CHINA’S

INFLUENCE
IN EUROPE
strategies towards a resilient and united EU

POLICY PAPER
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Authors
Ketty W. Chen, Benjamin Herscovitch, Ivana Karásková,
Anna Marti, Dániel Mikecz, Filip Šebok, Sascha Tamm,
Plamen Tonchev, Renaldas Vaisbrodas, Jan Weidenfeld

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Table of contents
INTRODUCTION
Xi has a Dream: China‘s Rise as a Geopolitical Power
Anna Marti 4

TAKING A CLOSER LOOK: CHINA‘S INFLUENCE IN THE EU

Case Study: Hungary
Dániel Mikecz 5
Case Study: Greece
Plamen Tonchev 7
Case Study: Germany
Jan Weidenfeld 9
Case Study: Czech Republic
Filip Šebok & Ivana Karásková 12
Case Study: Lithuania
Renaldas Vaisbrodas 14

LOOKING BEYOND THE POND: HOW OTHER COUNTRIES

ARE DEALING WITH CHINESE ECONOMIC COERCION
Case Study: Taiwan
Ketty W. Chen 17
Case Study: Australia
Benjamin Herscovitch 20
Case Study: USA
Sascha Tamm 22

LESSONS LEARNT FOR THE EU?

Policy proposals for a strategic response towards China
Jan Weidenfeld 24

ABOUT THE AUTHORS 27

4 China’s Influence in Europe

Introduction – Xi has a Dream:

China‘s Rise as a Geopolitical Power
Anna Marti

It was in late 2012, when the then newly instated Secretary to as the „Century of Humiliation” came to an end. Since
General of the Chinese Communist Party, Xi Jinping, coined then, the PRC has – according to CCP’s narrative – been
the phrase of the “Chinese Dream” as the slogan for his up- rising: it took over the Chinese seat in the United Nations and
coming time as leader of the PRC: “The Chinese Dream is its Security Council in 19712 , it has become an economic
the great rejuvenation of the Chinese nation”. powerhouse, and has been updating its military capabilities
since then. According to Xi’s plans, history should come “full
With this sentence, Xi links up to several narratives: there is circle” in 2049 when China is once again a formidable world
the magic of the American Dream, the promise (and often power, a “rejuvenated nation”, with restored territorial integrity
the illusion) that everyone can get rich if only they work hard. (Hongkong, Macao, Taiwan all parts of the PRC).
Wealth and better living conditions – this is also what the
CCP is promising their citizens. A promise upon which they The CCP has been framing the PRC’s trajectory to Superpo-
are building their legitimacy, and on which they have delive- wer status as benign and quintessentially peaceful, pointing
red: since Deng Xiaoping has started his Reform and Opening out it’s doctrine of non-interference and pressing the point
Policy, about 800 million people in China are no longer consi- that the PRC never colonised any country.
dered to be “extremely poor”1, an unprecedented feat.
But China’s non-interference is only true in the military sphe-
But the more relevant, and more illuminating link is this one: re – if we don’t take into account its militia of fishing vessels,
the phrase “Chinese Dream” links to a classic poem from the that are privately owned but are organized as a PLA auxiliary
time of the Southern Song Dynasty (1127-1279), in which the force and that have been known to occupy disputed reefs,
Poet Zheng Sixiao mourns the weakness and ultimate demise e.g. in the Philippines.3,4 China’s rise has created a growing
of this particular imperial dynasty, as it was overrun by foreign unease in many parts of the world – not just it’s direct neigh-
(Mongolian) forces. He writes of his heart that is full of the bours. Chinese Military spending has almost doubled bet-
“China Dream” of recapturing lost national greatness, prospe- ween 2011 and 2019, according to estimations of the Stock-
rity, and stability. holm International Peace Research Institute SIPRI 5 . In the
same time, tensions in the South China Sea and across the
China had once been a great power and a leader in science Taiwan Strait have been increasing. Despite promises to the
and technology as well as culture and discovery. The Chine- contrary6 , China has been militarizing the artificial islands
se empire had developed the magnetic compass, gunpow- they have created in the South China Sea. Beijing has built
der or paper hundreds and hundreds of years before Europe a military base in Djibouti in 20177 after denying such plans
did. And even though this period of imperial splendour had beforehand 8 . The latest security agreement with the Solo-
passed long ago, it is still vivid in the collective Chinese me- mon Islands 9 give rise to speculation, that China might have
mory. And it is being kept alive by Xi and the CPP, who are similar plans here. But there have also been other develop-
both often using “historical arguments”, particularly when it ments, that gave rise to concern: large-scale infrastructure
comes to issues of territory: Tibet and Taiwan for example projects such as the Belt and Road Initiative 10 and the Mari-
are claimed on the basis of having been part of the Chinese time Silkroad11 that have left countries in strategic locations,
empire before the “Century of Humiliation”, where foreign such as Pakistan (access to the Gulf of Oman) or Sri Lanka
forces had occupied and colonised parts of China, such as (position in the Indian Ocean) in considerable debt to China.
Hong Kong and Qingdao by western powers, and Manchuria The headquarter of the African Union in Addis Ababa – a gift
by the Japanese Empire. of the PRC to the AU – was found to have been bugged by
China and to be sending large volumes of data to Shanghai
And so Xi dreams of making China great again. When the every night.12 Several countries in the EU have received sig-
People’s Republic was founded in 1949, what the CCP refers nificant Chinese investment, e.g. Hungary or Greece – and

1
https://www.worldbank.org/en/news/press-release/2022/04/01/lifting-800-million-people-out-of-poverty-new-report-looks-at-lessons-from-china-s-experience
2
https://www.un.org/ga/search/view_doc.asp?symbol=A/RES/2758(XXVI)
3
https://foreignpolicy.com/2021/04/19/manilas-images-are-revealing-the-secrets-of-chinas-maritime-militia/
4
https://www.theguardian.com/world/2021/mar/22/south-china-sea-philippines-200-chinese-vessels-whitsun-reef
5
https://www.csis.org/analysis/understanding-chinas-2021-defense-budget
6
https://www.lowyinstitute.org/the-interpreter/what-are-china-s-leaders-saying-about-south-china-sea
7
https://www.reuters.com/article/us-china-djibouti-idUSKBN1AH3E3
8
https://www.aspistrategist.org.au/djibouti-shows-what-sogavares-deal-with-china-really-means/
9
https://www.theguardian.com/world/2022/apr/23/us-warns-solomon-islands-against-china-military-base-as-australian-mps-trade-blame
10
https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative
11
https://www.csis.org/analysis/chinas-maritime-silk-road
12
https://www.lemonde.fr/afrique/article/2018/01/26/a-addis-abeba-le-siege-de-l-union-africaine-espionne-par-les-chinois_5247521_3212.html
 5

have since blocked measures on the EU level that would ne- international perspective it IS relevant, whether a rising state
gatively impact China.13,14 is autocratic or if it is democratic, with a functioning system
of checks and balances, rule of law and reasonable protec-
While China has not been using traditional military force to tion of human rights.
expand its power, we can see clear instances where China
uses political and economic coercion to reach its goals. This (2) While Chinese involvement is often opaque, the guiding
has led many counties to label China as a “systemic rival”.15 strategy of this involvement is often very transparent and
And that begs the question: what does China’s rise mean for can be seen from the official documents, albeit in Chinese.
the world? To that end, we have assembled a selection of The projects that are being carried out and what is happe-
case studies that examine instances of economic and poli- ning, is often very intransparent and it is not clear what is
tical coercion, namely in Hungary, Greece, Germany, Czech happening and who is doing what. But what is usually very
Republic, Lithuania, Taiwan, Australia, USA and the EU. clear, is the goal behind it. There are enough documents in
Chinese outlining the goal and strategy of a project, but they
And while all case studies come to their own specific con- are written in Chinese because they are aimed at the Chi-
clusion, these two over-arching points that should be kept in nese bureaucracy and nomenclatura. It is vital that decisi-
mind when discussing the issue of China’s rise: onmakers are aware of this, pay attention, take China by its
word – and act accordingly.
(1) Interest-driven politics is nothing per se reprehensible,
but rather a normal political reality. All countries have inter- Xi Jinping dreams the “China Dream” of prosperity, power
ests that they pursue, and to claim otherwise would simply and greatness. To achieve this, the PRC is looking to convert
be naive. The critique is not about Chinese power extension economic strength into political influence and military pow-
itself, but rather about the way that China is using that power er, and in turn to become once again the centre of global and
and the methods it employs to expand it. Because from an geopolitical power.

Hungary
Dániel Mikecz

China‘s interest in economic reforms in closer. This trend was further accelerated under the leader-
Hungary and Hungarian ‚Eastern Opening‘ ship of the national-conservative Fidesz party. When Viktor
Hungary was one of the first countries that officially recog- Orbán, party leader of Fidesz, came to power in 2010, he an-
nised the People‘s Republic of China. Bilateral relations pea- nounced the policy of a so-called ‚Eastern Opening‘, meaning
ked at the end of the 1950s while, at the same time, China’s a close partnership with Eastern countries, including China.
relation with the Soviet Union as a whole became more and
more strained16 . After the death of Mao Zedong, the refor-
mist Chinese leadership under Deng Xiaoping became in- Hungarian government being criticised
creasingly interested in the economic reforms that Hungary over 2 cases involving China
introduced in 1968. In the 1980s, Chinese economists and
decision makers studied the effects of Hungarian economic Following this policy of ‘Eastern Opening’, relations between
reforms attentively, in particular the combination of central Hungary and China grew closer and as did the public scruti-
planning with market economy elements17. Since the end of ny of this partnership. Viktor Orbán’s government was heavi-
the 1980s and with the beginning of a democratic transition ly criticised for disproportionally serving the interests of Chi-
in Hungary, thousands of Chinese immigrants arrived in the na in two instances, namely the Budapest-Belgrade railway
country. According to some estimates, Hungary is home to and the Fudan University Campus in Budapest. Both cases
the largest Chinese community in East Central Europe 18 . will be studied in greater detail in the following:

In the course of the democratic transformation in Hungary, Budapest-Belgrade railway

European integration and good relations with NATO and
the Western alliances became the top priority for Hungary. The third Orbán government decided to renovate the Buda-
Nevertheless, Hungarian-Chinese relations grew steadily pest-Belgrade railway in 2014. The consortium, which won

13
https://www.reuters.com/world/asia-pacific/hungary-blocks-eu-statement-criticising-china-over-hong-kong-diplomats-say-2021-04-16/
14
https://www.reuters.com/article/uk-eu-un-rights-idUKKBN1990G0
15
https://foreignpolicy.com/2021/04/19/manilas-images-are-revealing-the-secrets-of-chinas-maritime-militia/
16
Salát, Gergely: Budapesttől Pekingig, a magyar-kínai kapcsolatok múltja. www.konfuciuszintezet.hu. Budapest: ELTE Konfuciusz Intézet (2009)
17
Kong, Tien-Ping (2019) A magyar és a kínai gazdasági reform tapasztalatai (1979-1989): a tudástörténet egy nézőpontja [Experiences of Hungarian and Chinese Economic Reform (1979-1989):
A Perspective on the History of Knowledge] In. Magyarország és Kína: 70 éves kapcsolat a változó világban. Budapest: Külügyi és Külgazdasági Intézet
18
Matura, Tamás (2012) A magyar–kínai kapcsolatok elmúlt két éve [The Recent Development of Sino-Hungarian Relations] Külügyi Szemle, 2012 Summer
6 China’s Influence in Europe

the bid, was announced in 2019. For the investment, the gative reactions from opposition parties and the public. The
Orbán government intended to take a credit from the Chinese Budapest-Belgrade railway has been cited as a possible cor-
Eximbank, one of three institutional banks in China chartered ruption case due to the overpricing of the project. The Fudan
to implement the state policies in industry, foreign trade, eco- University investment generated harsher public reactions,
nomy, and foreign aid. According to 2021 data, the project’s as the project was unpopular, which the opposition could ef-
budget was 750 billion HUF, which is 2.08 billion EUR accor- fectively exploit. According to an opinion poll of Republikon
ding to the exchange rates of that time. The Chinese bank Institute, 63 percent of the respondents heard that the go-
should have financed 85 percent of that amount19. According vernment aims to build a Chinese university in Budapest.
to estimates of investigative journalists, the payback period Furthermore, according to the same data, 66 percent rejec-
of the project is 979 years. The biggest tender with a value of ted the project 22 . After the pandemic-related lockdown mea-
600 billion HUF (~1,6 billion EUR) was won by a consortium sures, the first massive protest in Hungary was held against
led by two Chinese companies and a Hungarian company, the Fudan project, led and organised by opposition parties
which is owned by Lőrinc Mészáros, one of the richest Hun- and politicians. The oppositional mayor of Budapest’s 9th
garians and personal friend of Viktor Orbán20 . district, Krisztina Baranyi, proposed renaming the streets at
site where the Fudan campus is set to be built after persecu-
Fudan University ted people and persons in China. The proposal was later ac-
cepted by the general assembly of Budapest. Together with
The Hungarian government signed an agreement with China the lord mayor of Budapest, she also launched a four-ques-
to support the Fudan University‘s activities in the Hungarian tion consultation about the Fudan project. Due to the public
higher education system. Fudan is a major organisation of reactions and these direct actions, the government decided
research and higher education in China. According to the QS to put the project on hold. Nevertheless, Gergely Karácsony,
Asia University Rankings 2021, Fudan is the third best uni- the aforementioned lord mayor of Budapest, initiated a coun-
versity in China and the sixth in Asia. In August 2020, Viktor try-wide referendum on various issues, which also involved
Orbán issued a decree about the establishment of a Hunga- a question about the transfer of property to the fund over-
rian campus of the Fudan University. In February 2021, the seeing the Fudan project.
Hungarian Ministry for Innovation and Technology came up
with a plan to establish a campus of the Fudan University in
Hungary. The government calculated a budget of 540 billion Public funds for a foreign private university
HUF (~1,46 billion EUR). The Hungarian parliament accepted and own private university urged to leave
the so-called ‘lex Fudan’ in June 2021, which established the
overseeing foundation of the planned university, for which The comparison of the two cases demonstrates the condi-
the same law also granted state owned properties. Accor- tions of success for the opposition, which criticised the in-
ding to the plans of the government the realisation of the vestments involving Chinese capital. In both cases, not the
project would be funded with the help of Chinese loans and mere involvement of China was the problem, but the lack of
through Chinese companies 21. The campus was planned on transparency and the overpricing of the project. In the case of
the site of the Student City project, which was designed to Fudan, there were also other factors at place which triggered
offer 8000 dormitory places for students who study in Buda- such a negative public response. It undermined the Student’s
pest’s various universities. City project, which aimed to ensure housing for students
enrolled in public universities in Budapest, while the Fudan
was planned to be a private university with high tuition fees.
Hungarian opposition’s protests The opposition also pinpointed the fact that the government
against Chinese university provides public funds for a foreign private university, while
its own prestigious private university, the Central European
In both cases, there was no direct pressure from China, as University, was pressured to leave the country after years of
these investments and agreements were also initiated by struggling with the Orbán government. For the majority of
the Hungarian government. Nevertheless, the Budapest-Bel- the public, building a campus for a Chinese university with
grade railway project and the establishment of a Hungarian Chinese loans, which are ultimately paid for with Hungarian
campus of the Fudan University triggered criticism and ne- taxpayer’s money, made the project very unpopular.

