Holland – China in 2021

Poster© : https://chineseposters.net/posters/e15-882 designer: Yang Furu, May 1980, “Little Guest in Space” Yuzhou xiao keren (宇宙小客人 ), Shanghai renmin meishu chunbanshe (上海人民美术出版社) collection IHHS/Stefan Landsberger. No copyright infringement intended. All rights belong to their respective copyright owners

01/20/2021_In a September 2020 post I described the changing nature of the EU – China relationship, simultaneously making a prediction about the outlook of the Dutch-Chinese ties, which maybe could be considered typical for other European countries too. https://www.mijngroeve.nl/history/holland-china-predictions-about-the-new-relationship/ I wrote that within ~6 months we would see the consolidation of the following emerging trends in the Netherlands:

  1. Tightening of FDI rules
  2. Stricter export control on dual-use goods and emerging technologies
  3. Thorough screening of academic exchanges with the PRC and the creation of a task force to evaluate cooperation in sensitive areas and screen joint R&D projects
  4. A ban of Huawei in the Dutch 5G network
  5. End of business first approach propagated by the successive Rutte cabinets (and the EU) over the past decade
  6. Formulation of an action plan in response to continuing Chinese aggression and human right violations
  7. Revival of the debate on Dutch policies towards Taiwan
  8. A wide public discourse on the future of the relationship with the PRC

As the Rutte government stepped down last week following a serious domestic tax scandal, it’s a good moment to make an interim survey of forementioned projections in order to understand in which direction a new coalition government could be heading.

Ad 1) FDI (Foreign Direct Investment) regulations

In the course of 2019 the Dutch government had already professed to work on a screening mechanism to better defend Dutch companies against unwanted take-overs or investments, in particular in areas deemed sensitive or strategic. Holland has had one of the most open FDI policies in Europe. In the EU the fear of hostile take-overs by non-European, in particular Chinese, entities grew after the outbreak of the Corona-crisis, as some European enterprises could become cash-strapped. The EU got concerned there could be an increased risk of attempts to acquire healthcare capacities (for the productions of medical or protective equipment) or related industries such as research establishments (for developing vaccines) via FDI.

Consequentially the European Commission (EC) published its ‘Guidance on FDI and free movement of capital from third countries and the protection of Europe’s strategic assets.’ The resulting European FDI screening guidance includes a mechanism that facilitates the exchange of information and statistics between European member states on FDI and on third countries’ investment strategy and goals. A foreign acquisition which is likely to affect projects of Union interest will be subject to a closer scrutiny by the Commission, whose opinions have to be taken into utmost account by the Member States. The EC called upon the Dutch government and other member states without formalized screening tools to complete the set up of their FDI screening mechanisms as soon as possible.

The Dutch government failed to meet its own target to deliver a legal framework or bill by the end of 2020 to support the introduction of such a new FDI screening mechanism in Holland. On December 8th the Minister of Economic Affairs informed the new bill could be presented for parliamentary approval at the end of Q1 2021 at the earliest. It is unclear if the fall of the Rutte cabinet will impact this schedule.

Irrespective of the nature of a new coalition government, Dutch MPs will be in strong favour of the new FDI regulations. The Dutch bill is said to include a clause allowing a retroactive screening of investments and acquisitions made from June 2 2020, provided they are viewed as a national security risk. In other words, a new Dutch government is anticipated to have far more legal powers to block hostile take-overs or unwanted foreign investments.

It is important to point out that the different Rutte cabinets never considered Chinese investment in Holland or the EU to automatically increase the risks of shocks in supply chains from China to the EU, as some others in the EU have argued. In the view of Rutte Chinese investments in companies based in the EU would/will predominantly boost production within the EU as more capital would/will become available for those companies. A new Dutch government, especially if again led by Rutte, certainly won’t fully close the doors on all Chinese investors. A new cabinet won’t dread a complete sell-out to China considering our country already witnessed a decrease in Chinese direct investments for the last 3 consecutive years ahead of this new screening framework. But eventual new Chinese investments or acquisitions in (crucial) Dutch industry sectors will be much more thoroughly probed by Dutch authorities than before.

refer also https://www.politico.eu/article/mo-money-mo-pandas-chinas-influence-in-europe-by-the-numbers/

