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February 18, 2021

Dear readers,

In this issue of the EU-China Weekly Review, we cover the following topics:
  1. China overtakes the US as the EU’s top trading partner
  2. CGTN to be suspended across Europe after the UK ban
  3. French nuclear submarine patrolled the South China Sea
  4. EU countries oppose (China’s) arbitrary detentions
  5. German authorities agree on Supply Chain Act to address humanitarian and environmental concerns
The EU-China Weekly Review is compiled by MERICS Analyst Grzegorz Stec. Share story tips to or via Twitter: @grzestec.

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China overtakes the US as the EU’s top trading partner

According to new Eurostat data, China overtook the US as the EU’s top trading partner in 2020.

What you need to know
  • The EU’s exports to China in 2020 increased by 2.2 percent while the EU’s imports from China rose by 5.6 percent. By contrast, the EU noted a considerable drop in trade with the rest of the world as the EU’s exports decreased by 9.4 percent and imports dropped by 11.6 percent.
  • The EU’s imports from China formed 22.4 of the bloc’s overall imports, while exports to China amounted to almost 10.5 percent of its overall figures. German exports continue to dominate the EU’s exchange with the Chinese market forming 48 percent of the EU’s exports to China. The results of the second largest exporter, France, amount to less than 9 percent of the EU’s overall export figures.

Quick take

The results may intensify the EU’s internal discussion on the bloc’s dependence on the Chinese market. The extra-EU trade only figures show part of the picture. For example, Germany’s uniquely high exports to China amount to almost 17 percent of the country’s exports outside of the EU. But the figure drops to slightly below 8 percent when intra-EU exports are also considered. The discussion on dependence should focus on exports in specific sectors and on the imports of strategic goods.

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CGTN to be suspended across Europe after the UK ban

China Global Television Network (CGTN) had its license revoked after British broadcasting regulator Ofcom concluded that the network is ultimately controlled by the CCP. British laws do not permit networks controlled by political bodies to broadcast.

What you need to know
  • CGTN could broadcast across Europe on basis of its UK license, as stipulated by European Convention on Transfrontier Television. With its license revoked, the network is supposed to cease its broadcast until it obtains a license in another European state. CGTN’s activity had already been suspended in Germany. Reportedly, Chinese party-state media – including CCTV, CGTN, China Radio International – are preparing to set up a joint headquarters in Brussels.
  • In retaliation for Britain revoking CGTN’s license, China banned the BBC from broadcasting. The ban was officially linked to the BBC’s reporting on Xinjiang and the COVID-19 pandemic. The decision was criticized by the European External Action Service which also condemned the suspension of relaying BBC programs by the Hong Kong public broadcaster.
Quick take

Given China’s close relations with European countries like Hungary and Serbia, CGTN is unlikely to struggle to obtain a new license. But Ofcom’s decision and China’s retaliation may draw increased attention to the CCP-controlled media (such as CCTV or Xinhua) activities in Europe. Apart from broadcasting, Chinese media enters into cooperation with European news agencies, republishes articles and features paid supplements in European newspapers. Most EU member states have yet to address these practices and European media are not allowed to have the same footprint in China – with international media increasingly being pushed out of the country.  

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French nuclear submarine patrolled the South China Sea

A French nuclear submarine, accompanied by a support vessel, conducted a freedom of navigation operation in the South China Sea (SCS). France is using the operation to demonstrate its will to remain active in the Indo-Pacific and to uphold international law. 

What you need to know
  • The mission, codenamed “Marianne”, began in September 2020, which is when France, Germany and the UK signed a joint statement to support a 2016 international tribunal ruling. The ruling undermined most of Beijing’s claims in the SCS based on “historical rights”.
  • France’s Defense Minister, Florence Parly, pointed out that the mission demonstrates her country’s capacity to deploy forces in the region “together with our Australian, American and Japanese strategic partners”. She also stated that France plans to conduct such patrol operations on annual basis. Beijing has not issued a public response.
Quick take

Paris sent a political message aimed at Beijing that it intends uphold its promises made in its 2019 Indo-Pacific Strategy, this includes protecting freedom of navigation in the region. By sending a nuclear vessel and naming its strategic partners, France subscribed to the group of countries indirectly declaring military readiness to rebuke China’s activity in the SCS. So far. France has been the only EU member willing and able to project military power in the Indo-Pacific. Lack of Beijing’s response may be an indication that it is exercising restraint to prevent antagonizing Europe amid its rivalry with the US.

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EU countries oppose (China’s) arbitrary detentions

On February 15, almost all EU countries endorsed the Declaration Against Arbitrary Detention in State-to-State Relations championed by Canada. The move is to support detainees, like Michael Kovrig and Michael Spavor in China who have been held for over two years, and European citizens who have also been subjected to arbitrary detention

What you need to know
  • 58 states signed the declaration voicing opposition against arbitrary detention aimed at creating leverage in international relations. The declaration also encourages the signatories to “stand in solidarity” against this type of arrests. Among the EU members, Hungary was the only country not to endorse the document.
  • Last week, a new case arbitrary detention case of a European citizen was raised for the first time at the EU-level by MEPs. Richard O’Halloran, Irish director of a Dublin based aviation company, has been unable to leave China for two years over a crowdfunding scheme launched by the company’s owner Min Jiedong. O’Halloran does not face any allegations and the case predates his employment. Still, he has been prevented from leaving China until he facilitates a payback of around 30 million EUR by the company.
Quick take

The issue of arbitrary detentions in China also affects European citizens – visible in the case of O’Halloran or the long-running detention of Swedish citizen Gui Minhai, which has strained Sino-Swedish relations. The almost unanimous support for the Canadian-led declaration may be a good starting point for a wider European discussion on how to address such cases at the EU-level.  

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German authorities agree on Supply Chain Act to address humanitarian and environmental concerns

German authorities reached an agreement on the Supply Chain Act. This new act alongside France’s existing due diligence law could offer insight into how an EU-wide regulation might look like. 

What you need to know
  • The German legislation will bind companies to conduct supply chain due diligence against breaches of human rights and environmental standards. The mechanism is expected to be gradually rolled out and will apply to companies with over 3,000 employees from 2023 and to those with over 1,000 employees starting from 2024.
  • The European Commission is preparing a draft of a similar EU-level due diligence mechanism, set to be unveiled by mid-2021. The mechanism aims to tackle issues such as alleged forced labor practices deployed by China in Xinjiang and Tibet. Xinjiang remains an important provider of cotton and solar-grade polysilicon used in solar panels. Multiple leading companies such as Volkswagen or Siemens are running factories in the region.  
Quick take

The EU’s response to the forced labor issue will be a litmus test of the bloc’s commitment to upholding values in its relationship with Beijing. Two issues will be critical: the development of a mandatory due diligence mechanism and evaluation of China’s commitments to improve its labor laws as part of the Comprehensive Agreement on Investment ratification process. So far, the European bloc has been reluctant to take steps explicitly targeted at China on its human rights abuses in Xinjiang. The US, however, has introduced an import ban on selected products from the region. 

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About MERICS EU-China Weekly Review

The MERICS EU-China Weekly Review is compiled by MERICS Analyst Grzegorz Stec. Share story tips to Twitter: @grzestec
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