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Finbarr Bermingham

At a top-level meeting of her 26 department chiefs in March, European Commission President Ursula von der Leyen quietly approved a plan to stop EU funds from going to clean technology projects containing Chinese inverters.
Inverters are the essential power electronics at the heart of solar and wind systems. Industry groups estimate that Chinese companies led by Huawei Technologies control more than 220 gigawatts of Europe’s installed solar capacity via the devices.
The commission wants to prevent EU money from flowing to such projects and curb research cooperation under its Horizon programme, where Chinese inverters are involved, according to four people familiar with the plan.
This would fit with the bloc’s ambition to support local manufacturers, who complain they are being crushed by Chinese competition.
It dovetails too with heightened security fears that China, seen in large parts of Europe as a geopolitical rival, could cut power to the grid should relations worsen.


But the plan, which was made without public announcement and which has not been previously reported, also reflects new thinking in Brussels among those dealing with Beijing, several sources confirmed. This can be summed up as: do more, say less.
The aphorism talks to the need to balance the commission’s de-risking efforts with EU member states’ moves to re-engage with Beijing.
Gone are the “grandstanding” speeches of von der Leyen’s first term – which one official said led to “announcement fatigue” – replaced instead by substantive policy work with minimal public fanfare.
It also nods to the near-guarantee that any assertive move from Europe will be met with fierce retaliation, a sentiment that has grown with last week’s adoption of strict supply chain rules in China that give officials power to punish foreign entities if Chinese firms’ market access is curtailed.
Officials believe the cost of not reacting to China’s economic policy outweighs that of any counterpunch, but there has been a growing effort to work below the parapet and without ceremony.
Meanwhile, they were frustrated that a strategic debate on China scheduled for Monday was postponed, replaced instead by a commissioners’ discussion on the EU response to the Israel-US war on Iran.
But the officials are confident that, once rescheduled, bosses will bless a range of new tools amounting to a more joined-up strategy for dealing with China’s industrial excesses, which they insist are leading to thousands of job losses in Europe each month.
These tools are aimed at reducing Europe’s exposure to China’s industrial overcapacity and its rapid technological advance.
Brussels’ need to balance ties in several directions has led to a quiet resumption of EU-China diplomacy, after a period in which many channels went silent.


Through these engagements, Beijing has made clear that it too understands the eggshells over which the EU must walk as it navigates a geopolitically fraught moment – and indicated that it is willing to capitalise on that fragility.
It was the best part of a year since their last conversation when Chinese Foreign Minister Wang Yi spoke with the EU’s top diplomat Kaja Kallas on April 2 – but that was not for the want of trying on the European side.
Kallas’ team asked for a meeting with Wang at this year’s Munich Security Conference but Beijing declined. Other requests for telephone calls were submitted without even receiving a response.
The main topic of the Wang-Kallas call was the Iran crisis – launched by a US and Israeli bombardment on February 28 – but the pair also discussed bilateral relations, namely trade.
As Kallas explained recent EU proposals – including the Industrial Accelerator Act and the Cybersecurity Act – Wang fired back with ferocity, according to sources familiar with the exchange.
Beijing would retaliate fiercely and Europe would end up being hurt more than China, Wang was reported to have said.
The veteran minister also said that EU member states had told Beijing they did not even like what was being cooked up in Brussels and that they wished to do more business with China amid the fractured transatlantic relationship.
This was seen as a rare and tacit acknowledgement of what many in Europe regard as a long-running “divide and rule” approach from China to the bloc.
Insiders believe that the real value in the call was that it happened at all, after a fallow period for bilateral diplomacy. Some believe Beijing has taken to weaponising access to its officials and diplomats as it looks to pit Brussels against the 27 capitals.
In February, the South China Morning Post reported that the EU’s ambassador in China Jorge Toledo had been frozen out for months from meeting officials. In response, the bloc slow-walked engagement with Chinese diplomats in Brussels.


That stand-off passed. Soon after, Toledo was granted meetings again and contacts resumed in Belgium too. Now, the floodgates are about to open once more, with the bloc’s senior diplomats headed for Beijing alongside a smattering of meetings on trade.
This month, Brussels’ new top official on Asia Erik Kurzweil will make his maiden trip to Beijing, followed several weeks later by Olof Skoog, deputy secretary general of the External Action Service – the EU’s de facto foreign office.
It is hoped that they may pave the way for Kallas to travel to Beijing later this year for Strategic Dialogue, an annual meeting designed to chart the political course for the bilateral relations.
Ordinarily, it would also set the agenda for the EU-China summit, but that is not expected to happen this year. The EU leaders do not wish to go to Beijing for a third successive summit and they do not believe President Xi Jinping wishes to travel to Brussels.
On trade, the EU’s top official Sabine Weyand spoke with the commerce vice-minister in charge of Europe Ling Ji on Monday, with Minister Wang Wentao expected in Brussels before the summer.
EU sources said these appointments were aimed at streamlining an unwieldy number of up to 60 working groups and pushing Beijing to take Brussels’ concerns on export controls and trade deficits more seriously.
Away from Brussels, an increasingly discordant picture is building among member states towards Beijing – a dynamic that EU institutions feel weakens their hand in dealings with China.
German Chancellor Friedrich Merz was expected to follow up tough talk on the campaign trail with a more robust China policy. Instead, officials in Brussels and Berlin were shocked when he spoke of the potential for a free-trade deal with Beijing – an idea Chinese diplomats have been privately floating for months.
Some speculate that Merz’s words could have been influenced by the stunning displays of China’s technological prowess he witnessed on a recent state visit, where he watched dancing humanoid robots perform in Hangzhou.


Merz, like other leaders, also appears keen to tamp down trade tensions with Beijing to avoid fighting several trade wars at once, given the parlous state of EU-US ties.
Another explanation that has been floated is the concentrated period he spent travelling back and forth to China with a jet-load of German corporate executives, many of whom lobbied for a softer approach.
Traditionally hardline voices in Lithuania and Czechia have softened since the change in governments, while Spain is also getting closer to Beijing – reflected in Prime Minister Pedro Sanchez’s ongoing fourth official visit in four years.
An unlikely candidate for Europe’s newest China hawk, meanwhile, has emerged in Belgium, where Prime Minister Bart de Wever is calling for urgent action against the country’s economic policies.
In a four-page letter sent to von der Leyen last month and seen by the SCMP, de Wever urged her to come up with a new China policy and “create a paradigm shift away from the triptych ‘partner/competitor/systemic rival’ and more in tune with current geoeconomic realities”.
“China is devastating our economies and we need to dare call things by their name and demand a relationship based on reciprocity,” de Wever wrote, adding that “up to 55 per cent of EU industrial output faces Chinese pressure, rising to 70 per cent in Germany and about one-third in Belgium”.
Von der Leyen is likely to have welcomed de Wever’s bluntness but the German official will realise that major shifts in the bloc’s China policy will not come without the support of her compatriots in Berlin.


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China

Diplomacy

Without fanfare, Brussels will stop funding for projects that use the Chinese-made devices as part of a ‘do more, say less’ strategy


Without fanfare, Brussels will stop funding for projects that use the Chinese-made devices as part of a ‘do more, say less’ strategy.


.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Without fanfare, Brussels will stop funding for projects that use the Chinese-made devices as part of a ‘do more, say less’ strategy

Without fanfare, Brussels will stop funding for projects that use the Chinese-made devices as part of a ‘do more, say less’ strategy