Ad 2) Export Control regime

In November 2020 the Council of Europe and the European Parliament (EP) finally reached an agreement on a proposal for a modernisation of EU export controls on sensitive dual-use goods and technologies, which had been heavily debated for several years. Such items have many civilian uses but can also be used for defence, intelligence and law enforcement purposes (nuclear and special materials, space and aerospace, telecommunication, electronics and computers/software, marine equipment). Germany, which allegedly accounts for 50-60% of the EU’s exports of so-called dual-use items, ultimately settled for a compromise during its EU Presidency, whereas previously hesitating to accept any serious curb in sales of cyber-surveillance technologies to autocratic regimes. The agreement will strengthen the EU’s export control toolbox to respond effectively to evolving security risks and emerging technologies.

Due diligence obligations and compliance requirements for exporters have also been introduced, recognising the role of the private sector in addressing the risks posed by trade in dual use items to international security. Transparency is said to be enhanced through the obligation to publish reports on the licenses granted. The text of this new EU Dual-Use Regulation still needs to be formally adopted by the Council of the EU and the EP this year.

It would bring the EU more in line with the latest export control policies of the USA. The decision-making power regarding the evaluation/probing of potentially sensitive dual-use goods and the related granting of licenses lies with the individual governments of the EU member states, leaving room for applying different standards and interpretations. On the other hand, if used correctly, the new criteria would empower the EU to act as a stronger entity in controlling certain sensitive exports, f.e. related to biometrics and cyber surveillance technologies. These criteria are also meant to introduce a further level of scrutiny, requiring that these emerging technologies will not be utilized to violate human rights.

In the September post I wrote the Dutch government would probably establish its own new export control regime, driven by an increasingly critical Dutch Parliament and relentless American pressure, if the EU would fail to reach any agreement. In such a scenario, the Dutch would have just followed the latest American guidelines. The future Dutch government is now likely to ratify the EU accord, while Parliament could push the current care-taker cabinet to already fully abide by it before any ratification is executed. The new export control regime will have significant implications for business dealings in dual-use items, including for Dutch companies and also universities active in fields such as AI and facial recognition software.

ASML, whose delicate and unique position has been highlighted several times by mijngroeve.nl, has for the first time publicly acknowledged the new reality. CEO Wennink said just a few days ago he does not expect a major change any time soon in the USA-China relationship due to rival efforts by the superpowers to control leading technology, including semiconductor systems produced by ASML. “To be honest this goes to the heart of, I would say the very core of, industrial policy in both countries. It’s semiconductors, it’s technology that will create that value base, so that’s not going to change and we’ll have to live with that”, he told Reuters. https://www.reuters.com/article/us-asml-ceo/asml-ceo-sees-us-china-trade-antagonism-outlasting-trump-idUSKBN29J1OJ

But not just the USA and China, the EU too wants to install more control over its valuable semiconductor know-how and elevate the position of its own industry. With the new EU export control framework in place, ASML should no longer expect to receive any export license for its unique EUV lithographic tools to China any time soon. The Dutch company provides the Netherlands and the EU a substantial leverage over China. It occupies a very distinct position in the semiconductor supply chain, which The Hague and Brussels can no longer afford to take for granted.

Ad3) Academic exchanges

Just before X-mas, the Dutch Minister of Education, Culture & Science (OCW), Mrs. Van Engelshoven, briefed Parliament on the status of the co-operation of Dutch universities with Chinese counterparts, at the same time pre-announcing a package of socalled ‘country-neutral’ measures aimed at increasing ‘knowledge security’. Her letter was in response to growing concerns in Parliament over the naivety of Dutch universities in their dealings with Chinese institutes and companies and the lack of guidance by the Dutch government to avoid the loss of valuable, sensitive know-how: based on the cherished principles of academic freedom, autonomy and self- regulation, the task of assessing the risks, challenges, benefits and drawbacks of working with China have sofar solely fallen upon the universities. Refer also https://www.mijngroeve.nl/history/holland-china-policy-growing-parliamentary-discontent/

The past decade has seen an increase in absolute numbers of Chinese students in the Netherlands, according to a quick scan performed by the RVO (‘Rijksdienst voor Ondernemend Nederland’) on behalf of the government among 6 Dutch universities**, which even excluded the two in Amsterdam, both popular among young Chinese too. In 2010, 1,170 Chinese students were enrolled at those six participating universities, in 2019 this number had risen to 2,155 Chinese students. Chinese students mainly studied in the fields of Agriculture, Technology, Economics and Natural Sciences. In 2019 China was ranked third in number of students in the Netherlands after Germany and Italy.

