On January 1, Sweden took over the rotating EU Council Presidency from Czechia. The issues linked to Russian aggression in Ukraine are set to dominate Sweden’s term. But China policy will remain a topic of interest as it underpins several topics on the EU agenda.
Sweden on China
The Swedish program specifically lists “efforts for a clear, united and effective EU policy on China” as one of its objectives. The EU is calibrating its China policy, trying to develop tools to deal with a "strategic competitor" and at the same time keep a level of economic engagement that does not create strategic vulnerabilities. Stockholm plans to work on increasing information sharing, consensus building and solidarity among EU member states, referencing the EU’s Indo-Pacific Strategy in that context. Coordinating the EU’s position ahead of the EU-China summit – likely to take place during the Swedish Presidency – will be a test of those efforts.
More broadly, Stockholm is likely to advocate an assertive approach. Sweden-China relations have been turbulent over the past few years between the ongoing case of the detention of Swedish citizen Gui Minhai, the explicit exclusion of Huawei from Swedish telecommunication infrastructure and tensions over diplomatic incidents by former Ambassador Gui Congyou. Sweden’s application to join NATO may also factor into Stockholm’s calculation. With the US pressing for a tougher approach towards China within NATO, Stockholm may try to align more closely with Washington’s position. The country’s new Prime Minister Ulf Kristersson has a history to that regard, including critical remarks on Gui’s detention.
EU-China relations – next six months
As of the beginning of 2023, EU-China relations appear to be entering a period of stabilization as diplomatic channels reopen and Beijing signals a softening of its tone. Late last year German Chancellor Scholz and European Council President Michel conducted high-level visits to Beijing, with French President Macron and Italian Prime Minster Meloni set to follow suit.
Beijing also appointed its new Ambassador to the EU, Fu Cong (see his profile below), who arrived in Brussels with a message of diplomatic re-engagement. However, the fragile stabilization between the EU and China could be tested by a plethora of challenges during the Swedish Presidency.
Beijing appears committed to maintaining its tacit support for Russia as exemplified by direct recent exchanges between the presidents of the two countries. In a recent interview, Ambassador Fu attempted to frame Russia’s invasion as an issue external to EU-China relations. It is doubtful that such rhetoric will convince many in Brussels.
Tensions also persist in the Taiwan Strait. Over the last month, the People’s Liberation Army carried out two large scale military exercises and sent 16 planes and three warships to pass in vicinity of Taiwan shortly after a visit of a US trade delegation to Taipei. Such increasing displays of force could push the Swedish EU Presidency to advocate for more deterrence efforts. Especially as there may be more room for coordinated action with like-minded partners, with the Japanese G7 Presidency likely to promote joint statements on security in the Indo-Pacific.
With China opening up again after the end of the Zero-Covid policy, questions of European businesses’ exposure to the Chinese market have re-emerged. Zero-Covid had led businesses, especially small and medium enterprises, to questioning their investments in China. If the economy picks up, those questions may recede along with the support for EU strategy to reduce economic vulnerabilities.
The end of Zero-Covid also highlights the issue of energy dependency for Europeans. China’s energy consumption is likely to pick up in 2023. The country might have to use rather than sell any excess liquid natural gas (LNG) reserves it has. Seven percent of Europe’s gas import for the first half of 2022 came from China. In 2023, the EU may not be able to count as much on imported LNG from China.
The EU is going ahead with the WTO case against China for trade restrictions imposed on Lithuania. A request to establish two panels to deal with the case was rejected by China. The EU now looks set to advance the request once more, in which case it will automatically go through. A decision is, however, unlikely to be reached in 2023.
Furthermore, while China has introduced restrictions against Japan and South Korea as a response to both countries introducing measures for individuals travelling into their countries, it has not done the same against European countries who introduced similar measures. This is likely the result of the decrease in travel from China to Europe in the short-term, but it could also be a sign of China’s commitment to improving its relationship with the EU.
China’s new Ambassador to the EU has put his money on the ratification of the Comprehensive Agreement on Investment (CAI). However, for the European Parliament, CAI’s ratification remains conditional to the lifting of China’s sanctions against Europeans. It seems that for China a lifting of sanctions would require the EU to remove sanctions linked to the violation of human rights in Xinjiang. That would require the situation in Xinjiang has improved, and there has not yet been any reliable evidence of that.
The Swedish presidency of the Council will, in the months to come, have to deal with the consequences of China’s reopening. There will be a push for re-engagement by China. Yet, many of the issues that have burdened the relationship between the EU and China in the past years have not disappeared and will re-emerge throughout 2023.