19
Szabad Európa (2021) Szél Bernadett kiperelte a Budapest–Belgrád-vasút kínai hitelszerződését
https://www.rferl.org/a/rfe-rl-relaunches-operations-in-hungary-amid-drop-in-media-freedom/30826537.html
20
Kálmán, Attila and Ćurić, Ana (2021) Budapest-Belgrád: a 979 év alatt megtérülő vasútvonal [Budapest-Belgrade: the railway line that pays off in 979 years] telex.hu
https://telex.hu/komplex/2021/11/26/budapest-belgrad-a-979-ev-alatt-megterulo-vasutvonal
21
Panyi, Szabolcs (2021) Kínai hitelből készül a magyar felsőoktatás óriásberuházása. [The huge investment in Hungarian higher education is being made from a Chinese loan] 444.hu
https://444.hu/2021/04/06/kinai-hitelbol-keszul-a-magyar-felsooktatas-oriasberuhazasa-a-kormany-mar-oda-is-igerte-egy-kinai-cegnek
22
Republikon Institute (2021) A Fudan Egyetem budapesti kampuszának támogatottsága [Support for the Budapest campus of Fudan University]
http://republikon.hu/media/97193/republikon-fudan-elemzes-21-06-01.pdf
 7

Greece
Plamen Tonchev

Greece’s ambivalent stance towards China Apart from the two FDI projects, Greek shipowners have tra-
ditionally been close to China, as it is one of their main cus-
Sino-Greek relations have traditionally been non-confrontatio- tomers. The Greek commercial fleet is reportedly behind the
nal and particularly warm since the mid-2000s. Consecutive import of 50% of energy resources and 20% of other goods
Greek governments have sought to attract Chinese invest- into China.23 Furthermore, a large number of Greek-owned
ment, but also to increase the volume of Greek exports to ships have been built in Chinese shipyards. Greek exports to
the vast Chinese market. In 2008, the Chinese shipping giant the vast Chinese market have been growing in the wake of
COSCO signed a concession contract for two-thirds of the Pi- the decade-long crisis in the country, though from a low base.
raeus sea port. In 2016, the same company obtained a 51%
stake in the Piraeus Port Authority, and an extra 16% in Sep- Cultural diplomacy is one of Beijing’s standard soft power
tember 2021. Another Chinese foreign direct investment (FDI) tools. Chinese culture is promoted in Greece through Confu-
was the purchase of a 24% stake in the Independent Power cius Institutes; currently there are three of them in Greece –
Transmission Operator (IPTO) by State Grid, a Chinese state- hosted by the Athens University of Economics and Business,
owned electric utility company. Back then, there was an ex- the Aristotle University of Thessaloniki, and the University of
pectation that China could be of help at a time when Greece Thessaly. Additionally, two higher educational institutions, the
was at loggerheads with international creditors and there was Panteion University and the University of the Aegean, have
no appetite from abroad to invest in a country plagued by in- launched Chinese language classes.
debtedness and political instability.
Building on its cultural diplomacy, China pursues considerable
Until the general elections held in July 2019, the populist go- presence in the media sector. Unlike developments in other
vernment led by the Coalition of the Radical Left (SYRIZA) in- parts of Europe, no Greek media outlet is directly controlled
strumentalised its overtures to Beijing to express its anti-wes- by Chinese interests. However, Beijing seeks to use Greek me-
tern sentiments. This is why it made a number of high-profile dia as amplifiers of its messaging, through cooperation ag-
goodwill gestures to Beijing in its quest for a powerful political reements with central institutions, such as the national news
ally as an alternative to the much-vilified West. Furthermore, agency of Greece, or influential media outlets. Thus, Greece’s
in April 2019 Greece acceded to the controversial 16+1 format official Athens Macedonian News Agency (AMNA) has had a
of cooperation between central and eastern European states cooperation agreement with China’s state news agency Xin-
and China, seen by many as undermining the EU’s unity. The hua since May 2016. Furthermore, in December 2017, AMNA
current centre-right New Democracy government prioritises signed a memorandum of understanding (MoU) with the Chi-
economic recovery and views China as a valuable economic na Economic Information Service (CEIS), an affiliate of Xin-
partner, though it is also more pro-Western and aware of hua, for the establishment of a Belt and Road Economic and
China’s authoritarian political model. The current Greek prime Financial Information Partnership. In November 2019, during
minister Kyriakos Mitsotakis attended an international trade president Xi’s visit to Greece, yet another MoU was signed by
fair in Shanghai in November 2019, and a few days later the China’s National Radio and Television Administration (a minis-
Chinese president Xi Jinping travelled to Greece on a state try-level executive agency directly under the State Council of
visit. Greek officials take pains to convince Western partners China) and the Greek state television ERT. One of the leading
that Athens is enjoying a healthy and legitimate commercial daily newspapers in Greece, Kathimerini, signed a coopera-
relationship’ with Beijing, but it remains committed to the EU tion agreement with Xinhua in April 2017. A study carried out
and NATO. Greece’s ambivalent stance towards China is often by the Athens-based Institute of International Economic Re-
referred to as follows: ‘It is complicated, we are partners and lations (IIER) 24 finds that in 2020 alone the English edition of
competitors at the same time’. Kathimerini republished 66 Xinhua reports, that is approxima-
tely every fifth day or more than once a week. The topics of
these reports range from a rebuttal of China’s responsibility
Economic or political moves by China for the coronavirus outbreak to praise for the Belt and Road
in Greece Initiative (BRI) to Beijing’s position on various international is-
sues or a rosy picture of Sino-Greek relations.
Beijing’s influence strategy in Greece is structured around four
main pillars: China’s economic statecraft, cultural diplomacy, In projecting its narratives in Greece, China appears to deploy
media presence and sub-national cooperation. a subtle and ‘tailor-made’, Greece-specific, strategy. Chinese

23
Andreas Bloom, ‘China’s Belt and Road megaproject in the Mediterranean: Was it the Greek shipping tycoons who sealed the deal?’, Global Voices, 8 July 2021,
https://globalvoices.org/2021/07/08/chinas-belt-and-road-megaproject-in-the-mediterranean-was-it-the-greek-shipping-tycoons-who-sealed-the-deal/.
24
Plamen Tonchev, ‘Sino-Greek Relations in Greek and Chinese Media, 2020‘, Institute of International Economic Relations, March 2021,
https://idos.gr/wp-content/uploads/2021/03/Sino-Greek-Relations_in_Media_18-3-2021.pdf.
8 China’s Influence in Europe

authorities and media alike have chosen a friendly and ac- officials are fully aware of controversial issues, such as de-
commodating stance to Greece rather than the “wolf warri- velopments in Hong Kong, human rights violations in Xinjiang,
or diplomacy” reported in other European countries. China’s tension over Taiwan, accusations levelled against Huawei in
media strategy does not seem to be geared towards winning relation to 5G or the global stand-off between the US and Chi-
the hearts and minds of the general public in Greece – rather, na, but they would rather stay out of related discussions. As
Chinese media tend to serve a targeted approach focusing for the COSCO investment in Piraeus, it has become highly
on Greek political and economic elites. In doing so, Chinese controversial, with a host of complaints about the Chinese
media consistently uses an invariably positive tone, a half- company’s monopolistic behaviour and low environmental
truth template and occasionally disinformation. With regard standards. Yet, the official narrative is that this is a successful
to international media, China systematically seeks to portray project with a positive impact on the Greek economy, even
Greece as a true friend, if not a staunch ally, at a time when though credible figures substantiating such an assertion are
relations between Beijing and the West are becoming increa- hard to come by. The most vocal opponents against China
singly strained. are local trade unions, vested interests in Piraeus and media
outlets leaning towards opposition parties.
Last but not least, China is ‘investing’ in its sub-national co-
operation with Greek authorities. As of April 2021, there were
some 20 twinning and cooperation agreements between Beijing’s large-scale charm offensive
Greece and China at the level of districts, cities, prefectures, instead of coercion exerted on Greece
provinces and regions, though there are many question marks
over the validity and precise nature of these arrangements. It would be inaccurate to speak of Chinese coercion exerted
on Greece. Instead, Beijing is carrying out a systematic large-
scale charm offensive. China’s strategic objectives in Greece
Caution of Athens regarding criticism are to: (i) make the most of the country’s position in the frame-
towards China in sensitive political issues work of Beijing’s flagship Belt and Road Initiative (BRI); (ii) to
win over the Greek political, business and academic elite, and
Despite the highly visible COSCO investment in the port of Pi- ensure Athens’ favourable stance towards China; (iii) to exert
raeus, China’s economic presence in Greece is actually very influence over the EU through ‘friendly’ member states, one of
limited, State Grid’s stake in IPTO being the only other Chinese which is perceived to be Greece.
FDI in the country. Conversely, there is a long list of aborted
or failed projects, with Chinese contractors disqualified from Greek authorities tend to be cautious in their attitude towards
public tenders, mostly in the areas of energy and transport. China. At the same time, Beijing’s influence in Greece has
On the highly political issue of 5G, Huawei has been excluded weakened visibly over the past three years. On the one hand,
from networks that are currently being constructed in Gree- China is no longer seen as the sole source of capital in view
ce. Moreover, Athens has joined the US-led Clean Network, an of much-needed foreign direct investment (FDI) – in reality,
initiative by the Trump administration to safeguard a nation’s China has been reduced to one of the many potential sources
assets including citizens’ privacy and companies’ most sensi- Greece is now targeting and this has further downgraded Bei-
tive information from aggressive intrusions by malign actors, jing’s capability to wield influence. Notably, the current Greek
such as the Chinese Communist Party. prime minister is on record stating that ‘Greece is not parti-
cularly dependent on Chinese investment’. This is confirmed
In the framework of this complicated relationship, in early by the fact that a number of prospective Chinese investment
2021 Greece’s refused to host the 2022 summit of the 16+1 projects have recently been aborted or Chinese state-owned
format, but at the same time Athens has been conspicuously enterprises have failed in their attempts to clinch public pro-
silent on all sensitive political issues, such as human rights curement contracts.
violations and the rule of law in China.
In addition, closer political and military ties with Western part-
There is a strong element of self-restraint on the part of Greek ners, such as the US and France, have left limited space for
authorities who are all too eager not to embarrass China. No- China’s political clout in the country. Given the security con-
tably, between 2019 and 2021 Athens consistently abstained cerns of Greece in the Aegean and the broader eastern Medi-
from all the statements at the UN criticising China of human terranean basin, China has no role to play in this geopolitical
rights violations in Hong Kong and Xinjiang. conundrum: not only is it not a security provider or guarantor,
but it is a security consumer, only interested in the pursuit of
While there are some signs of a shift in discussions about its economic goals in the region and leaving other actors to
the benefits of connectivity and friendly relations with China take the lead on security matters. It only counts thanks to its
to potential dependence on China, the related debate is still political weight as a UNSC permanent member, which is defi-
rather subdued and mostly behind closed doors. Government nitely taken into consideration by Greek authorities.
 9

Given these developments, Beijing is currently readjusting its most probably invest in ‘softer’ forms of cooperation, such as
strategy based on the following premises: (i) another large- culture and education, twinning links at sub-national level, cul-
scale investment in Greek infrastructure of the Piraeus scale tivating ties with select Greek media, etc. Having said that, in-
is unlikely to be repeated in the foreseeable future; (ii) Beijing creasingly ‘softer’ forms of Sino-Greek cooperation are often
continues to view Athens as a ‘friend’ and ‘partner’, and will deemed ‘harmless’ in the country and tend to be neglected,
spare no efforts in courting Greece as an EU member state which is an insidious hazard to be kept in mind.
that is likely to blunt anti-China voices in Europe; (iii) China will

Germany
Jan Weidenfeld

China as Germany’s biggest trading partner the takeover of German robotics company KUKA, prompted
but also as a competitor and rival public concern about the loss of German innovative tech-
nologies, knowledge, and talent to Chinese competitors. As
Over the course of four decades, close economic relations China began to roll out its infrastructure foreign economic
have become the defining feature of Germany-China rela- policy, the Belt and Road Initiative, German businesses and
tions. Ever since China opened up during the 1980s, German policy makers also became increasingly wary about (unfair)
businesses have invested heavily in production facilities in Chinese competition in third markets and waning Western
China and in building market presence there, regularly ma- global political influence.
king Germany a bigger provider of foreign direct investment
(FDI) to China than all EU member states and even the United The mighty German industry federation Bund der Indus-
States.25 In light of deepening economic relations with China trie (BDI) galvanised the rethink in German China policy in
but persisting political differences, the notion of Wandel durch January 2019 when it suggested that Germany should no
Handel became a lowest common denominator principle of longer see China as a partner first and foremost but also
German China policy during the administrations of Helmut as a competitor and even as a systemic rival.28 As this tri-
Kohl (1982-1998), Gerhard Schröder (1998-2005), and (much partite approach also became the main building block of the
of that of) Angela Merkel (2005-2021). A core tenet of this EU’s new China policy in March 2019, 29 it also became the
policy is that economic cooperation inevitably leads to poli- principal framework for the conduct of German China policy.
tical and economic liberalisation in China. Framing China as a competitor and rival has aligned with the
more critical stance towards China the wider German public
As Xi Jinping became leader of the Chinese Communist Par- has embraced in recent years. Specifically, Beijing’s infringe-
ty (CCP) in 2013 and political and economic reforms began ment on the autonomy of Hong Kong and its human rights
to stall, most – but not all 26 – senior government officials abuses in Xinjiang contributed to a considerable worsening
abandoned the notion that trade results in change. Never- of China’s public perception in Germany.30 Shortages of per-
theless, well until the end of the 2010s, the Merkel adminis- sonal protective equipment and critical medical supplies du-
tration continued to frame relations with China in predomi- ring the Covid-19 pandemic also gave rise to a public debate
nately economic and industrial interest terms. This stance in Germany about supply chain and economic dependencies
has been driven not least by the fact that China has been on China. Germany’s more critical public sentiment towards
Germany’s biggest trading partner since 2015, with a total China is likely to be further spurred by China’s strategic part-
trade volume of EUR 245bn in 2021, 27 and that the Chinese nership with Russia and its support for the Russian war in
market has been vital to some key German industries, like Ukraine.31
automotive or chemicals.