The quick scan also learned that often Dutch professors or researchers have been initiating “bottom-up” collaborations with the PRC. As a result, these collaborations do not automatically come to the attention of the central board of their institute. In other words, at institutional level, often no strategic consideration appears to be taking place in which areas one wishes to cooperate with Chinese institutions and what will benefit the Netherlands. The motivation for co-operation by the Dutch side regularly seems to driven by purely financial or reputational considerations, i.e. by the wish to co-work with a famous Chinese company or reputable Chinese university ranked high on the international list just to gather funding and/or to buttress its own reputation on the international stage. Thus the way is paved to attract even more Chinese talent and money.

A central overview of what and how many Chinese PhD students have been studying in Holland has been absent. Particularly those studying on a Chinese scholarship or external contract do have the chance to fall under the radar. Part of the PhD students’ research has been focused on ‘new generation IT’, including high-end computerized machines & robots. Some of them have had links with universities mentioned in the ‘The China Defense Universities tracker’, a tool developed in Australia to help Western universities and researchers understand institutions in China and avoid harmful, sensitive collaborations.

The CCP under Chairman Xi has been building ties between China’s civilian universities, military and security agencies. Those efforts, known as ‘military–civil fusion’, have greatly accelerated over the past years. Research for the China Defence Universities Tracker has found that greater numbers of Chinese universities are engaged in defence research, collaborating with the military and cooperating with defence industry conglomerates. At least 15 civilian universities have been implicated in cyberattacks, illegal exports or espionage. China’s defence industry conglomerates are known to have been supervising agencies of at least nine universities and have sent thousands of their employees to be trained abroad. https://www.aspi.org.au/report/china-defence-universities-tracker

There nevertheless has been a lack of recognition in the Dutch academic world of the risks and challenges in working with Chinese institutes and researchers. The Dutch government in its letter to Parliament belatedly acknowledged action would have to be taken to assist Dutch universities to better manage those risks and increase awareness. In order to support these institutes in their evaluations, the cabinet described plans to set up ‘an expertise and advice desk’ in the course of 2021 in the field of knowledge protection, which could be consulted by universities for non-binding advise.

Last but not least, the Ministers of Justice, Economic Affairs and OCW promised to come up with a comprehensive, new ‘country-neutral’ assessment framework, clear governmental procedures and regulations on know-how sharing that affects defense and national security, enabling a systematic, coordinated approach in the future. In addition the government stated to be in favour of introducing a central registration of PhD students, though the co-ordination and execution of this initiative would still rest with the universities.

Meanwhile the government had already kicked off a dialogue with the university boards last summer about securing knowledge, in which the intelligence and security services participated in addition to the various ministries. Guidelines, checklists and self-evaluation instruments can play a useful role for institutions to provide insight into what needs to be paid attention to in international cooperation. Several countries are working with such guidelines, such as Australia, Germany and Sweden. Based on those examples, the Ministry of OCW has initiated the development of new (non-binding) guidelines for protecting knowledge, targetted to be made available in 2H2021 to the universities…

Additionally as part of the effort to create the ‘country-neutral’ assessment framework an inventory is on-going of fields of expertise and disciplines that require protection for national security reasons. Criteria are under development on the basis of which sensitive technologies can be identified. Foreign (research) funding will also be taken into account, to prevent situations of excessive (financial) dependence on foreign partners, with a possible impact on academic freedom and scientific integrity. This inventory should result in a ‘country-neutral’ system of rules and regulations that is ‘dynamic and future-proof’ and that takes into consideration new threats and emerging technologies. But such a new assessment framework or systematic approach will require new legislation: as a result, the framework will realistically speaking only come into effect in 2023 at the earliest, according the governmental briefing late last year…

Furthermore, the Rutte government was contemplating to have existing collaborations substantively reviewed and probed by an independent advisory committee with experts who have knowledge of the disciplines that are perceived as critical. This committee should advise the Minister of OCW whether any collaborations should be discontinued…A new Dutch government is expected take over this recommendation.

