Interpreting Xi´s Europe visit

On 28 March in Berlin, I watched China’s President Xi Jinping deliver one of the few speeches he gave during his 11-day European tour. He spoke about the Chinese dream and about the difficult reforms ahead of the country, and he reminded the audience of the 1937 Nanjing Massacre carried out by the Japanese army. After his comments about the European-driven nineteenth-century Opium Wars, we all felt a little guilty. Then he went on to praise German-Chinese relations and to talk about the long-standing economic ties between the two countries, which he said should be nurtured. This is how you do business: first make them feel bad and then ask for money.

Xi’s agenda in Europe had business written all over it. First, he inked a dairy product deal in the Netherlands, and then he concluded the Airbus deal in France (though it turned out to be worth €7 billion rather than the expected €14 billion). In France, he also had talks on cooperation between Chinese automaker Dongfeng and France’s Peugeot. Xi visited not only Versailles, but also Rhône-Alpes (Lyon), the centre of Chinese enterprise in France. After visiting Berlin, Xi travelled on to Germany’s industrial centres, Duesseldorf (which is known as the centre of Japanese enterprise in Germany) and Duisburg. While his wife visited an old acquaintance at a high school in Essen, Xi watched as the Yuxinou train arrived in Duisburg from Chongqing. A Memorandum of Understanding was signed between Germany’s Bundesbank and the People’s Bank of China on yuan trading in Frankfurt on 29 March – followed by a similar MOU with the Bank of England three days later. Deals and agreements were also signed in Germany with Daimler AG (€1 billion), Bayer, Siemens, and BMW.

Ahead of Xi’s visit to Brussels, Beijing announced that it is dropping subsidy and dumping complaints against imports of European wine and the polysilicon used in the production of solar panels. Then, European Union trade commissioner Karel De Gucht announced that he would no longer pursue an investigation into Chinese dumping of telecoms equipment. The trade dispute out of the way (for now), Xi’s objective in Brussels was to focus on furthering a possible China-EU Free Trade Agreement (FTA).

Other than business deals, the visit uncovered little that was new about China. French President François Hollande only briefly alluded to the issue of human rights. German Prime Minister Angela Merkel said a little more on the topic, but the most outspoken voice on the subject was Germany’s President Joachim Gauck, who during his luncheon speech with Xi on 28 March urged China to improve its record on human rights, religious freedom, and the rule of law.

US president Barack Obama and Xi talked on the sidelines of the Nuclear Security Summit in the Hague on 24 March, touching on a number of issues, including climate change, North Korea, Iran, and cybersecurity. Meanwhile, China, Russia, and 16 other countries (including India and Pakistan) abstained from signing the pledge to an initiative backed by the United States and South Korea promoting nuclear security and transparency.

Both the European leaders and President Obama addressed the Crimean crisis in their talks with Xi. But they failed to change China’s decision to avoid taking any side officially. China seems like an outsider dragged into the spotlight and desperately trying to get out of it. But the signal is clear: by abstaining in the UN Security Council vote declaring the secession referendum illegal and by not siding with the West, Beijing has indicated that it is still standing on Russia’s side. In Berlin, Xi said that China would not take sides, because of its adherence to the principle of non-interference. But at the same time, Beijing is not criticising Russia for breaking with that principle. China does not support the referendum in Crimea – but it is pleased to see Russia stand up to the West.

Looking at the visit’s achievements from a business perspective, it must be accepted that the enhancement in China-EU relations and the major China-EU business deals would have been made with or without Xi’s presence. In the real world, finance and economic exchange has a complex dynamic of its own, which a state visit can support but not greatly influence. Xi signalled that on foreign and security policy, China is not about to adopt a new stance. And on the economy, his visit was structured in a traditional fashion: Xi visited four countries within 11 days and dealt with European business and political leaders on an individual and bilateral basis. With regard to the trade disputes, the EU and its member states have recently proven to China that they can be divided by competing and conflicting interests.

So what is the outcome of Xi’s visit? On Xi’s first visit to Europe since taking office as president, he wanted to deliver a message to Europeans. The message was: this is what you can expect from China, and you need not expect not much more. Not much will change on China’s Europe policy in the coming decade, while Xi holds power. Nevertheless, “not much change” means that there can still be some new developments: as well as taking the usual approach of talking to Europeans individually, Xi also visited Brussels. In doing so, he became the first Chinese president to visit EU headquarters. As the Chinese economy shows slower growth and faces potential struggles, China needs to enhance its economic relations with the EU, as the largest economy in the world. For this reason, China has been pushing hard for the China-EU FTA deal, and this is why Xi visited not only EU member states but also the EU’s headquarters. Beijing knows that if it wants negotiations to succeed, it will have to deal with Brussels.