China’s domestic political hardening and its more asserti- A picture of Chinese influencing in Germany
ve geopolitical and geo-economic policies under Xi Jinping
have prompted Germany to re-evaluate its political and eco- While Germany has remained largely untouched by ‘official
nomic relations with China. China’s pursuit of ambitious episodes’ of Chinese economic coercion, the threat of Chi-
outbound industrial policies from the mid-2010s onwards nese economic punishment has shaped German busines-
marked the starting point of Germany’s reappraisal of the re- ses’ conduct for some time. Beijing sent a chilling signal du-
lationship with China. High-profile cases of Chinese FDI, like ring the second half of the 2010s when German corporates

25
https://www.ifw-kiel.de/publications/kiel-policy-brief/2022/reluctant-us-vs-ambitious-german-direct-investment-in-china-the-tale-of-two-strategies-17025/
26
https://www.politico.eu/article/peter-altmaier-defends-berlins-muted-response-to-chinas-crackdown-in-hong-kong-germany/
27
https://www.destatis.de/DE/Themen/Wirtschaft/Aussenhandel/handelspartner-jahr.html
28
https://bdi.eu/publikation/news/china-partner-und-systemischer-wettbewerber/
29
https://ec.europa.eu/info/publications/eu-china-strategic-outlook-commission-contribution-european-council-21-22-march-2019_de
30
https://securityconference.org/publikationen/munich-security-index-2021/
31
https://merics.org/en/merics-briefs/chinese-debates-ukraine-eu-indo-pacific-forum-strategic-dependency
10 China’s Influence in Europe

with long-standing business track records in China, such as political and business elites, including former German minis-
Audi (2017), Daimler (2018), or Leica (2019), became the tar- ters 38 ; shaping media coverage of China and public opinion
gets of significant Chinese political and economic pressures through paid-for content in mainstream media; attempts to
over communication missteps in relation to issues sensitive put German journalists on the payroll of the Chinese embas-
to the CCP, like Taiwan, Tibet, or the Tiananmen protests.32 sy39; and the pressuring of civil society representatives and
Anxious about similar negative repercussions that could af- academics, including through imposing sanctions.40 Lately,
fect their China business, German companies have tended Chinese political coercion on the sub-national level has also
to tread more carefully in relation to the CCP and Chinese attracted greater scrutiny41 as has China’s evolving role in
core interests. With them generating an average 16 percent spreading disinformation through social media.
of their annual revenue in China, 33 DAX companies have even
cautioned the German government to voice public criticism
regarding Hong Kong or Xinjiang. The EU’s anti-coercion instrument
and difficulties in its introduction
On the back of more difficult political relations, China has gra-
dually stepped up the threat of economic coercion against Despite increased threats of falling victim to episodes of Chi-
Germany. In late 2019, China’s ambassador to Germany, Wu nese economic coercion, German multinationals have dou-
Ken, threatened retaliation against Germany’s automotive in- bled down on what they consider unparalleled growth and
dustry, if Germany were to decide against allowing a bid by innovation opportunities in the Chinese market. Rising poli-
Huawei to build the country’s 5G infrastructure.34 In March tical risks in Germany-China relations, global decoupling dy-
2021, Beijing orchestrated a targeted and impactful Chinese namics, and Chinese policies aimed at increasing economic
consumer boycott of European companies after the EU had self-reliance are likely to further complicate the business en-
sanctioned four Chinese local officials over human rights vironment for German companies in China. They will also be
violations in Xinjiang. The boycott also affected German exposed to more competition from Chinese companies both
multinational Adidas. Adidas products disappeared from in China and in global markets. Over the last two years, these
major Chinese e-commerce apps, and the company saw a developments have prompted many German businesses to
considerable drop in its sales in China. 35 reassess their China strategies, and some have sought to di-
versify their markets and supply chains.42 However, the ma-
In late 2021, China stepped up economic coercion of German jority of German multinationals are not reconsidering their
companies in an unprecedented way by not only targeting presence in China but are doubling down on investments
their China operations but also their third market business and R&D in China, localising entire production and value
links. To punish EU member Lithuania for allowing Taiwan to chains to bulletproof their continued presence.43
upgrade its representation in Vilnius, China did not only res-
trict trade with Lithuania. More than a dozen German com- Concerns over economic overdependence on China have
panies, mainly from the automotive and agricultural sectors become commonplace in Germany’s policy debates on Chi-
and including major players like Continental, were threatened na, but tangible action has been limited. Several German
that they would lose access to the Chinese market if they ministries have encouraged German businesses to diversi-
continued trading with Lithuanian firms.36 Setting a worri- fy markets and supply chains. Even the powerful Asia-Pa-
some precedent, the blackmailing over Lithuania seems to cific Committee of German Businesses (APA) has called on
have confirmed a long-held fear of German companies that German companies to diversify supply chains.44 The 2020
in the future Beijing might seek ways to force German corpo- Asia-Pacific guidelines of the German Foreign Office call
rates to stop dealing with entities in other countries whose for the creation of framework conditions that give German
relations with China deteriorate. companies better access to Indo-Pacific markets other than
China.45 However, in practice, the German government has
China’s growing exertion of economic pressure against Ger- done little to support German companies in this endeavour.
man businesses is part of a wider picture of Chinese political It remains to be seen whether this will change under the
influencing in Germany that has emerged in recent years. new German government headed by Olaf Scholz, which has
Like other EU member states, Germany has been exposed launched a national security strategy process that will be
to the full spectrum of established Chinese political influen- followed by the formulation of a new China strategy. Recent
cing activities in Europe. 37 This has involved the capture of non-public Foreign Office input into the new China strategy,

32
https://merics.org/de/studie/chinas-public-diplomacy
33
https://www.handelsblatt.com/unternehmen/ukraine-krieg-das-grosse-china-risiko-einige-dax-konzerne-koennten-konflikte-wie-mit-russland-kaum-verkraften/28174438.html
34
https://www.bloomberg.com/news/articles/2019-12-14/china-threatens-germany-with-retaliation-if-huawei-5g-is-banned
35
https://www.wsj.com/articles/chinese-markets-promise-turns-to-threat-for-adidas-11636534875
36
https://www.reuters.com/world/china/exclusive-china-asks-germanys-continental-cut-out-lithuania-sources-2021-12-17/
37
https://merics.org/de/studie/authoritarian-advance-responding-chinas-growing-political-influence-europe
38
https://www.faz.net/aktuell/rhein-main/frankfurt/frankfurter-gesichter/rudolf-scharping-macht-heute-geschaefte-mit-china-17781045.html
39
https://www.sueddeutsche.de/politik/china-deutschland-china-bruecke-1.4757650
40
https://www.nzz.ch/international/china-verhaengt-sanktionen-gegen-europa-was-bezwecken-sie-ld.1608345
41
https://merics.org/de/studie/big-fish-small-ponds-chinas-subnational-diplomacy-europe
42
https://www.handelsblatt.com/politik/international/handelspolitik-das-china-risiko-deutsche-unternehmen-geraten-immer-staerker-zwischen-geopolitische-fronten/27134454.html
43
https://china.ahk.de/filehub/deliverFile/74912be3-ce50-45a8-8d33-282d4d60487b/1407744/AHK-GC_BCS_2122_web.pdf_1407744.pdf
44
https://www.reuters.com/article/china-deutschland-wirtschaft-idDEKBN2740UF
45
https://www.auswaertiges-amt.de/en/aussenpolitik/regionaleschwerpunkte/asien/german-government-policy-guidelines-indo-pacific/2380510
 11

the drafting of which will also be led by the Foreign Office, Germany’s past ability to avoid episodes of Chinese econo-
suggests that Germany might critically reassess policies mic coercion is also a result of China’s own dependence on
geared at promoting closer economic cooperation between Germany. The roughly 5,000 German companies that cur-
Germany and China.46 rently operate in China make an important contribution to
Chinese economic growth, employing more than one million
In the meantime, Germany supports the expansion of the staff. While they are heavily concentrated on China’s boom-
EU’s toolbox against economic coercion and specifically ing east coast, they also create economic stimulus in strug-
the introduction of the EU’s anti-coercion instrument (ACI). gling Chinese provinces, such as Liaoning and Jilin.51 Ger-
Presented by the European Commission in December 2021 man investments in China also often align with core Chinese
and currently subject to legislative negotiations among EU policies on industrial upgrading, specifically regarding high-
member states, the ACI is meant to give the EU the legal tech manufacturing and R&D.52 China’s government also still
tools necessary to respond to Chinese and other third-coun- views Germany as a partner that can aid technical governan-
try economic coercion, including by imposing restrictions on ce reforms and institution building. Germany’s Industrie 4.0
financial services, trade, and investments. However, at least industrial policy has served as a blueprint for the conception
initially, the ACI is unlikely to deter Chinese coercive behavi- of China’s own industrial innovation strategies, like “Made in
our, especially in response to actions that are perceived by China 2025”, 53 and China has started to emulate Germany’s
Beijing as threatening core interests, as the EU will first need SME landscape.54
to build up a track record of applying the tool and hence
making it a credible deterrent.47 Also, the ACI will do little to As Germany is in the process of developing and pursuing
mitigate the impact that coercive economic measures could a more robust approach towards China, the litmus test for
have on businesses in Europe, as it offers no concrete sup- Germany in dealing with Chinese coercion is yet to come. For
port mechanisms to date. Given German corporate’s strong other EU member states, exposure to more substantial and
exposure to China this raises questions concerning the use- frequent Chinese coercive economic episodes has already
fulness of the tool to protect their interests. been a reality, as other contributions to this volume under-
score. Given the political hardening in Beijing, even if puniti-
ve economic measures also damage China’s own economy,
Germany’s compartmentalising China policy the EU and Germany are likely to be increasingly exposed to
a new quality of Chinese coercive measures.55 In light of the
The absence of any major episodes of Chinese economic growing challenges on the horizon, shoring up the EU’s eco-
coercion against Germany to date is a result of past strate- nomic security toolbox and helping German companies di-
gies to remove friction from political relations as well as Chi- versifying markets and supply chains must remain a priority.
nese dependence on Germany. As Germany has always had At the same time, the new German government must invest
a marginal security profile in the Asia-pacific region, security in more seamless institutional coordination around the eco-
considerations had little inhibitive effects on the evolution of nomic security policy nexus among relevant ministries, the
German economic relations with China. At the same time the chancellery, and sub-national administrations, following the
economic relationship was bolstered by densely institutiona- example of Japan, and in building economic security coaliti-
lised political relations between Berlin and Beijing, with Chi- ons with like-minded countries.
na being one of a few countries in the world Germany has
established regular cabinet-level government consultations
with. Germany has also compartmentalised its China policy,
shifting difficult issues from direct government interactions
to the roughly 80 institutionalised dialogue formats, which
Berlin and Beijing have established along the full spectrum
of bilateral relations over time. On top of that, Berlin has long
pursued a policy of raising difficult political and human rights
in private.48 Instances of German public rebukes of China, like
Angela Merkel welcoming the Dalai Lama in 200749 or former
Foreign Minister Heiko Mass meeting with Joshua Wong in
2019,50 have been the exception rather than the norm.

46
https://www.handelsblatt.com/politik/international/wirtschaftliche-beziehungen-handelspartner-und-systemrivale-deutschlands-neuer-chinakurs-wird-konkret/28142168.html
47
https://merics.org/de/executive-memo/dealing-chinas-economic-coercion-case-lithuania-and-insights-east-asia-and-australia
48
https://www.spiegel.de/politik/deutschland/heiko-maas-und-china-cdu-und-csu-stuetzen-aussenminister-und-joshua-wong-a-1286481.html
49
https://www.faz.net/aktuell/politik/inland/nach-kritik-am-dalai-lama-besuch-merkel-ich-entscheide-selbst-wen-ich-empfange-und-wo-1491981.html
50
https://www.zeit.de/politik/ausland/2019-09/heiko-maas-joshua-wong-treffen-hongkong-china
51
https://china.ahk.de/filehub/deliverFile/74912be3-ce50-45a8-8d33-282d4d60487b/1407744/AHK-GC_BCS_2122_web.pdf_1407744.pdf
52
https://merics.org/de/kurzanalyse/china-relies-little-giants-and-foreign-partners-plug-stubborn-technology-gaps
53
https://merics.org/sites/default/files/2020-05/China_Monitor_No_23.pdf
54
https://www.dw.com/en/china-eyes-germanys-famous-hidden-champions-model/a-58986878
55
https://merics.org/de/executive-memo/dealing-chinas-economic-coercion-case-lithuania-and-insights-east-asia-and-australia
12 China’s Influence in Europe

Czech Republic
Filip Šebok and Ivana Karásková

From values to economic pragmatism… CEFC Europe, a subsidiary of the Chinese energy and financial
and back again services conglomerate CEFC China Energy, was most emble-
matic of China’s failure: the company‘s highly erratic acquisiti-
The Czech relationship with China has gone through pendu- on behaviour in the country was revealed to have been fuelled
lum-like developments over the past decade. The political by essentially a Ponzi-scheme and the company was taken
constellation of President Miloš Zeman and the government over by China’s state-owned CITIC in 2018.59 Many other ca-
of Social Democrats (ČSSD) which formed in 2013-2014 pro- ses of unrealised Chinese investment projects followed.60
vided an impetus for a dramatic change in Czech policy on
China.56 This was to mean, specifically, less focus on conflic- In the political sphere, the issues of Taiwan, Tibet, and hu-
tual issues in the relationship related to human rights, Tibet man rights violations resurfaced again, and were often used
and Taiwan, which have traditionally played a significant role by opposition politicians to criticise the government and the
in the Czech approach to China. Instead, the new policy clai- president. This was most visible in the tearing up of sister ci-
med to be more “pragmatic“, focusing on economic diplom- ties agreements (between Prague and Beijing and Prague and
acy and avoiding political friction, which had previously led to Shanghai in 2019 and 2020, respectively) as well as the visit of
the freezing of bilateral contacts. the Senate President Miloš Vystrčil to Taiwan in 2020.

The so-called “restart” of the Czech policy on China was thus Finally, security issues have become a new area of concern
motivated chiefly by economic considerations, in line with the in bilateral ties. Czech politicians and society have started to
whole region‘s turn to China in the aftermath of the global fi- focus more attention on them after Chinese covert funding
nancial crisis. The Czech Republic found itself competing with of conferences and classes at Charles University,61 Chinese
other countries in Central and Eastern Europe over becoming propaganda in Czech media,62 revelation of ties between the
a “gateway to Europe” for Chinese investment. Moreover, it Chinese Communist Party and local political and economic
was reciprocated by China’s increased attention to the region, elites,63 as well as concerns over the security risks associated
manifested through the establishment of a format for coope- with the Chinese company Huawei.64
ration between Central and Eastern European countries and
China (the so-called 16+1 format) in 2012.57 Apart from struc- The political environment has also become less friendly to Chi-
tural factors, specific political business interests also played na, a trend which already became apparent with the creation
a significant role on the Czech side, as the Czech business of the new government led by the ANO party in 2017. President
and political elites have built a dense web of relationships with Zeman became one of the few Czech politicians who remai-
Chinese actors.58 ned interested in the development of bilateral ties. The Co-
vid-19 pandemic and deliveries of personal protective equip-
China, however, failed to make up on its promises in the eco- ment from China provided a brief positive impetus for the
nomic sphere, which were also often exaggerated by Czech relationship, yet the situation again deteriorated quickly.65 The
domestic actors for their own interests. The peak of political new Czech government led by a coalition of centre and centre-
relations, when Xi Jinping visited the Czech Republic on a his- right parties that assumed power in October 2021 promised
toric visit in 2016, was not matched by economic aspirations. to redefine its China policy, return to a values-based foreign
In the economic sphere, the case of the Chinese company policy and reconsider the “strategic partnership” with China.66