All the above are indications of a fundamental shift in thinking at Dutch government levels on the need and scope for know-how protection. All over Europe the same is happening. A sense of urgency has finally arrived in the Hague, the question is if all these pre-announced initiatives will incur serious delays if no new coalition government will be formed any time soon in Holland. Dutch MPs, however, will probably put strong pressure on the new cabinet to make the set up of a systematic assessment approach a top priority.

Just like ASML, the Dutch academic community will have to wake up to the new reality too. Co-operation with China will be much more scrutinized in the future and will have to conform to the new EU export control regime as well as to new Dutch governmental assesment regulations and inspections. The freewheeling times of the past are over.

Interestingly, in another response to Dutch MPs, the Dutch Minister of Economic Affairs wrote that the Dutch government currently “sees no possibility of adding China” to a list of high risk countries falling under very strict supervision such as Iran or North Korea as the latter are facing UN and EU sanctions, which does not apply to the PRC. This statement obviously doesn’t rule out such Dutch action in case of eventual future EU sanctions against China.

ad 4) Huawei

The Huawei soap in Europe has been widely covered in mijngroeve.nl. Suffice it to say that Dutch Parliament does have strong concerns on the approach of the Rutte cabinet (core-periphery seperation of the network), which officially does grant Huawei (equipment) a role in at least part of the 5G network. More and more EU countries have decided to fully ban or phase out Huawei gear, but Germany and the Netherlands, China’s two major trading partners in the EU and both heavily reliant on Huawei’s 3&4G equipment, have not gone that far.

On December 17th the German cabinet finally agreed on the draft of a new law that gives authorities the power to block the Chinese telecoms company from the country’s 5G networks over cybersecurity concerns. Part of the law dictates companies setting up networks must inform officials of the Bundesamt für Sicherheit in der Informationstechnik (BSI/ Federal Cyber Security Authority ) about critical components for implementation, which may then be either approved or rejected over interests of national security. Aspects of these companies’ supply chains, such as vendors, must also be analysed for their “trustworthiness” to ensure the products cannot be used for the purposes of espionage or digital terrorism. The draft law still has to pass German Parliament this year.

It’s unclear if ultimately all Huawei gear will be banned and replaced in Germany and Holland like the UK has decided. The Dutch government does have the power to force telecom operators to replace or ban Huawei gear at any point in time, but all detailed discussions over the 5G roll-out and related safety precautions are now conducted behind close doors, officially over national security concerns. Merkel and Rutte for years never bothered to tell their citizens and telcom operators that the choice for Huawei wouldn’t just be a matter of economics or technology, but also touch upon questions of national security and transatlantic co-operation ( refer Nato which has been vehemently opposed to Huawei). Rutte apparently never believed or anticipated it to be(come) a national security issue: those who did are now kept in the dark for… reasons of national security! refer also https://www.mijngroeve.nl/history/den-haag-brussel-washington-huawei-the-big-clean-up/

ad 5) End of Business First

The successive Rutte cabinets pre-dominantly followed a business first approach in their dealings with China, like most European nations. In The Hague and in Dutch industry circles presumably nobody really expected China to give up on authoritarianism anytime soon, especially after Xi’s rise to power, but they probably did believe the country would open itself up to more competition, just as the West had done for China.

Unfortunately it has not truly happened under Xi, who deferred economic and political reform and began to stress the importance of self-reliance for China, while usurping all power within the CCP with the justification only he could make China great again. The Chinese President for life strongly believes America is in irreversible decline, while glorifying at home his autocratic development model as the only way to ‘rejuventate China’. Gradually perceptions of China started to change among the European political elite. Since Spring 2019 the EU has adhered to the official opinion China is, simultaneously, in different policy areas, a cooperation partner with whom the EU has closely aligned objectives, a negotiating partner with whom the EU needs to find a balance of interests, an economic competitor in the pursuit of technological leadership, and a systemic rival promoting alternative models of governance.

