing’s reactions to such as its reactions to the development of the labor-rights related EU due diligence mechanism and the EU’s growing involvement in the Indo-Pacific.

Read more

• European Parliament: MEPs set out their vision for a new EU strategy for China
• European Parliament: Video interview with report’s rapporteur Hilde Vautmans
• RUSI: Technocratic Mitigation – The European Way of Managing the China Challenge

Taiwan to open Taiwanese Representative Office in Lithuania

It will be the first office of its kind to open in Europe to use the name “Taiwanese” instead of “Taipei”. PRC opposes the establishment of such offices.

• The Strait Times: Taiwan to use its own name at new Lithuania office
• Twitter: Thread by CHOICE on similar representative offices in Europe
• Ministry of Foreign Affairs of the PRC: Spokesperson Regular Press Conference on July 20

France revises its Indo-Pacific Strategy 

Shortly before the revision’s release, French foreign minister Jean-Yves Le Drian visited the US calling for increasing transatlantic coordination on Indo-Pacific policies.

• Ministry of Europe and Foreign Affairs of the French Republic: The strategy of France in Indo-Pacific
• Ministry of Europe and Foreign Affairs of the French Republic: Jean-Yves Le Drian’s speech at the Carnegie Endowment for International Peace

Wang Yi sends a mixed message during a forum on connectivity in Central and South Asia

High Representative Josep Borrell and Foreign Minister Wang Yi discussed Iran, the situation in Afghanistan and possibilities for EU-China connectivity cooperation. Yet, in a separate statement with Russian FM Sergei Lavrov, Wang called to “resist the Indo-Pacific strategy which is full of Cold War thinking.”

• Twitter: High Representative Josep Borrell on meeting with Wang Yi
• CGTN: Wang Yi calls for China-Russia efforts to combat 'political virus'

EU and Taiwan hold fourth Human Rights Consultations

Both sides talked about their initiatives against human rights abuses and the EEAS statement remarked on their commonality of values and like-mindedness.

• EEAS: Taiwan : Joint Press Release on the Fourth EU-Taiwan Human Rights Consultation

Volkswagen plans to share data with Chinese authorities amid data security crackdown

The announcement on July 16 comes as part of new data protection regulations which have already hit China’s ride hailing service Didi Chuxing. Operations of other European companies will also be impacted.

• Bloomberg: Volkswagen to Ensure Compliance With China Data Privacy Rules
• FT: Volkswagen vows to boost China sales of electric cars after slow start
• More on this in our upcoming EU-China Briefing (subscribe here)