56
Ivana Karásková, „Vytváření pročínské agendy v Česku: aktéři, jejich role a vazby”, Association for International Affairs (AMO), 2018,
https://mapinfluence.eu/cs/vytvareni-procinske-agendy-v-cesku-akteri-jejich-role-a-vazby/.
57
Ivana Karásková, Alicja Bachulska, Agnes Szunomár, Stefan Vladisavljev, Stefan (eds.), “Empty shell no more: China’s growing footprint in Central and Eastern Europe”,
Association for International Affairs (AMO), 2020, https://chinaobservers.eu/wp-content/uploads/2020/04/CHOICE_Empty-shell-no-more.pdf.
58
“Relations Between Czech Political and Business Elites With Links to China,” MapInfluenCE, https://mapinfluence.eu/en/relations-between-political-elites-and-pro-china-business/.
59
Jeremy Garlick, “Chinese Investments in the Czech Republic: Opportunity or Threat?” China Observers in Central and Eastern Europe (CHOICE), February 12, 2020,
https://chinaobservers.eu/chinese-investments-in-the-czech-republic-opportunity-or-threat/.
60
Kateřina Menzelová, „Čínské investice v Česku: Nesplněné sliby,” Lidové noviny, April 10, 2018,
https://ceskapozice.lidovky.cz/tema/cinske-investice-v-cesku-nesplnene-sliby.A180406_115524_pozice-tema_lube.
61
Alžběta Bajerová, „The Czech-Chinese Centre of Influence: How Chinese Embassy in Prague Secretly Funded Activities at the Top Czech University,” China Observers in Central and Eastern
Europe (CHOICE), November 7, 2019, https://chinaobservers.eu/the-czech-chinese-centre-of-influence-how-chinese-embassy-in-prague-secretly-funded-activities-at-the-top-czech-university/.
62
Ivana Karásková, Tamás Matura, Richard Q. Turcsányi, Matej Šimalčík, “Central Europe for Sale: The Politics of China’s Influence,” Association for International Affairs (AMO), 2018,
http://www.chinfluence.eu/central-europe-for-sale-the-politics-of-chinas-influence-2/.
63
“Relations Between Czech Political and Business Elites With Links to China,” MapInfluenCE, https://mapinfluence.eu/en/relations-between-political-elites-and-pro-china-business/.
64
“Software i hardware společností Huawei a ZTE je bezpečnostní hrozbou,” Národní úřad pro kybernetickou a informační bezpečnost, December 17, 2018,
https://nukib.cz/cs/infoservis/aktuality/1303-software-i-hardware-spolecnosti-huawei-a-zte-je-bezpecnostni-hrozbou/.
65
“Chinese plane carrying medical supplies arrives in Czech Republic,” Xinhua, March 21, 2020, http://www.xinhuanet.com/english/2020-03/21/c_138900277.htm.
65
Daniela Lazarová, „Newly-emerging government planning return to Václav Havel’s values,” Radio Prague International, October 22, 2021,
https://english.radio.cz/newly-emerging-government-planning-return-vaclav-havels-values-8731977.
66
Daniela Lazarová, „Newly-emerging government planning return to Václav Havel’s values,” Radio Prague International, October 22, 2021,
https://english.radio.cz/newly-emerging-government-planning-return-vaclav-havels-values-8731977.
67
“China cancels another Czech musical tour as dispute with Prague escalates,” Kafka Desk, September 7, 2019,
https://kafkadesk.org/2019/09/07/china-cancels-another-czech-musical-tour-as-dispute-with-prague-escalates/.
 13

Political pressure intensified Diplomatic condemnation backed up civil

society response
The Czech Republic has experienced several cases of Chine-
se political coercion, with so far unsubstantiated claims of The Czech Republic’s response to China’s pressure has been
economic coercion. All the recorded cases have been linked two-fold and includes a diplomatic condemnation of China’s
to the issues of Taiwan. pressure supported by strong societal response. In the cases
of severing sister cities agreements and threats of retaliation
The Prague municipal government led by Mayor Zdeněk Hřib for Czech political and economic delegations to Taiwan, the
assumed power in 2018 and promised it would renegotiate its Czech Ministry of Foreign Affairs strongly condemned Chi-
partnership with Beijing, signed by the previous city govern- nese threats. The Minister of Foreign Affairs Tomáš Petříček
ment. The agreement concluded a clause on Prague‘s respect even reprimanded the Chinese Ambassador in Prague for his
for “One China Policy,” which the new government sought to comments, saying “there is no place for threats in diplom-
renegotiate. Moreover, the mayor has been rather outspoken acy”74 and that “the ambassador went too far”.
not just on the issue of the agreement, but on ties with Taiwan
and human rights abuses, especially in Tibet and Xinjiang. In both cases the Ministry of Foreign Affairs explained to the
Chinese partners refused to renegotiate the agreement; inste- Chinese counterparts that the decisions were made by auto-
ad, China initiated coercion measures. China cancelled tours nomous actors (e.g. municipalities, the Senate), hence it had
of Czech musical ensembles, 67 and several trade deals were no legal mandate to interfere in their decision-making pro-
reported to have been put on hold. Economic countermeasu- cesses. In the same time, the ministry reiterated the Czech
res including divestment, were discussed as a potential next position on the One China Policy, keeping in line with the EU’s
move by the Czech President Zeman.68 However, no direct interpretation and (most likely) serving to reassure Beijing that
economic repercussions connected to the controversy could these incidents were rather exceptions than a rule.
be conclusively confirmed, even after the Prague-Beijing part-
nership was severed in October 2019. The second set of responses is perhaps more interesting as
it includes a societal response. The resilience against China’s
In late 2019, the planned visit of Senate President Jaroslav Ku- pressure owes much to a broader Czech intellectual and po-
bera to Taiwan as a head of a business mission became anot- litical opposition to authoritarian tendencies. China has been
her controversial issue in bilateral relations. The Chinese em- linked in this discourse to the pre-1989 experience of com-
bassy pressured Kubera, together with Czech politicians, most munist Czechoslovakia, and generally used as a (internal)
notably President Zeman, not to proceed with the visit. Kubera warning against the dangers of totalitarian rule.75 The anti-to-
suddenly died in January 2020, after which a document was talitarian stream of thinking in Czech society has been kept
found in his office from the Chinese Embassy.69 As it was later alive by very active civil society organizations and investigati-
ascertained, the document was ordered by the Office of Pre- ve journalists, focusing on uncovering, reporting and counte-
sident Zeman. The letter noted specific repercussions for the ring China’s influence.
Czech Republic, including damage to the Czech companies
Škoda Auto, Home Credit, Klavíry Petrof and others.70 Kubera’s Curiously, it was a civil society organization (i.e. the Associa-
successor in the office, Miloš Vystrčil, decided to proceed with tion for International Affairs, AMO) which presented econo-
the visit anyway in late August 2020. In response, Wang Yi, the mic models to evaluate the potential economic and societal
Chinese Minister of Foreign Affairs, promised Vystrčil would impact of Vystrčil’s delegation visit to Taiwan. The research
pay “a heavy price”.71 However, no significant economic sanc- found that even in the hypothetical case of the most severe
tions were recorded. The only publicly documented case was retaliation from China, the Czech GDP would be affected by a
that of Klavíry Petrof having its orders in China rescinded.72 drop of a mere 1%, as the country’s economy is shielded from
How-ever, the company was reported to not be facing any is- sanctions by its membership of the EU. The analysis76 was
sues on the Chinese market a few months later.73 presented to the Ministry of Foreign Affairs and other stake-

68
Ivana Karásková et el., “China’s Sticks and Carrots in Central Europe: The Logic and Power of Chinese Influence,” Association for International Affairs (AMO), 2020,
https://mapinfluence.eu/wp-content/uploads/2020/06/Chinas-Sticks-and-Carrots-in-Central-Europe_policy-paper_-1.pdf.
69
Lukás Valášek, Helena Truchlá, “‚Za návštěvu Tchaj-wanu budete platit.‘Kubera si z Hradu přinesl výhrůžky od Číny,” Aktuálně, February 19, 2020,
https://zpravy.aktualne.cz/domaci/za-navstevu-tchaj-wanu-budete-platit-kubera-si-z-hradu-prine/r~3602b9ba51a711eaa5e40cc47ab5f122/.
70
Helena Truchlá, Lukáš Valášek, Ondřej Leiner, “Nový šéf Senátu Vystrčil potvrdil, že v Kuberově kanceláři byl výhrůžný dopis Číňanů”, Aktuálně, February 19, 2020,
https://zpravy.aktualne.cz/domaci/vystrcil-potvrdil-ze-v-kancelari-kubery-nasel-vyhruzny-dopis/r~2f018d98531011ea85aaac1f6b220ee8/.
71
Ben Blanchard, Yew Lun Tian, “Czech senate speaker will pay ‚heavy price‘ for Taiwan visit, China says,” Reuters, August 31, 2020,
https://www.reuters.com/article/us-taiwan-czech-china-idUSKBN25R059.
72
“Čína stopla zakázku na česká piana za miliony. Kvůli senátní misi,” iDNES, September 4, 2020,
https://www.idnes.cz/ekonomika/podniky/petrof-senator-vystrcil-cesta-na-tchaj-wan-zruseni-zakazky.A200904_154831_ekoakcie_fih.
73
“Panika byla zbytečná. Petrof dál naplno dodává do Číny, zakázky má i z Tchaj-wanu,” Aktuálně, November 24, 2020,
https://zpravy.aktualne.cz/ekonomika/panika-byla-zbytecna-petrof-dal-naplno-dodava-do-ciny-zakazk/r~5db260b62e6d11eb8972ac1f6b220ee8/.
74
“Změňte přístup, nebo pocítíte újmu, varoval čínský velvyslanec Prahu. Petříčkovi se výhrůžky nelíbí,” ČT24, October 9, 2019,
https://ct24.ceskatelevize.cz/regiony/2946251-zmente-pristup-nebo-pocitite-ujmu-varoval-cinsky-velvyslanec-prahu;
“Čínský velvyslanec musí Petříčkovi vysvětlit výrok k Vystrčilovi. Vyjádření diplomata jsou podle ministra za hranou,” lidovky.cz, August 31, 2020,
https://www.lidovky.cz/domov/ministerstvo-zahranici-velvyslanci-ciny-vyjadrilo-nesouhlas-s-vyrokum-k-vystrcilove-ceste.A200831_142158_ln_domov_ele.
75
Ivana Karásková, Alžběta Bajerová, Tamás Matura, “Images of China in the Czech and Hungarian Parliaments,” Association for International Affairs (AMO), March 2019,
http://www.amo.cz/wp-content/uploads/2019/03/AMO_Images-of-China-in-the-Czech-and-Hungarian-Parliaments.pdf.
75
Ivana Karásková et el., “China’s Sticks and Carrots in Central Europe: The Logic and Power of Chinese Influence,” Association for International Affairs (AMO), 2020,
https://mapinfluence.eu/wp-content/uploads/2020/06/Chinas-Sticks-and-Carrots-in-Central-Europe_policy-paper_-1.pdf.
76
“Political leaders express solidarity with Czech Senate President Miloš Vystrčil in connection to his official visit to Taiwan,” Miriam Lexmann website, August 25, 2020,
https://lexmann.eu/political-leaders-express-solidarity-with-czech-senate-president-milos-vystrcil-in-connection-to-his-official-visit-to-taiwan/.
14 China’s Influence in Europe

holders and passed to journalists which helped to debunk the The second factor relates to the fact that China was not able
myths of China’s upper hand and mitigated fears connected to fulfil the economic expectations in relation to its investment
to the Vystrčil’s visit.77 However, the case of Lithuania and in the Czech Republic. As other, including Asian (e.g. Japan,
Chinese weaponization of value chains and indirect economic Republic of Korea or Taiwan), investors were considered more
links has shown that the danger of Chinese economic coerci- important for the Czech economy, China has not succeeded
on is larger than anticipated. in presenting itself as the most attractive alternative.

The spectacular failure of CEFC Europe in the Czech Republic

Failure of China’s „sticks and carrots” and a sudden disappearance of its chairman Ye Jianming in
approach China, made the Czech business community aware of poten-
tial risks of economic deals with Chinese counterparts.
Although it may be argued that China has become a somew-
hat influential actor in Central and Eastern Europe, in recent Moreover, it is noticeable that China plays a great role in Czech
years several factors have made it a less attractive coopera- domestic political debates and even features in parliamenta-
tion partner. ry and presidential election debates. While the government
parties usually defended economic relations with China, the
First and foremost, a detailed research and outreach to the opposition parties utilised the criticism of China as a handy
public by respected Czech civil society organizations directly tool for attacking the government and the president for their
focusing on China have helped uncover patterns of Chinese affinity to Beijing.78
foreign policy behavior. Their efforts were echoed by the work
of investigative journalists who described in detail cases of Last but not least, the rising scepticism in the European Union
Chinese influence in the Czech Republic. The media raised regarding the cooperation with China increased political and
awareness in the Czech society and this increased reputatio- reputational risks for Czech politicians. Combined, these fac-
nal risks for local political and economic elites eager to pro- tors contributed to increased scrutiny of and general distaste
mote Chinese positions in the country. for dealings with China in the Czech Republic.

Lithuania
Renaldas Vaisbrodas

From fairly positive to rock bottom: Down- communist policies and demand for political responsibility
hill trend in the Sino-Lithuanian relations for the crimes committed by the communist regimes, made
Lithuania an uncomfortable counterpart for the PRC with
Ever since Lithuania gained independence from the Soviet its three T’s taboo (Tibet, Taiwan, Tiananmen). Regular di-
Union, relations with the People’s Republic of China (PRC) plomatic scuffles erupted over the course of the relationship
were fairly positive and never lead to much public attention between the two countries, be it over an informal meeting
or debate. Hence, somehow appropriately, it took more than of President Dalia Grybauskaitė with the Dalai Lama in 2013
a decade for a highest-level Chinese politician to come to or the demonstration in support of Hong Kong protesters in
Lithuania: President Jiang Zemin, who travelled through all Vilnius in 2019.
of the Baltic states in mid-2002. This remains the only presi-
dential visit thus far. The PRC’s interest in Lithuania seemed to be driven by its di-
plomatic and economic initiatives in Europe, be it the Belt and
A distant and fairly small Lithuania has not been seen as a Road Initiative (BRI), connecting the Eurasian continent, or the
“significant” player by the PRC. But this does not mean that establishment of the 17+1 (now 16+1) format, promoting co-
Baltic States in general and Lithuania in particular have not operation with Central Eastern European countries. Lithua-
been noticed for their role in the break-up of the communist nia’s proximity to the PRC strategic partners Belarus and Rus-
Soviet Union. Furthermore, the active positions Lithuania sia and its importance for the transit route to its Baltic port of
took when assuming the Presidency of Council of the Eu- Klaipėda has incentivised more contact in early 2010’s.
ropean Union in 2013 and its non-permanent membership
in the UN Security Council from 2013 – 2015 were looked Similar to many other countries worldwide, Lithuania took
upon with interest in Beijing. Its ferocious opposition to notice of a “positive” potential that was inspired by the