Due to these multiple roles of China, the EU has been sending mixed messages regarding its priorities in the relationship with the PRC over the past year. Brussels has repeatedly stressed the importance of inclusion of Beijing in the international order. The recently concluded investment agreement (CAI) which has been heralded as a big success by both sides supports the perception and role of China as a lucrative partner, which in return for its commitment to increase economic co-operation should be rewarded with continuous access to the European market. https://www.mijngroeve.nl/history/in-a-bind-ratify-eu-china-investment-agreement/

But the newly agreed EU export control regime and EU guidelines on FDI screening and academic cooperation signify a strong European fear of the the PRC, and express a wish to limit China’s access to the EU and European know-how. The lack of any EU repercussions against Xi’s China following its actions in Hong Kong and its human right violations in Xinjiang at the same time begs the question how the EU would like to stand up for the international legal system and European values and ideals in the exchange with China in its role as a systemic rival. How much to confront, accommodate or appease a proclaimed rival? How to shape regulations that are more robust and more effectively enforced in the coming era to secure and re-inforce our system of international rules?

The argument that continued dialogue and engagement with Xi provides the best chance for positive outcomes has come under fire in the EP and in Parliaments across Europe. Companies are increasingly criticized or exposed for still relying on forced Chinese labour and for practicing self-censorship out of fear of losing business opportunities in China or reprisals by the CCP. For some MPs China’s role as a systemic rival has begun to outweigh its other roles.

The business first doctrine is no longer sustainable for any new Dutch or European government in such a climate. But it could even turn out to be a major challenge for The Hague and the EU to re-build a close transatlantic partnership if it is perceived to give insufficient priority or attention to China’s role as a systemic rival. Will the current EU China strategy prove to be a workable approach in 2021? Or does the Huawei saga in Germany and Holland actually prove it’s nearly impossible to strike a balance between China as a partner, competitor and system rival?

Ad 6) Action plans

On December 7, 2020 the EU finally established a Global Human Rights Sanctions Regime. Similar to the US Magnitsky Act, the framework will enable the EU to target individuals, entities and bodies responsible for, involved in or associated with serious human rights violations and abuses worldwide, regardless of where they occurred. The new sanctions regime makes it possible to act against human rights violations through the freezing of funds and economic resources of sanctioned persons, entities and organizations.

If Xi’s China won’t tone down its aggressive stance which does little else than re-confirming the notion of the PRC mostly being a systemic rival, calls for the implementation of sanctions in different phases and levels will grow louder in Dutch Parliament and inside the EP. The Hague and the EU sofar have never clarified their red lines in the exchange with China. Apparently Xi’s take over of Hong Kong wasn’t one. A million Ughyurs in ‘re-education camps’ wasn’t either. But will the EU finally retort if Xi’s China persists in arresting political opponents and perseveres in completely eroding the seperations of powers in Hong Kong, keeps on building up its military capabilities in the South China Sea and bullying Taiwan? A new government in The Hague ‘d better define its red lines and formulate an action plan together with Brussels to be prepared for such a worse case scenario.

Ad 7) Taiwan

The Dutch government made a U-turn on its policies towards Taiwan in the 1980’s. From agreeing to sell submarines to Taipei in 1980, the then Dutch cabinet went on to promise to Beijing in 1984 not to sell any weapons or military equipment to the island state and strictly adhere to the socalled One-China policy. This promise is still valid today: in return Holland was able to quickly expand its commercial relationship with the PRC, though business ties with Taiwan were never severed. The Netherlands has been China’s second-largest trading partner within the EU since 2003.

The Taiwan issue is quickly taking center stage in 2021. https://www.mijngroeve.nl/history/taiwan-taking-center-stage-in-2021/ While neither the future Dutch government nor the majority of Dutch Parliament is likely to be in favour of resuming sales of military equipment to Taipei or for overturning the One-China policy, voices in support of giving democratic Taiwan more visibility on the international stage by pushing for its admittance to f.e. WHO & WTO are growing stronger in the Hague and around Europe. How to realize this without invoking Beijing’s wrath for being perceived as challenging communist China’s sovereignty claims over the island, a red-line for the CCP, will be a major question…..

Interestingly in September 2020 a Czech Senate delegation did already make a visit to Taipei and had a meeting with President Tsai Ing-wen, causing a furious response by Beijing that stated the Czech Republic’s leadership would pay “a heavy price”. Strikingly, most European capitals remained silent when their Czech colleagues where reprimanded by the CCP. If the EU would like to stand by Taiwan’s democracy, a more united European front will be an absolute pre-requisite and a coordinated Taiwan policy a must. Taiwan is growing into a testcase for Europe’s (and America’s) resilience in standing up for democracy in Asia.

