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Illustration: Brian Wang

ExclusiveChina-EU investment deal casts long shadow over Beijing’s vague sanctions against Europeans

  • Sanctions imposed by Beijing in March against European politicians, scholars and bodies comes as the European Parliament is due to ratify the CAI
  • ‘We have stopped inquiring as it would force the Chinese side to define it,’ says a diplomatic insider
When the European Union sanctioned four Chinese officials in March over suspected human rights violations in China’s far western region of Xinjiang, the response from Beijing was swift.
China hit back within hours, imposing its own sanctions against European politicians, scholars and research groups it deemed critical of its policies in Xinjiang.

China’s Ministry of Foreign Affairs said the personnel and their relatives were banned from travelling to China, including Hong Kong and Macau, while their “related companies and institutes” were restricted from interactions with China.

But there has been little indication since of how the Chinese restrictions apply.

Diplomatic sources say Chinese officials have tried to downplay the significance of its sanctions and tried to prove the policies were less forceful than they appear.

The sources say it is all part of an effort to quietly contain any damage to its ties with Europe and limit the fallout on a much bigger play – a comprehensive investment deal with the EU.

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The Chinese side has on multiple occasions refused to further define the legal implications of its sanctions, leaving a question mark over how they would be applied, the sources said.

In one case, the Chinese side said Beijing’s sanction against the EU’s Political and Security Committee did not target the body’s members, who are member states’ ambassadors to Brussels, a diplomatic source said.

China’s sanctions – unlike those imposed by Western countries that were based on the Global Magnitsky Act or similar frameworks – are not defined by Chinese laws.


Beijing hits back at Western sanctions against China’s alleged treatment of Uygur Muslims

Beijing hits back at Western sanctions against China’s alleged treatment of Uygur Muslims

The issue of implementation, then, depends heavily on how the Chinese side defines those policies, or if they further define them at all, according to sources familiar with the situation.

“We have stopped inquiring as it would force the Chinese side to define it,” a source said. “Official interactions are mostly back to its normal level.”

While retaliation from Beijing was to be expected, there were surprises on the sanctions list, including the Berlin-based think tank Mercator Institute for China Studies (Merics) and the EU’s Political and Security Committee as well as the European Parliament’s Subcommittee on Human Rights.

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Merics said it did not know how the sanctions worked beyond what was already in Beijing’s statement.

“We find the decision regrettable and have no information about how it came about since we were not approached by anyone beforehand,” said Claudia Wessling, Merics director of communications and publications.

The institute had not sent any staff to China recently because of travel restrictions caused by the pandemic, and had no such plans at the moment, she added.

Days after the sanctions were announced, the Beijing office of the German foundation Stiftung Mercator – the sole shareholder of Merics – lost its state sponsor, the Ministry of Civil Affairs, according to sources. The foundation did not reply to requests for comment. Such a partnership is a prerequisite for any foreign NGO operating in China, according to Chinese laws.

The sanctions caused initial confusion about people associated with Merics who are currently in China, including Joerg Wuttke, who sits on the Merics Advisory Board.

But Wuttke, who is also president of the European Union Chamber of Commerce in China, said there was no impact on him personally.

“I guess it primarily means that Merics staff will find it hard to obtain a visa to visit China,” he said. “Equally, Chinese think tanks might be very restricted in working with Merics.”

He added that he would continue to stay on the board of Merics.

While the inclusion of Merics came as a surprise to the European side, it was hardly unexpected to people familiar with Beijing’s thinking.


UK parliament declares Uygurs suffering ‘genocide’ in China’s Xinjiang

UK parliament declares Uygurs suffering ‘genocide’ in China’s Xinjiang
Calling Merics’ research on China’s Belt and Road Initiative and other matters “disinformation”, Wang Yiwei, an international relations expert with Renmin University, said Beijing had found the think tank “annoying”.
Wang acknowledged that Beijing’s retaliation against Brussels was “seemingly heavier” than those against London and Ottawa, which rolled out almost identical sanctions on the same day against Chinese officials deemed responsible for policies in Xinjiang.

The reason behind the difference lay in Europe’s strategic autonomy, he said.

“Britain and Canada both had to follow the direction of the Five Eyes [intelligence alliance], but it’s possible to win over Europe,” Wang said.

Beijing takes foreign media to Xinjiang in bid to dispel suspicion

Beijing has stopped short of imposing sanctions on entities in the executive branch of Britain or Canada, as it did with the Political and Security Committee of the European Council.

Wang added that he remained optimistic the China-EU Comprehensive Agreement on Investment (CAI) would be ratified next year under France’s EU presidency, despite major European parties casting doubt over the deal.
Some members of the European Parliament were targeted by Beijing’s sanctions in March. At a debate in the European Parliament on Wednesday, dozens of members spoke to denounce sanctions by the Chinese side.

There was also a general “lack of appetite” by the European Commission to lobby for the deal, said a diplomatic source. Another person added that the general sense that China had overreacted over the sanctions added to the difficulty of ironing out the tensions.

At the same time, there are signs Beijing is trying to comfort the European business community in China and keep the CAI deal afloat.

Just one day after China announced sanctions on the EU, Chinese Premier Li Keqiang visited a factory in east China owned by the German company BASF, one of the world’s largest chemicals producers.


‘Major progress’ made on China-EU investment deal negotiations, says Beijing’s foreign ministry

‘Major progress’ made on China-EU investment deal negotiations, says Beijing’s foreign ministry

On a trip in April, Li visited the Business & Innovation Centre for China-Europe Cooperation (CCEC) in Chengdu, pledging to representatives of European and Asian companies a continuous opening up of the market. He made a similar pledge during a virtual summit with German Chancellor Angela Merkel on Wednesday.

Since the exchange of sanctions in March, President Xi Jinping has also spoken to European leaders via video links, though discussion of the sanctions was not included in the official readouts.

Wuttke, president of the EU Chamber in China, said Beijing was making an extra effort to reach out to European businesses.

“[I] assume Beijing wants to compartmentalise business and politics, something they achieved … with US investors in China,” he said.