78
Ivana Karásková, Alžběta Bajerová, Tamás Matura, “Images of China in the Czech and Hungarian Parliaments,” Association for International Affairs (AMO), March 2019,
http://www.amo.cz/wp-content/uploads/2019/03/AMO_Images-of-China-in-the-Czech-and-Hungarian-Parliaments.pdf.
 15

attractiveness of China’s market and financial resources. Sino- The Lithuanian government has stayed true to its word and
Lithuanian economic relations, however, remain modest, its consequent actions promoted an inclusion of Taiwan
with the total volume of bilateral trade passing the symbo- in WHO discussions on the management of COVID-19. In
lically important mark of €1 billion only in 2017. Despite the March 2021, after the EU imposed sanctions on a number
fact that Lithuanian exports to China have recently grown of officials involved in serious human rights violations in the
faster than imports from it, a huge trade imbalance (€277 PRC, Beijing reacted by sanctioning a number of politicians,
million vs. €929 million respectively in 2019 79) remained a among others Lithuanian social-democrat (opposition) MP
major issue in the economic relationship. At the same time Dovilė Šakalienė. The Lithuanian parliament expressed its
Foreign Direct Investment remains negligible. full solidarity and adopted a cross party resolution on the
genocide carried out in Xinjiang. Lithuania announced its
A certain turning point in Sino–Lithuanian relations was rea- official withdrawal from 17+1 format, stating that its objecti-
ched in February 2019 when the State Security Department ves did not serve the purposes of unity within the EU. At the
and the Second Investigation Department under the Ministry same time, Taiwan announced its plan to open an economic
of National Defence published their annual National Threat representation in Lithuania. Predictably, this led to the recall
Assessment. It underscored the “increasing aggressiveness of ambassadors for consultations. Later that year, Lithua-
of Chinese intelligence and security services’ activities” in nia’s National Cyber Security Centre said it had found major
Lithuania and explicitly named the PRC’s Ministry of State cybersecurity risks concerning Huawei and Xiaomi mobile
Security and military intelligence as the two services opera- devices and advised government officials and agencies to
ting in the country. The document noted that such activities discontinue their use. Finally, Sino-Lithuanian relations hit
are driven by China’s domestic policy issues, particularly si- rock bottom when the Taiwanese representative office in Lit-
lencing Lithuania on Tibet and Taiwan, but also aiming at huania started its operations in November 2021, prompting
broader interests, including “Lithuanian foreign policy and the PRC to downgrade the official diplomatic representation
economy, the defence sector, information accessible to Lit- of Lithuania to a Chargé d’affaires office in Beijing. As this
huanian citizens about foreign countries’ international co- spiral of events developed, the PRC deployed unprecedented
operation projects and future plans with China.”80 One year coercive actions to “punish” Lithuania for its decisions.
after, the assessment of the same institutions was equally
damning, highlighting ‘ongoing malicious use’ of Chinese
cyber-capabilities for acts of hacking and spying that had Aggressive Chinese sanctions policy
been observed in Lithuanian cyberspace.81 This was the be- towards Lithuania
ginning of the downhill turn for the Sino-Lithuanian relations.
After the PRC furiously withdrew its ambassador from Vilnius,
As Lithuania entered its electoral year (parliamentary electi- it chose to go the extra mile: in December 2021, China effec-
ons were held in the fall of 2020), a number of events shaped tively blocked Lithuanian imports by delisting it as a country
the political debate and made relations with the PRC one of of origin, meaning goods could not clear Chinese customs.
the issues in the campaign. It also pressured multinational businesses to sever ties with
Vilnius. Such a measure applied not only to goods that are
In mid-September 2020, the country signed a Memoran- produced in Lithuania but also in some cases to goods that
dum of Understanding on 5G Security with the US, which in their supply chain include components produced in Lithua-
underlined ‘the importance of encouraging the participation nia. Moreover, it also affected the European exports in transit
of reliable and trustworthy network hardware and software through Lithuanian ports. The application of these unannoun-
suppliers in 5G markets’. ced measures undoubtedly influences the efficient functio-
ning of the EU internal market. The PRC is using its market
Centre-right and liberal politicians openly reflected on a power to push other countries and businesses to choose bet-
possibility of being much more proactive on the issues sur- ween Vilnius and Beijing. This case reveals the emergence of
rounding Taiwan. The liberal Laisvės Party included a clause a far more aggressive Chinese sanctions policy, as well as an
which supported Taiwan’s statehood and independence in intensifying global struggle over Taiwan.
its electoral programme 82 . Consequently, after the parlia-
mentary elections in 2020 delivered a governing coalition
agreement between conservative and liberal parties, who Three tracks of the Lithuanian response
committed to promote ‘value based foreign policy‘ and ‘ac- to the pressure
tively oppose any violation of human rights and democratic
freedoms, and defend those who are fighting for freedom The response to the pressure from Beijing focused on three
around the world, from Belarus to Taiwan’, it was clear that tracks: national, bilateral, and multilateral. In the face of the
Sino-Lithuanian relations would not improve. increasing pressure and unprecedented moves by the PRC,
Lithuania chose to go ‘all-in’ and intensify the search for

79
Lietuvos – Kinijos dvišalė prekyba 2020 gegužės 20, https://www.verslilietuva.lt/wp-content/uploads/2020/07/2020-05-20_Kinija_LT.pdf.
80
National Threat Assesment 2019, https://www.vsd.lt/wp-content/uploads/2019/02/2019-Gresmes-internetui-EN.pdf.
81
National Threat Assessment 2020, pp 5 & 32-34, https://www.vsd.lt/wp-content/uploads/2020/02/2020-Gresmes-En.pdf.
82
Laisvės partijos 2020 metų Seimo rinkimų programa: pasiūlymai Lietuvos proveržiui,
https://www.laisvespartija.lt/wp-content/uploads/2020/06/Laisv%C4%97s-partijos-2020-m.-Seimo-rinkim%C5%B3-programa.pdf.
16 China’s Influence in Europe

alternative markets for its businesses affected by the Chi- launched a World Trade Organization case against China
nese punitive measures. The beginning of 2022 saw offi- over „discriminatory trade practices“. This case was joined
cial Lithuanian diplomatic representations formally open in by US, Japan, UK, Australia, Taiwan, and Canada. However,
Singapore, South Korea and Australia. An official economic proving economic coercion at the WTO is a complicated and
representation in Taiwan is scheduled to open soon. These risky process that could drag on over several years.
new diplomatic representations primarily focus on seeking
new economic opportunities for the export of Lithuanian
goods. Dedicated financial facilities were set up by the Go- Assessment of the country’s response:
vernment to offer Lithuanian businesses incentives to deve- factors affecting success and failure
lop new export markets 83 .
Reflecting upon the Lithuania’s response measures, one can
On the bilateral front, predictably, Lithuania received an ex- only acknowledge that the decisions to pursue a multi-vec-
tended hand from Taiwan. Taipei has started a $1 billion tor approach and successfully acquire strong backing from
worth credit programme to fund joint projects between Lit- the EU and other G7 countries is an important achievement
huanian and Taiwanese companies, as well as a separate for the Lithuanian government. It allowed for a certain di-
$200 million fund to invest in Lithuanian industries and plomatic breathing room, but it has so far not reversed some
boost bilateral trade. of the measures taken by the PRC. In this context, measu-
ring success and failure of one case, needs to be seen from
The United States has also stepped in to make up the short- a broader perspective. Current PRC leadership is clearly
fall caused by China’s blockade. The U.S. Export-Import prepared to test Western democracies that believe in free
Bank signed a $600 million export credit agreement with Lit- trade and dare to speak up on the “Three Ts”. The challenge
huania, focusing on manufacturing, business services and that the PRC presents to those countries is clear - economic
renewable energy. coercion and political blackmail. As a rule based player, the
West at large has no quick fix to counteract these measures
Finally, on a multilateral track, two ongoing processes were by the PRC without inflicting serious economic losses upon
initiated. First, the EU started preparing a so-called anti-co- itself. Are we ready to take a stand for our principles and
ercion instrument to hit back at exactly the sort of tactics values and how far will we be prepared to go? The answer
China is using against Vilnius. However, the instrument could to this will determine the success and failure of our ability to
take years to come into force. Secondly, the European Union respond to China.

83
Press release by Ministry of Economy & Innovation of the Republic of Lithuania, 2022 02 17, https://eimin.lrv.lt/lt/naujienos/del-kinijos-sankciju-nukentejusiam-verslui-reali-pagalba.
 17

Looking beyond the pond: How other countries

are dealing with Chinese Economic Coercion
Democracy under threat
Ketty W. Chen

Authoritarian influence in Taiwan and how and promote hatred between members of society. Fourth, to
Taiwan manages to combat it co-opt politicians, retired military officers, civil servants and
the business community.
Taiwan is a democratic country that stands on the frontline
of the People’s Republic of China (PRC)’s coercion and in- Massive economic capacity has been China’s most power-
fluence, as the PRC considers Taiwan as part of its territory ful tool to support such operations. According to Prof. Jaw-
that has to be unified with “the motherland” as soon as pos- niang Huang, the Chinese government has been increasing
sible. It’s clear that the PRC’s aim behind its economic and its purchase of advertisements in Taiwanese media since
political coercion is to annex Taiwan, and its approaches in- Taiwan’s economic relations with China became closer un-
clude military threats, import bans of Taiwan’s goods, and in- der the Ma Ying-jeou administration, namely for the purpose
formation operations. The PRC not only uncompromisingly of promoting tourism or business.84 Some Taiwanese media
intensified its influence operations in Taiwan, it also is using increasingly used “embedded marketing” for these adverti-
Taiwan as a testing and training ground on how to “improve” sements. This makes it more difficult for readers to identify
its methods. advertisements, as they might just look like a news item or
any other form of content.85 In 2012, the Want-Want China
However, Taiwan’s vibrant democracy serves as a constant Times Media Group placed a series of relevant embedded
reminder to China on what it is not. Taiwan’s democratic news items in its China Times and affiliated newspapers du-
existence dispels the CCP’s narrative that democracy is not ring the Taiwan visit of Fujian’s governor. A report of New-
only a product of the West but that it is also incompatible talk Media revealed, that these embedded news items were
with Chinese or Asian culture. Taiwan’s democracy now ser- part of a propaganda plan from the Fujian and Amoy Go-
ves as a model for countries in the region demonstrating, vernments. Following an Investigation of the Overseas Chi-
that democracy can work in Asia, that it can be peaceful, nese and Foreign Investment Commission Want-Want China
stable and vibrant. Times was fined because its placement marketing had viola-
ted the law.[3] keine Fußnote In the same year, students and
professors launched an anti-media monopoly movement in
China’s political and economic warfare Taiwan, urging the government to refuse Want-Want China
on Taiwan Times Media Group’s application to bid on a Taiwanese ca-
ble TV system company.86 In 2008, the Want Want Group
In the midst of the struggle between authoritarian uprising acquired and merged with China Times and two TV news
and democratic backsliding, Taiwan stands in the forefront stations in Taiwan. According to Prof. Jei-ming Wu’s re-
of China’s influence operation. The most utilized method of search, the company also received large subsidies from Chi-
influence operation is the use of information manipulation. na’s local government.87 This led to concerns whether the
China’s influence operations against Taiwan can be catego- company would be able to sustain the independence of its
rised into serving four main purposes. First, to corrode de- media while having significant business interests in China.
mocratic institutions, national and local elections, and public In 2019, Reuters published a report showing that China paid
trust on the democratic system. Second, Chinese influence Taiwanese media to write reports to improve CCP’s image in
operation to undermine the Taiwanese people’s confidence, Taiwanese “hearts and minds”.88
so their will to resist would be weakened, and their feeling
of abandonment and isolation magnified. Most importantly, China has also been leveraging market forces and business
the CCP’s intent is for the Taiwanese people to feel that be- interests to gradually embed a culture of self-censorship in
coming part of China is inevitable. Third, to polarize division Taiwanese media. According to the 2021 Country Reports on

84
Prof. Jiaw Niang Huang, The China Factor in Taiwan’s Media: Outsourcing Chinese Censorship Abroad,” China Perspectives 2017/3: 27–36. 2017,
https://www.cefc.com.hk/download.php?file=ef39d6f84675efe600f79c1d13f84cda&id=100065037.
85
Regulations for Advertising Goods, Labor and General Services of the Mainland Area in the Taiwan Area.
https://law.moj.gov.tw/ENG/LawClass/LawAll.aspx?pcode=Q0060008.
86
Li-jen Liu, Wei-cheng Tseng, Cheng-hsiang Fan, Chia-ling Tang, Directors of the top ten journalism departments in universities sign a petition to stop Want Want China Times Media Group’s
Media M&A, Liberty Times, May 26th 2012, https://news.ltn.com.tw/news/life/paper/586655.
87
Wu Jieh-min, The China Factor in Taiwan: Impact and Response., pp. 425-445 in Gunter Schubert ed., Handbook of Modern Taiwan Politics and Society, Routledge. 2016
88
Yimou Lee and I-hwa Cheng, Paid ‚news‘: China using Taiwan media to win hearts and minds on island – sources, Reuter, August 9th2019,
https://www.reuters.com/article/us-taiwan-china-media-insight-idUSKCN1UZ0I4.
18 China’s Influence in Europe

Human Rights Practices: Taiwan, business interests of Tai- nally established an anti-media monopoly law. It is the first
wanese media outlet’s parent companies have been utilised such law in Taiwan’s history. The law stipulates that media
by PRC officials to influence Taiwan’s media. Faced with the should periodically disclose their source of advertisement
threat of losing commercial revenue, journalists self-censo- revenue,93 and clearly defines four “red lines” on how a me-
red and refrained from publishing reports criticising China.89 dia merger and acquisition (M&A) will be defined as media
monopoly, and therefore be forbidden.94
A few years ago, China began aggressively using the inter-
net and social media as a tool for its influence operations To tackle CCP’s infiltration through invisible flows of capital
towards Taiwan. Using content farms, social media marke- and resource, particularly targeting online information ope-
ting companies and influencers, these new tools enabled the ration, members of civil society also pushed the government
Chinese government to operate more stealthily and establis- to establish the first anti-infiltration law in Taiwan. The law
hed a network of local collaborators. While it is difficult for was passed by the Legislative Yuan and formally ratified in
civil society to track the direct flow of funds from the PRC 2020.95 The law closed up the loopholes in Taiwan’s Political
to support its online information operation to Taiwan, some Donation Act,96 Referendum Act,97 Lobbying Act,98 and Civil
footprints identified by Taiwan’s law enforcement agencies Servants Election And Recall Act.99 People or organizations
are revealing. For example, a Facebook fan page, uncovered instructed or funded by hostile foreign agents to make politi-
by Taiwan’s Ministry of Justice Investigation Bureau (MJIB), cal donations, lobby, canvass or interfere in elections, launch
as linked to at least 12 websites spreading PRC propagan- referendum, spread disinformation, disrupt assemblies or
da and disinformation.90 Buying and creating a substantial undermine the social order, will be penalised if a court rules
number of URLs, facebook pages, social media accounts their behaviour to violate the law.100
allow content farms to repeatedly resurrected.91

In addition to information manipulation, economic coercion Actions of civil society

is another method the PRC utilised to intimidate Taiwan. For
example, in spring 2021, China banned imports of Taiwane- Taiwan’s civil society played an integral part in Taiwan’s li-
se pineapples, as a punitive trade measure. This served as a beralisation and democratisation and now, in its effort to
prime example of China weaponizing economic measures. combat authoritarian influence from China. In recent years,
Another instance came in September 2021, when the US members of Taiwan’s civil society organizations advocated
deliberated changing the name of the Taipei Economic and the practice of digital democracy. Many organisations wor-
Cultural Representative Office in Washington to that of Tai- ked together to strategise and develop methods to combat
wan Representative Office, China reacted by again stopping information manipulation, offer media literacy lessons, write
Taiwanese fruit imports. This time sugar and wax apples.92 codes for fact check chatbots and to inform the public. Non-
governmental organisations such as the Taiwan Foundation
for Democracy provide funding for their endeavour to safe-
How Taiwan combats influence operations guard Taiwan’s democratic institutions.

The resilience, awareness, and fast-reaction of Taiwan’s ci- The civil society organizations assumed different roles in
vil society have always been the shield that defends Taiwan combating information manipulation. For example, a group
against China’s economic and political coercion. They led of civil society organisations devoted their focus on factche-
the following actions. cking. Their work created the basis for analysing the patterns
of the PRC’s information infiltration, as they accumulated
huge amounts of data on disinformation. The Taiwan Fact-
Closing loopholes in legislature Check Center,101 MyGoPen,102 and CoFacts103 are all examples
of NGOs with diligent members who work tirelessly to provide
After the anti-media monopoly movement in 2012, Taiwan’s clarifications for disinformation and validate facts. MyGoPen
government and Legislative Yuan (Taiwan’s parliament) fi- and CoFacts also developed LINE chatbots, so individuals can

89
Bureau of Democracy, Human Rights, and Labor, U.S. Department of States, 2021 Country Reports on Human Rights Practices: Taiwan,
https://www.state.gov/reports/2021-country-reports-on-human-rights-practices/taiwan/.
90
Taiwan’s Ministry of Justice Investigation Bureau, Disclosing how China’s cyber army buying Taiwan’s internet domain, March 6th 2020, https://www.mjib.gov.tw/news/Details/1/578.
91
Te-lien Kung, Hao-hsing Ko,Jason Liu, Chia-yu Hsu, Uncovering the Money and China Factor Behind „Mission“ – Taiwan‘s Most Controversial Content Farm, The Reporter,
December 26, 2019, https://www.twreporter.org/a/information-warfare-business-content-farm-mission-english.
92
Dong Xing, First pineapples, now sugar apples. Taiwan threatens to take China to WTO over new fruit import ban,ABC News, September 21st 2021,
https://www.abc.net.au/news/2021-09-21/china-taiwan-fruit-ban-may-jeopardise-application/100479612.
93
Li-ren Liu, NCC added new articles to anti-media monopoly law: news channels should periodically disclose its income generated through advertisement, Liberty Times, May 1st 2019,
https://news.ltn.com.tw/news/politics/breakingnews/2776234.
94
Shu-hui Lin, NCC passed anti-media monopoly law., Commercial Times, Jan 16th 2019, https://ctee.com.tw/news/tech/24345.html.
95
Anti-Infiltration Law, https://law.moj.gov.tw/LawClass/LawAll.aspx?pcode=A0030317.
96
Political Donation Act, https://law.moj.gov.tw/ENG/LawClass/LawAll.aspx?pcode=D0020049.
97
Referendum Act, https://law.moj.gov.tw/ENG/LawClass/LawAll.aspx?pcode=D0020050.
98
Lobbying Act, https://law.moj.gov.tw/ENG/LawClass/LawAll.aspx?pcode=D0020062.
99
Civil Servants Election And Recall Act, https://law.moj.gov.tw/ENG/LawClass/LawAll.aspx?pcode=D0020010.
100
Legislative Yuan Passes Anti-Infiltration Bill to Strengthen Defense for Democracy and Preserve Stable and Orderly Cross-Strait Exchanges. News Release of Mainland Affairs Council,
December 31st 2019. https://www.mac.gov.tw/en/News_Content.aspx?n=2BA0753CBE348412&s=88E5E1EF1343B1B8.
101
Taiwan Fact Check Centre, https://tfc-taiwan.org.tw/en/about-us.
102
MyGoPen, https://www.mygopen.com/. MyGoPen”’ phenetically meant “Stop Lying” in Taiwanese.
103
CoFacts, https://cofacts.tw/.
 19

add them to their chat application to easily fact-check informa- ning the effectiveness of China’s influence strategy can be
tion they received. Lastly, organisations such as the Double- observed in the following areas:
Think Lab (DTL)104 and Information Operation Research Group
(IORG)105 aim to research, compile and publish biweekly
reports to inform Taiwan’s population and the international Growing Taiwanese Identity stops China
community of China’s information warfare. Organisations from winning Taiwanese hearts and minds
like DTL and IORG also offer policy recommendations to the
government, so it can use more tools to tackle the informa- The goal behind China’s economic and political coercion
tion manipulation challenge. to Taiwan is to annex Taiwan. The emergence of a distinct
“Taiwanese identity” may hinder that. Taiwan now has a strong
national identity that is vastly different from China. Accor-
Fast reaction of the Government ding to an identity survey conducted by the National Cheng-
chi University’s Election Study Center (ESC), the proportion
In recent years, the Taiwanese government dedicated many of Taiwanese who identify as Taiwanese increased from 22
resources to counter China’s political influence campaign, percent in 1994 to approximately 60 percent in 2021. Those
mainly on information manipulation. Taiwan’s Premier Su who identify with a dual identity, as both Chinese and Taiwa-
Tseng-Chang ordered that government ministries must pro- nese, witnessed a sharp decline from 50 percent to less
vide clarification to disinformation within two hours upon than 30 percent. Those who identified as only Chinese was
discovery. The Executive Yuan created a webpage and uses down to 2.8%, while more than 90 percent of those surveyed
the messaging app LINE to provide timely clarification. Pre- considered being “Taiwanese” as part of their identity106 .
sident Tsai appointed former hacker and civic tech mem- Therefore, the PRC had to confront the harsh reality that the
ber Audrey Tang as Taiwan’s first digital minister. Part of future of Taiwan is moving increasingly further away from
her portfolio is dedicated to combating disinformation and President Xi’s dream of one unified Chinese nation.
improving media literacy. Furthermore, the Taiwanese go-
vernment managed to capture concrete evidence on disin-
formation that originated in China or was generated by CCP Strong willingness to protect Taiwan
proxies based in Taiwan or elsewhere. and support democracy

Addressing China’s import ban on Taiwan’s pineapples, Taiwanese’s strong support to democracy and willingness to
the Taiwanese government, in response, launched a public protect Taiwan will hinder China’s goal to annex Taiwan. Ac-
campaign for “Freedom Pineapples”. The campaign went cording to the survey of the TFD in 2021, when asked “Would
viral quickly after its introduction. From Taiwan’s President, you fight for Taiwan if China uses force against Taiwan for
Tsai Ing-wen, to its Foreign Minister, Joseph Wu, Taiwanese unification,” 72.5% of the polled said they would. Also, 75.3%
public figures and celebrities urged citizens to stand up to of the polled agree that democracy is the best political
China and support Taiwanese farmers by purchasing more system even though some problems exist with it.107
pineapples. The Taiwanese government also promoted the
fruit to its democratic allies, as Japan became one of the
major purchasing countries of Taiwanese pineapples. This Strong awareness of disinformation
campaign was met with enthusiasm from global netizens.
Solidarity for “Freedom Pineapples” became Taiwan’s way to In 2018, Taiwan was experiencing the peak of disinforma-
combat economic coercion gaining support from countries tion during the local election and ten referendums. In 2019
such as Japan, Britain, Denmark, Australia and the US. around 80,000 people marched on the street to join in the
anti-red media parade.108, 109 Participants witnessed the in-
creasingly unbalanced reporting of some media that derived
Conclusion huge profits from China. They urged the government to take
action to stop media from being “bought”. Moreover, accor-
The effort made by the Taiwanese government, as well as ding to a survey conducted by TFD last year, more than 90%
members of civil society in Taiwan, not only raised public of the respondents agreed that disinformation hurt the de-
awareness on information manipulation and influence ope- velopment and quality of democracy in Taiwan. According
ration from China, it also managed to curb China’s economic to Professor Eric Yu, one of the co-convenors of the survey,
coercion and political influence. Taiwan’s action undermi- this was the largest consensus of the Taiwanese people.110
104
Double Think Lab, https://doublethinklab.org/.
105
Information Operation Research Group, https://iorg.tw/.
106
Election Study Center, National Chengchi University, “Taiwanese and Chinese Identity (1992/02 – 2021/12),” January 28th 2019, Election Study Center, National Chengchi University,
https://esc.nccu.edu.tw/PageDoc/Detail?fid=7800&id=6961.
107
TFD press release, 2021 TFD Survey on Taiwanese View of Democratic Values and Governance, December 29th 2021,
http://www.tfd.org.tw/export/sites/tfd/files/news/pressRelease/ENG_press_release.pdf.
108
SETN, Aerial photography shows the number of participants of the anti-red media march are tremendous. June 24th 2019,
https://tw.news.yahoo.com/%E5%8F%8D%E7%B4%85%E5%AA%92%E9%81%8A%E8%A1%8C%E6%93%A0%E7%88%86%E5%87%B1%E9%81%93-%E9%9C%87%E6%92%BC%E7%A9%BA%E6%8
B%8D%E7%85%A7%E6%9B%9D%E5%85%89-113018438.html.
109
In Taiwan, “red media” has been used to describe media that spread disinformation and excise spring controls to amply PRC’s propaganda in Taiwan. A red media and its parent companies
usually rely on the PRC market as their main source of profits, and receive a huge amount of subsidies from the PRC’s local governments or governmental apparatuses regarding Taiwan.
110
TFD press release, 2021 TFD Survey on Taiwanese View of Democratic Values and Governance, December 29th 2021,
http://www.tfd.org.tw/export/sites/tfd/files/news/pressRelease/ENG_press_release.pdf.
20 China’s Influence in Europe

China’s economic coercion

and Australia’s resilience
Benjamin Herscovitch

Addressing the Australian Parliament in November 2014, has largely held up at the aggregate level: the value of goods
Chinese President Xi Jinping spoke of a “vast ocean of good- exports to China only declined by roughly 2% to A$146 bil-
will between China and Australia”. 111 These waters are now lion in 2020 from a record high of A$148 billion in 2019. But
stormy and foreboding. Diplomatic, political, military, and assessments of the overall costs to the Australian economy
economic tensions simmered between Canberra and Beijing are significant: in the range of A$7 billion to A$10 billion by
for years over everything from the Australian government’s early 2021.113
expanding efforts to combat foreign influence and interfe-
rence to Canberra’s public objections to Beijing’s erosion of The nine confirmed targets of China’s trade restrictions saw
Hong Kong’s autonomy. But 2020 was a watershed year. In their export value to China drop by as much as 78% in 2020,
the wake of Canberra’s call in April for an inquiry into the with exports of coal, barley, and copper ores and concentra-
origins of the COVID-19 pandemic, the bilateral relationship tes being slashed to zero by 2021. These key goods exports
went into freefall. to China were still flatlining at zero in the latest trade data
from late 2021 and early 2022. Meanwhile, the value of all
Not since November 2019 has the Australian Prime Minis- other targeted exports to China slumped. Given that this in-
ter met a Chinese leader, and not since January 2020 has cludes other high-value exports, such as beef, wine, and cot-
an Australian minister been able to speak directly to their ton, which were all worth more than A$1 billion per annum in
Chinese counterpart. The drumbeat of mutual criticisms in 2019, these drops in export values are a dramatic disruption
official diplomatic statements and the press also reached a of Australia’s trade.
crescendo that shows no sign of easing. Meanwhile, Aus-
tralia’s move to build long-range nuclear-powered subma- Even exporters of broadly fungible commodities, such as
rines and People’s Liberation Army presence in Australia’s coal, copper ores and concentrates, and barley, have had to
northern maritime approaches have led to frostier military forgo the premium associated with exporting to the massi-
ties. Notwithstanding all these examples of the freeze in bi- ve Chinese market, albeit in most cases while finding alter-
lateral relations, perhaps the most dramatic is China’s cam- native export markets.114 Meanwhile, select exports geared
paign of economic coercion. Set to enter its third year in May towards the Chinese market, notably premium Australian wi-
2022, Beijing has pursued a sustained and severe campaign nes and lobsters, have either been unable to find alternative
of trade restrictions against a wide array of valuable Austra- markets or have been forced to sell on the domestic Australi-
lian exports. an or other international markets at significantly discounted
prices. For example, industry reports indicated that lobsters
that would have been exported to China in late 2020 were
The pain of parlous Australia-China sold on the domestic Australian market for approximately
relations 30% of their sale price on the Chinese market.115

At least nine Australian exports have been targeted. Austra- Raising resilience and enforcing rules
lian beef, barley, cotton, coal, timber, sugar, lobsters, copper,
and wine exports have all been slammed with punitive tra- In response to the bite of trade restrictions, Canberra has re-
de restrictions. These trade barriers have reduced to zero fused to either offer concessions aimed at placating Beijing
the value of some of Australia’s most lucrative exports to its or enacting punitive counter-coercion measures against the
biggest export destination – worth in total more than A$24 Chinese economy. Instead, Australia has sought to raise its
billion in 2019.112 The value of Australia’s exports to China resilience via trade diversification, while also seeking to re-

111
Xi Jinping, “House of Representatives Address by the President of the People’s Republic of China,” Commonwealth of Australia, Canberra, 17 November 2014.
https://parlinfo.aph.gov.au/parlInfo/genpdf/chamber/hansardr/35c9c2cf-9347-4a82-be89-20df5f76529b/0005/hansard_frag.pdf;fileType=application%2Fpdf.
112
Unless otherwise specified, figures in this paper are based on the author’s calculations of official Australian government trade data, which is available here:
Department of Foreign Affairs and Trade, “Trade statistical pivot tables,” 2022, https://www.dfat.gov.au/about-us/publications/trade-statistical-pivot-tables;
Department of Foreign Affairs and Trade, “Direction of goods and services trade,” 2022; https://www.dfat.gov.au/trade/resources/trade-statistics/Pages/trade-time-series-data.
113
Roland Rajah, “The big bark but small bite of China’s trade coercion,” The Interpreter, 8 April 2021,
https://www.lowyinstitute.org/the-interpreter/big-bark-small-bite-china-s-trade-coercion;
Ron Wickes, Mike Adams, and Nicolas Brown, Economic Coercion by China: the impact on Australia’s merchandise exports. Adelaide: The University of Adelaide, 2021,
https://iit.adelaide.edu.au/ua/media/1479/wp04-economic-coercion-by-china-the-effects-on-australias-merchandise-exports.pdf.
Estimates vary and are challenging to calculate given the counterfactuals of what would have occurred in the absence of China’s economic coercion.
114
James Laurenceson and Thomas Pantle, Australia’s export exposure to China: Assessing the costs of disruption, The Australia-China Relations Institute, Sydney, 2021,
https://www.australiachinarelations.org/sites/default/files/Australia%27s%20export%20exposure%20to%20China-%20assessing%20the%20costs_JL%20and%20TP.pdf;
Scott Waldron, Victor Ferguson, and Darren Lim, “Market adjustments to import sanctions: Lessons from Chinese restrictions on Australian trade, 2020-21,” SSRN, 2021,
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3945451.
115
Steven Schubert, “Victorian rock lobster industry ‘on its knees’ in ongoing China trade dispute,” ABC News, 20 February 2021,
https://www.abc.net.au/news/2021-02-20/victorian-rock-lobster-industry-suffers-in-china-trade-dispute/13174912.
 21

medy China’s coercive practices by appealing to both inter- ministerial-level statements, Australia supports the rules-
national trade law and diplomatic norms.116 Australia’s trade based international order.122 This broad concept encom-
diversification efforts have focussed on export-promotion passes the United Nations, international law, and the WTO-
initiatives in emerging and established markets, additional centred global trading system, among other norms and rules.
market access, and government loans targeted at exporters Maintenance of this order is considered “essential for Aus-
impacted by economic coercion.117 These measures have tralia’s security and prosperity”.123
included additional Australian government representatives
to promote Australian exports in key markets, ongoing ef- Australia’s efforts to raise resilience and enforce rules are
forts to negotiate access in alternative markets via new and not only consistent with the broad principles of this rules-
expanded free trade agreements (FTAs), and small loans for based international order, but also in many cases incrementally
exporters to enter and expand operations in other markets.118 strengthen this system. Responding to China’s economic
coercion via WTO processes buttresses the rules-based
On the trade law front, Australia has sought remedy via World global trading system, while efforts to enhance the pow-
Trade Organisation (WTO) dispute resolution processes. In er of diplomatic norms against coercive practices solidify
response to China’s formal anti-dumping and countervailing the normative basis of the rules-based international order.
duties against Australian barley and wine, Australia has ini- Trade diversification measures such as efforts to support
tiated ongoing WTO dispute resolution processes, which a exporters find new markets do not directly serve the rules-
range of likeminded partners have joined as Third Parties.119 based global trading system. But these measures are at the
Australia has also made numerous unilateral criticisms of very least not inconsistent with the rules-based international
China’s economic coercion and issued bilateral joint state- order. Moreover, to the extent that this system seeks to en-
ments raising concerns about economic coercion with more hance global economic connectivity, these trade diversifica-
than 11 countries and multilateral organisations.120 Although tion measures will produce outcomes that complement the
most of these joint statements do not explicitly refer to China, rules-based international order.
they would probably be understood by Beijing as thinly veiled
criticisms of its behaviour and are designed to impose repu-
tational costs on China.121 Australia’s export redirection

Australia’s policy choices have also likely been made easier

The benefits and limitations by the relatively fast and successful redirection of Australian
of Australia’s responses exports.124 Just as China has been able to find alternative
suppliers, so too have most Australian exporters been able
On one level, Australia’s responses to China’s economic co- to find alternative markets.125 Take the case of Australia’s
ercion have been unsuccessful. At the time of writing, some previously large wine exports to China. Although their value
of Australia’s most valuable exports, such as coal and cop- collapsed with the November/December 2020 introduction
per ores and concentrates, were still being entirely blocked of anti-dumping and countervailing duties, their value to the
from the Chinese market. Moreover, there are currently few rest of the world has steadily climbed since January 2021,
indications that trade restrictions will ease in the near term. despite exports to China flatlining.126 It remains to be seen
But changing China’s behaviour is not the only measure of whether this rising value will fully offset the loss of the large
effectiveness. From the point of view of the value of Austra- and lucrative Chinese market. But the data so far suggests
lia’s exports and Canberra’s overarching goal of supporting that a significant amount of export redirection has already
the rules-based international order, Australian policy res- occurred since China shut Australian wines out of its market.
ponses appear more favourable. As per successive autho- This story has been replicated in other industries targeted
ritative policy documents and a long record of leader- and by China’s trade restrictions. Despite Australian exports of

116
Dan Tehan, “National Press Club Address – Economic statecraft in a challenging time,” Minister for Trade, Tourism and Investment, 22 September 2021,
https://www.trademinister.gov.au/minister/dan-tehan/speech/national-press-club-address-economic-statecraft-challenging-time.
117
See, for example, “Agribusiness Expansion Initiative,” Business Envoy, July 2021,
https://www.dfat.gov.au/about-us/publications/trade-investment/business-envoy/july-2021/agribusiness-expansion-initiative.
118
See, for example, “Grants to boost Australian exporters’ global growth,” Minister for Trade, Tourism and Investment, 16 August 2021,
https://www.trademinister.gov.au/minister/dan-tehan/media-release/grants-boost-australian-exporters-global-growth.
119
“WTO panel to be established in barley dispute.” Minister for Trade, Tourism and Investment Minister for Finance, 28 May 2021,
https://www.trademinister.gov.au/minister/dan-tehan/media-release/wto-panel-be-established-barley-dispute;
“WTO action to defend Australia’s wine makers,” Minister for Trade, Tourism and Investment Minister for Finance, 19 June 2021,
https://www.trademinister.gov.au/minister/dan-tehan/media-release/wto-action-defend-australias-wine-makers.
120
“Australia’s diplomatic campaign against economic coercion,” Beijing to Canberra and Back, March 2022,
http://beijing2canberra.org/australias-diplomatic-campaign-against-economic-coercion/.
121
Dan Tehan, “Interview – Bloomberg,” Minister for Trade, Tourism and Investment, 23 July 2021, https://www.trademinister.gov.au/minister/dan-tehan/transcript/interview-bloomberg.
122
2016 Defence White Paper, Commonwealth of Australia, Canberra, https://www1.defence.gov.au/sites/default/files/2021-08/2016-Defence-White-Paper.pdf; Foreign Policy White Paper,
Commonwealth of Australia, Canberra, https://www.dfat.gov.au/publications/minisite/2017-foreign-policy-white-paper/fpwhitepaper/pdf/2017-foreign-policy-white-paper.pdf, 2020 Defence
Strategic Update, Commonwealth of Australia, Canberra, https://www1.defence.gov.au/sites/default/files/2020-11/2020_Defence_Strategic_Update.pdf.
123
2016 Defence White Paper, Commonwealth of Australia, Canberra, https://www1.defence.gov.au/sites/default/files/2021-08/2016-Defence-White-Paper.pdf
124
The extent of this economic cushioning resulting from relatively successful export redirection has only become clear since the introduction of China’s trade restrictions.
As such, notwithstanding policy planners and economists foreseeing some level of natural export redirection, such redirection may not have been a significant motivating factor
for the Australian government to pursue resilience and rules-enforcement measures.
125
Su-Lin Tan, “China’s imports of US coal, Canadian barley continue to climb amid ban on Australian exports,” South China Morning Post, 30 April 2021,
https://www.scmp.com/economy/china-economy/article/3131652/chinas-imports-us-coal-canadian-barley-continue-climb-amid.
126
Benjamin Herscovitch, “Diplomatic signalling, no negotiating, and export redirection (again),” Beijing to Canberra and Back, 3 March 2022,
https://beijing2canberra.substack.com/p/diplomatic-signalling-no-negotiating.
.
22 China’s Influence in Europe

barley, coal, and copper ores and concentrates to China cras- course. Australia has sought to make its economy more re-
hing to zero, the value of exports of these commodities to ot- silient by supporting its exporters to redirect to alternative
her markets has risen sharply. The overall value of Australia’s markets while also seeking to use the rules-based global
coal exports in June 2021 (when coal was entirely excluded trading system and diplomatic norms to respond to China’s
from the Chinese market) already eclipsed its value in May coercive practices. Canberra’s efforts to build resilience and
2020 when coal exports to China spiked to just shy of A$1.5 seek redress will, of course, neither yield immediate com-
billion. Surging global coal prices since mid-2020 have likely pensation nor avoid all costs. But Australia enjoys a key
played a significant role in the rising value of Australian coal structural advantage. While Canberra waits for WTO proces-
exports to the rest of the world. Nevertheless, rising coal ses and government-led trade diversification measures to
prices alone do not account for the way in which the aggrega- do their work, many of the largest impacted Australian ex-
te value of the nine Australian exports targeted by China’s tra- porters have been able to take advantage of dynamic global
de restrictions had by November 2021 far surpassed their Ap- markets to redirect to alternative buyers.127
ril 2020 value prior to China’s trade restrictions. Although the
monthly value of these exports to China in November 2021 Just as Australia’s status as an economically liberal trading
was approximately 9% of its value in May 2020, the value of nation paved the way for the country’s export dependence
these same nine exports to the rest of the world in November on China and accordingly made it vulnerable to Beijing’s tra-
2021 was approximately 267% of its value in May 2020. de restrictions, it has equally cushioned the blow of econo-
mic coercion by ensuring that Australian exporters can find
alternative international markets. China has the economic
Conclusion clout and determination to pursue punishing campaigns of
economic coercion against countries that defy its will. But
Faced with the dilemma of making political and policy com- the Australian experience suggests that the reality of China’s
promises to placate China or passively enduring the costs economic coercion need not be as bad as the ominous threat
of Beijing’s economic coercion, Canberra has chosen a third portends.

USA
Sascha Tamm

Preliminary note perceived as a threat. Most important among these is unfair

competition from Chinese companies, which enjoy significant
The character of U.S.-China relations is different from that advantages over their U.S. competitors through subsidies and
of China‘s relations with smaller and economically weaker partial home market protection. Closely related to this is the
states. China has significantly less pressure potential than criticism that intellectual property and other investments by
in these relations. At the same time, the U.S. exerts conside- U.S. companies in China are inadequately protected. Finally,
rable pressure on China in various fields. The following brief there are concerns that China and Chinese banks and compa-
analysis has been adjusted accordingly. nies could use the large amounts of U.S. Treasury bonds they
hold to exert pressure.

The relationship between the USA and China From China‘s perspective, the U.S. claim to global power and
influence is seen as an obstacle to its own goals in the eco-
The U.S. sees China as by far the most important global com- nomic and political spheres. China defends its right to eco-
petitor. This trend began at the latest under President Oba- nomic intervention and regulatory mechanisms in its home
ma and has support on both sides of the political spectrum. market. This is even more true of the Chinese leadership‘s
The term „Great Power Competition“ neatly summarises the brutal crackdown on ethnic and religious minorities and its
evolving relationship between the two states.128 In addition, suppression of freedom of expression and pro-democracy
there is extensive criticism of human rights violations and, movements. These are, of course, assessed quite differently
more generally, of China‘s evolution toward totalitarian one- by the Chinese leadership, but above all, they are described
party rule. As a result, China is seen less and less as a partner as purely domestic matters. Finally, China maintains that
by the U.S. and today almost exclusively as a threat. This is Chinese companies are nothing more than private enterpri-
evident in a number of areas. Apart from the dynamic expan- ses and are not used for strategic and threatening actions in
sion of Chinese military strength through huge investments, other countries.
there are several factors in the field of economics that are
127
Although beyond the scope of this paper, it is worth highlighting that Australia has also significantly benefitted from China having primarily targeted broadly fungible commodities
(e.g., coal) that can be relatively easily redirected to alternative international markets.
128
On the parameters and controversies about „Great Power Competition“: Joseph S. Nye, Jr.: America‘s New Great-Power Strategy, 2021
https://www.project-syndicate.org/commentary/us-china-new-great-power-strategy-by-joseph-s-nye-2021-08?barrier=accesspaylog.
 23

At the same time, the economic ties are (still) very close.129 However, apart from these more symbolic acts, China is of-
China is the U.S.‘s most important foreign trade partner, ten willing to negotiate on specific issues. These negotiati-
even ahead of neighbouring Canada and Mexico. The same ons are not easy, but there is great interest in markets for
is true in reverse: the U.S. is also China‘s largest foreign trade Chinese exports that are as open as possible. That is why
partner. This gives both sides leverage for economic pres- the Chinese leadership is ready to make some concessions,
sure. But it also gives them incentives to avoid too much at least on paper. Both sides know that their economies
disruption of the trade relations so as not to jeopardize their could hardly function without close ties with each other.
own economic development.
At the same time, efforts can be observed on both sides to
become less dependent on potential threats from the other
Cases of economic or political coercion side. This is especially true in fields of high strategic import-
exerted by China and the USA ance. China is pushing research132 and development in areas
where American companies still have a clear advantage. The
The U.S. exerts economic pressure on China with different USA, on the other hand, wants to break away from China in
justifications and different methods. Economic sanctions to certain areas of the economy, such as the steel industry. It
protect the Uyghur minority include, for example, a ban on remains to be seen how this will affect the complex supply
trading with the Xinjiang Uyghur Autonomous Region. Ame- chains in the globalised world economy.
rican companies are exempt only if they can prove that for-
ced labor did not play a role in the production of the goods
they trade. In addition, sanctions were imposed on individu- Assessment of the response, factors
als responsible for serious human rights violations against affecting success and failure
Uighurs.130
The effectiveness of the pressure exerted by the U.S. on China
In 2018 and 2019, under Donald Trump‘s presidency, existing must be judged in a differentiated manner. It is obvious, for
trade and economic policy differences mentioned above tur- example, that sanctions imposed for human rights violations
ned into an outright trade war, which included, for example, have no direct influence on the behaviour of the Chinese lea-
hefty special tariffs on certain Chinese export goods. As a dership. At the same time, it can be observed that companies
result, after intensive negotiations, the so-called Phase One can be persuaded to change their supply chains and thus in-
Agreement was reached, which takes up some of the Ame- crease the pressure for change.
rican criticisms, but also opens up stronger export oppor-
tunities for China. The U.S. is pressing China to meet all its Two things became apparent during the negotiations on the
obligations under the agreement. Phase one trade agreement: first, the Chinese leadership is
very much interested in long-term trade relations and cannot
From a strategic and security perspective, President Biden do without the United States as a trading partner. For this
has banned American businesses from investing in 59 Chi- reason, compromises are sometimes made that contradict
nese companies that are closely linked to the military and the domestic economic policy orientation. Second, however,
intelligence services. The U.S. is also trying to convince its it also became apparent that the United States‘ trade policy
partners around the world, including Germany and the entire is currently not primarily oriented toward the development
EU, to exclude Chinese companies from expanding their and implementation of general rules and towards for free
critical infrastructure, especially in the field of information trade, but rather toward the enforcement of national, often
technology. particular domestic political interests.

A critical aspect not to be forgotten is that the U.S. does not

Mutual reactions to pressure and threats use the WTO‘s dispute settlement mechanisms, which are
from the other side applicable to various problem areas. Under President Trump,
these have even been effectively blocked. In doing so, the
China has responded to US economic pressure in different United States is giving up an instrument that can be very
ways. The sanctions for human rights violations have seen a useful for them and even more so for their allies.
blunt rejection and counter-sanctions against American indi-
viduals and entities, including former Secretary of Commerce
Wilbur Ross and former Secretary of State Mike Pompeo131.

129
For an overview see: https://sgp.fas.org/crs/row/IF11284.pdf.
130
For details of the sanctions see: https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/24/fact-sheet-new-u-s-government-actions-on-forced-labor-in-xinjiang/.
131
https://www.reuters.com/world/china/china-imposes-counter-sanctions-former-us-commerce-secretary-ross-others-2021-07-23/.
132
On the strategies applied by China see: https://www.economist.com/business/china-wants-to-insulate-itself-against-western-sanctions/21807805.
24 China’s Influence in Europe

Lessons learnt for the EU?

Policy proposals for a strategic response
to Chinese coercion
Jan Weidenfeld

The European Union and its member states have already has pursued in the past when it comes to criticising China
taken important steps to increase Europe’s resilience in and Chinese policies will be sustainable. Similarly, past
the face of Chinese economic and political coercion. Vari- efforts by several German governments to erect a firewall
ous measures aimed at bolstering the EU’s economic secu- between economic cooperation and difficult human rights
rity have been in the making for years, with the anti-coercion issues, which were often parcelled out to German-Chinese
instrument (ACI) that the European Commission presented dialogue formats, seem increasingly untenable.
in December 2021 constituting a key measure.133 The EU
institutions and EU member states have also expanded re- The EU and its member states must expedite preparations for
sources in relevant ministries and intelligence agencies and strengthening their economic security and resilience capa-
even created new institutions to detect and counter malign cities in the face of what are likely to be more frequent and
Chinese political influence and disinformation. As a result, more consequential episodes of Chinese economic coercion.
awareness of such activities has grown across the EU. As the case studies of EU member states and like-minded
partners in the Indo-Pacific in this volume show, at least
However, this is not a time for complacency. The coun- three elements can be critical in successfully managing
try case studies in this volume suggest that past Chinese episodes of Chinese economic coercion.
announcements of economic punishment did not always
translate into decisive action and hence painful economic First, the EU and its member states need to strengthen
effects. The recent experiences of Australia and Lithuania coordination and resilience to cope more effectively with
also demonstrate that even in cases where China is seri- Chinese economic coercion:
ous about pursuing economic coercion through trade and
investment restrictions the effects can at least be partially B The EU and its member states should engage in more
contained and even be made up for over time, for instan- structured intelligence sharing regarding Chinese eco-
ce, by diverting exports to other markets or sourcing capital nomic coercion practices and effective responses, also
from like-minded partners. However, the EU and its member drawing on the input of like-minded countries. Specifi-
states would be ill-advised to underestimate the depth and cally, EU institutions and member states should create a
breadth of risks that future episodes of Chinese economic hub for gathering economic intelligence and exchanging
coercion pose. Beijing is more willing than ever to pay a high relevant information. In doing so, they can learn from like-
economic price for pursuing its political goals, specifically minded partners. For example, Australia already benefits
when core interests regarding Taiwan, Hong Kong, or Xin- from government structures that provide regular econo-
jiang, are at stake. At the same time, Beijing explores new mic intelligence and strategic assessments of China’s
economic coercion tools and approaches. China’s pressu- economic coercion intentions, strategies, and capabilities
ring of third country multinational companies to stop trading as well as Australia’s own economic vulnerabilities.
with Lithuanian entities in relation to the ongoing dispute
over an upgrading of Taiwan’s representation in Vilnius is a B The EU institutions must put in place mechanisms to co-
case in point. ordinate EU solidarity in the face of economic coercion.
EU member states should consult each other on an ad
Avoiding confrontation with China is unlikely to prove a hoc basis when one of them is subject to economic co-
viable strategy in going forward. China’s willingness to en- ercive measures in order to signal solidarity with targeted
gage in a more aggressive use of economic coercion comes member states as well as dissatisfaction to China. Lear-
at a time when European publics are increasingly weary of ning from missed opportunities in the case of Lithuania,
the Chinese Communist Party’s violation of human rights, for example, the EU should send coordinated messages
fundamental freedoms, and minority rights at home as well during future episodes of economic coercion that any
as its more assertive posture in international affairs, inclu- Chinese measures aimed at undermining the single mar-
ding Beijing’s de facto support for Russia’s war in Ukraine. In ket are unacceptable and that the cooperation agenda
light of these developments, it seems increasingly doubtful between the EU and China is massively impaired if this
that the “politics of self-constraint” that Greece, for example, key element of European integration is not respected.

133
https://trade.ec.europa.eu/doclib/docs/2021/december/tradoc_159958.pdf
 25

B The launch of new tools and mechanisms that are ai- The EU’s Global Gateway and Indo-Pacific strategies
med at strengthening the EU’s economic resilience, offer important reference frameworks for strengthening
specifically the ACI, should be expedited. The European partnerships that can help diversify the EU’s economic
Commission’s ACI proposal remains contested among relations, especially if initial connectivity projects are cho-
member states. The legislative procedure might therefore sen strategically and are implemented swiftly.
take still a considerable number of negotiations and draf-
ting before the ACI can be voted on. EU member states Third, in countering Chinese economic coercion, the EU
should pull together to make sure that this process is ex- and its member states must leverage international part-
pedited as much as possible. At the same time, in order to nerships as well as international institutions and rules:
build up a credible track record in the sphere of anti-coer-
cion, the EU and its member states must be fully prepared B The EU should continue to make use of relevant inter-
to impose the restrictions on financial services, trade, and national fora when tackling episodes of economic co-
investments envisaged by the ACI when warranted. ercion. As it did with launching a WTO case against China
over discriminatory trade practices in relation to Lithua-
Second, where feasible, markets and supply chains must nia, the EU should adhere to the WTO and its principles to
be diversified away from China: deal with Chinese economic coercion, wherever possible
and likely to yield results. The EU should also continue to
B The EU and its member states should create tangible lend support to like-minded partners in relation to WTO
incentives for industries and companies to diversify cases, as it has, for example, with supporting Australia
their global markets, supply chains, and sources of in response to China’s anti-dumping and countervailing
investment. Calls for the diversification of markets and duties against Australian barley.134
supply chains away from China have been a commonpla-
ce in EU and EU member state Asia and Indo-Pacific stra- B To raise the reputational costs associated with episo-
tegies of recent years. However, these calls have rarely des of economic coercion for Beijing, the EU and its
been met with tangible action. In deploying such action, member states should raise international awareness
other EU member states might look to Lithuania. Faced of China’s activities. As the country case studies in this
with Chinese economic coercion, the Lithuanian govern- volume shows, Australia has issued numerous criticisms
ment has not only opened up new diplomatic and trade of China’s economic coercion in international fora and ex-
representations in several countries along the Indo-Paci- pressed concerns about economic coercion in bilateral
fic, but it has also created dedicated financial facilities to joint statements, thereby raising international awareness
encourage Lithuanian businesses to develop new export of Chinese practices.
markets. While not necessarily easily reproduceable, Lit-
huania also secured new sources of inbound investment, B The EU and its member states should proactively co-
as Taiwan set up a $200m fund to invest in Lithuanian ordinate international support for countries affected
businesses and to boost bilateral trade. The EU and its by Chinese economic coercion through relevant fora of
member states might also look to Australia for measures like-minded partners, such as the OECD. The establish-
to put market diversification into practice. The Australian ment of a dedicated working group in the Transatlantic
government has handed out small loans to exporters Trade and Technology Council could help promote grea-
developing new markets and tried to expand access for ter alignment between the EU and the U.S. when it comes
Australian businesses in alternative markets through ne- to dealing with episodes of Chinese economic coercion.
gotiating additional and expanded free trade agreements.
B The EU and its member states should initiate and en-
B The EU and its member states should devise a facili- gage in more structured dialogues with like-minded
ty for providing financial support to companies most economies on dealing with Chinese economic coer-
affected by Chinese economic coercion. This would cion. By engaging with partners in the Indo-Pacific, like
entail the introduction of emergency relief funds as well Australia or Taiwan, EU member states cannot only build
as longer-term support schemes for the diversification of the foundation for seeking support in the event of econo-
supply chains and markets. If such measures cannot be mic coercion episodes, but they can also learn from these
integrated into the ACI, member states must be prepared partners what works and what does not when it comes to
to act on a less formal, ad hoc basis. In doing so, they dealing with Chinese economic coercion.
might want to study the way Australia has offered govern-
ment loans to Australian exporters impacted by Chinese As the contributions to this volume underscore, Chinese
economic coercion. coercion is not limited to the economic dimension alone
but also involves malign political influencing activities.
B The EU should mainstream project-based elements ai- Some segments of political and business elites in European
med at the diversification of markets and supply chains countries, like the Czech Republic, Germany, or Greece, have
into the implementation of its strategies for engaging already been captured by China, while European civil society
third countries, especially those related to connectivity. representatives and academics critical of China have been

134
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds598_e.htm.
26 China’s Influence in Europe

put under pressure, including through the imposition of Chi- B European governments as well as foundations and ot-
nese sanctions. The evidence from the country case studies her philanthropic actors should further bolster existing
also shows that China has made efforts to sway wider public funding of investigative journalism, research and civil
opinion in favour of its own policy priorities. Not least the society actors covering and countering Chinese poli-
war in Ukraine has underscored China’s growing role as a tical influencing activities at the national and sub-na-
sponsor and promoter of disinformation in Europe. China’s tional level. As the country case studies from the Czech
state-backed media have frequently taken up and reinforced Republic and Hungary show, independent journalism as
Russian propaganda and disinformation in relation to the well as a vibrant and highly aware civil society scene of-
conflict, including denials of atrocities and the attribution of ten have a critical role to play in uncovering malign po-
blame to the U.S. and NATO.135 litical influence and mobilising political and civil society
responses.
Awareness of Chinese political influencing efforts has grown
steadily in European capitals in recent years, and the EU in- Second, investments in countering disinformation more
stitutions have put in place mechanisms to call out Chinese rapidly and strengthening the media literacy of European
(and other) disinformation campaigns. However, EU mem- publics are critical:
ber states need to remain vigilant. The case studies of EU
member states and like-minded partners in the Indo-Pa- B The EU institutions and relevant EU member state bo-
cific presented in this volume hint at two critical elements dies should put in place mechanisms to respond and
in dealing with malign Chinese political influence. correct disinformation in real time. The target set for
Taiwanese ministries, for example, to address disinfor-
First, EU member states need to facilitate and promote mation within two hours upon discovery could serve as
awareness and transparency in relation to Chinese politi- a yardstick. However, such an ambition would not only
cal influencing efforts: require even closer collaboration between European go-
vernment ministries and relevant social media platforms,
B The EU should promote awareness raising program- but also a considerable expansion of public sector re-
mes and activities for parliamentarians and senior sources to monitor relevant social media platforms.
public officials at national and sub-national level. Chi-
nese political influencing strategies are often successful B EU member states should promote national alliances
because they go undetected, due to a lack of awareness and campaigns for media and disinformation education.
of Chinese aims and strategies among political decision- Akin to the Taiwanese approach discussed in the country
makers. The cases of the Czech Republic and Hungary case study in this volume, relevant government depart-
underline that opposition parties often play a critical role ments and civil society organisations working on media
in exposing Chinese political influencing activities. Howe- and digital themes as well as education could come toge-
ver, in order to exert effective political scrutiny in relation ther to develop curricula and delivery campaigns for fight-
to Chinese political influence activities, they also need to ing disinformation and increasing media literacy among a
be made aware of aims and mechanisms. wide spectrum of societal stakeholders. Also, media lite-
racy training should be offered in all high schools across
B Chinese political influencing efforts should be the Europe in a regular and compulsory manner.
subject of regular debates in national and sub-natio-
nal parliaments. The relatively high level of awareness The episodes of Chinese economic and political coercion di-
of Chinese political influencing efforts in the Czech Repu- scussed in the country case studies in this volume highlight
blic, for example, is a result of the opposition parties ha- the challenges that lie ahead in the relationship with China,
ving regularly raised the issue in parliamentary debates. especially as Beijing is more willing and able to escalate
when its key interests are at stake. In facing these challen-
B EU member state intelligence agencies should regular- ges, the EU and its member states can and must learn from
ly release public reports about the scope, intensity, and each other and from other like-minded countries to rapidly
nature of Chinese political influencing efforts. If provi- bolster their economic and political resilience.
ding concrete examples of influencing activities, as has
been the case, for instance, in the past by the German
and Lithuanian intelligence agencies, such reports can
help create greater public awareness.

135
https://www.euractiv.com/section/digital/news/russia-and-china-align-on-war-disinformation-eu-service-says/.
 27

About the authors

B KETTY W. CHEN
is the Vice President of the Taiwan Foundation for Democracy and a member of the Board
for the Prospect Foundation. She also serves as an advisor for the National Bureau of Asian
Research board of advisors. Dr. Chen is a political scientist with a doctoral degree focusing on
comparative politics, democratization, international relations and political philosophy. She has
written for international media outlets such as The Wall Street Journal, the Associated Press,
Al Jazeera, LA Times, New York Times, Financial Times, BBC, and Le Monde.

B BENJAMIN HERSCOVITCH
is a Research Fellow jointly appointed to the School of Regulation and Global Governance
(RegNet) and the National Security College at the Australian National University, where he fo-
cuses on China’s economic statecraft and Australia-China relations. He is a member of the
ANU Working Group on Geoeconomics. Prior to joining RegNet, Benjamin was an analyst and
policy officer in the Australian Department of Defence, specialising in China’s external policy
and Australia’s defence diplomacy. He was previously a researcher for Beijing-based thank-
tanks and consultancies. Benjamin holds a Bachelor of International Studies from the Univer-
sity of New South Wales and a PhD in political theory from the University of Sydney.

B IVANA KARÁSKOVÁ
is a China Research Fellow at Association for International Affairs (AMO), a non-governmen-
tal not-for-profit organisation and think tank based in Prague, Czech Republic. Ivana founded
and has been leading two international projects - MapInfluenCE, an initiative mapping China’s
influence in Central Europe (i.e. Czechia, Poland, Hungary and Slovakia), and China Observers
in Central and Eastern Europe (CHOICE), a platform gathering more than 50 China researchers
from 27 CEE countries.

She holds Ph.D. in International Relations and other university degrees in Journalism and Mass
Communication and European Studies. Besides her think tank activities and advocacy, she
works at Charles University, Czech Republic, where she lectures on EU-China relations, China’s
geopolitics and security in Northeast Asia and conducts her research on societal resilience
against foreign malign influence at CEDMO.

Ivana completed research and study stays in China, Taiwan and US (Fulbright scholar at We-
atherhead East Asian Institute, Columbia University). She is a member of China expert pool
at the European Centre of Excellence for Countering Hybrid Threats (Hybrid CoE) in Helsinki.
Since September 2020 she has been a non-resident European China Policy Fellow at MERICS,
Germany.

B ANNA MARTI
heads the Global Innovation Hub of Friedrich Naumann Foundation for Freedom in Taipei,
which focuses on the topics of “Innovation for Democracy” and “Digital Transformation”. Anna
Marti is also co-editor of the Foundation’s China Bulletin, where she regularly contributes
analysis on Taiwan, cross-strait relations, Greater China, security issues and EU-China relations.
Prior to joining Friedrich Naumann Foundation for Freedom, Anna Marti worked at the UN
Regional Center for Peace and Disarmament in Asia and the Pacific and giz. Anna holds a BA in
International Cultural and Business Studies from Passau University, and an MA in politics and
Society of East Asia from Tübingen University.
28 China’s Influence in Europe

B DÁNIEL MIKECZ
is a political scientist. He received both his MA and PhD at the Eötvös Loránd University in
Budapest. He is a Senior Research Fellow at the Republikon Institute and Research Fellow at
the Institute of Political Science of the Centre for Social Sciences in Budapest. From 2010 he
holds various courses at the Eötvös Loránd University on protest movements and political par-
ticipation. He frequently publishes articles in academic journals and weekly, daily newspapers
on social movements, protests and a political participation.

B FILIP ŠEBOK
is a Project Manager of MapInfluenCE and China Observers in Central and Eastern Europe
(CHOICE) projects and a China Research Fellow at the Association for International Affairs
(AMO) in Prague, Czech Republic.

Filip graduated in International Relations and Chinese Cultural Studies at Masaryk University in
Brno, Czech Republic, and International Relations (program taught in Chinese) at Renmin Uni-
versity in Beijing, China. He previously worked for Slovak research institutions STRATPOL and
CEIAS (Central European Institute of Asian Studies. Filip also gained experience as an intern at
the Slovak Ministry of Foreign Affairs and the Slovak Embassy in Beijing. His research interests
include Chinese domestic and foreign policy, relations between China and Central and Eastern
European countries and China’s foreign policy rhetoric and propaganda.

B SASCHA TAMM
Born in 1965, Sascha TAMM studied philosophy, political science and physics in Dresden, Leip-
zig and Urbana-Champaign. After working as freelance coach, author and ghost-writer he joi-
ned Friedrich Naumann Foundation for Freedom (FNF) in 2001. In 2009 he became head of the
Moscow office of FNF. Since 2014 he works at the International Department of FNF, currently
as head of the North America/Latin America Unit.

He has published books and articles on various issues of liberal political philosophy, European
integration and foreign policy, among them: Property. Conceptions and Ideas (2009), Liberal
Readings on Education (with Stefan Melnik, 2008).

B PLAMEN TONCHEV
is Head of Asia Unit at the Athens- based Institute of International Economic Relations (IIER).
He is founding member of the European Think-tank Network on China (ETNC) and a member
of the EU Chapter of the Council for Security Cooperation in the Asia Pacific committee (EU
CSCAP). Plamen has specialised in Chinese studies since the late 1990s and has published
extensively in the field. His research interests cover both China’s politics and economy and its
standing on the international scene, the Belt and Road Initiative (BRI) and EU-China relations.

B RENALDAS VAISBRODAS
is the international officer of the Laisvės partija. Previously Renaldas held various political po-
sitions: Chief Foreign Policy adviser to the President of the Republic of Lithuania Dalia Grybau-
skaite (2014-2016). Political adviser to Presidents of the ALDE Group Graham Watson (2009)
and Guy Verhofstadt (2009-2014). Formerly elected Member of the Vilnius City Council. Cur-
rently Renaldas is running corporate affairs and communication function in Lithuania for a
large international corporation.
 29

B JAN WEIDENFELD
is Director Policy and Advisory. He oversees MERICS’s advisory portfolio and manages rela-
tions with key public and private sector stakeholders. Jan is also heavily invested in MERICS’s
research activities on Europe-China economic and political relations, German, European and
transatlantic approaches to China policy, as well as China’s global political influencing activi-
ties and security policies.

Prior to joining MERICS, he was a consultant with the RAND Corporation, where he led Euro-
pean foreign and public policy research efforts for EU member states, institutions, and agen-
cies. Previously, he also worked with the NATO Parliamentary Assembly, the OSCE, the EU De-
legation to the International Organisations in Vienna, the European Union Institute for Security
Studies, and the European Centre for Development Policy Management. Jan holds an MPhil
in International Relations from the University of Cambridge as well as BA degrees in European
Studies from the University of Maastricht and in International Relations and Politics from the
University of Sussex.