Just a few weeks ago the Trump government announced the lifting of all self-imposed restrictions on interactions with Taiwanese counterparts by American diplomats, service members and other officials. This decision means, for example, that Taiwan officials will be able to hold meetings at the State Department or White House rather than in non-official locations elsewhere, such as hotels. President Biden is unlikely to immediately undo these latest measures of Trump, although he will continue to express strong support for “a peaceful resolution of cross-strait issues consistent with the wishes and best interests of the people of Taiwan.” Abandoning the One China Policy would be a tectonic policy shift by the USA and is highly unlikely to happen anytime soon.

Yet any new Dutch government ‘d better review its stance on the Taiwan issue and -as said- push for a quick co-ordination & re-alignment at the European level. How to create room for manoeuvre on this issue in the face of Chinese diplomatic threats? Europe sofar has adhered to similar self-imposed restrictions as the USA out of fear of upsetting Beijing. But since Xi has unilaterally overturned the international treaty on Hong Kong, one wonders if the Czech example and the recent American decision will induce more discussion at EU level to forego the restrictions with respect to interactions with Taiwan and Taiwanese officials.

Ad 8) Public Debate

While China has finally become a recurrent topic in Dutch parliamentary debates and the academic and business community is gradually waking up to the new realities, the Dutch audience at large is still not very conscious of the potential implications of the changing world order. Understandably over the past year the Corona-crisis has dominated all the news, together with the chaotic policies of the erratic President Trump.

Though domestic topics/policies (Corona-crisis management & economic recovery plan) will be of more importance to most Dutch voters than foreign policy in the upcoming elections, the relevance of the EU in relation to the rise of China could become a topic for debate for the first time in many years. Overdependence on an unreliable autocratic regime for f.e. medical supplies has made Dutch and European vulnerabilities visible for ordinary citizens. China’s secrecy regarding the outbreak of the Corona-virus has not gone unnoticed either.

It offers Dutch political parties the opportunity to raise public awareness of the growing importance of China and the changing world order and to stimulate a discussion on f.e. the EU’s China strategy and the relevance of the transatlantic relationship and NATO and to debate how to best engage with the PRC in these difficult circumstances, what to protect and what to share in the exchange with the PRC, a matter which has been left too long to just the government and major corporations. Let’s await and follow the election campaigns before drawing any conclusions.

The 2021 outlook

If the above sounds like the prospects for the Dutch-Chinese relationship look bleak, it’s good to be reminded China did try in the past to shift economic policy into a market-oriented direction and embark on political reform. We should keep hope it may well have incentive and opportunity to do so again in the future. The CAI -if ratified- could be a major test case of its commitment to open up its markets.

But hope should no longer be The Hague or Brussel’s guide. Xi is not expected to use the moment to invigorate a rigorous policy reform agenda. On the contrary, this Chinese President has not stopped emphasizing self-reliance over openness and a free, international market. The role of state-owned enterprises has been resurgent under his leadership. Xi also feels very comfortable and confident to propagate the Chinese autocratic development model to other parts in the world.

At the same time China needs continued access to Western countries, markets and know-how to safeguard its future economic growth and to upgrade its domestic industry. One could even argue China needs the USA and the EU more than vice versa in order to succeed in its modernization plans. Convergence and divergence, two conflicting trends, are occurring in full force in front of our eyes on a world wide scale, not for the first time in history.

By agreeing to the CAI with the EU, China appears committed to opening up to global capital inflows, yet its paramount leader keeps on preaching his preference for state planning and self-reliance. Nor can the West’ interdependence with China easily or rapidly be undone without risking the chances for a quick economic recovery. The EU is pro-actively looking for ‘strategic autonomy’, yet prefers to keep relying on the USA for military protection. Europe is longing for the USA to build a diplomatic front against China, but worries the ‘America first’ ideology could resurface if another Republican would become President in 4 years time. Biden would like to revive multilateralism and re-establish ties with Europe, but can’t ignore the strong undercurrent in American society to always put America first. The task for the USA, EU and China will be to find a common ground under these conflicting trends, while new global challenges related to privacy, data control & protection, digital security & technology standardization, and control over outer-space have arisen.

We do not necessarily have to be like-minded in our economic or political systems to recognize we are in the same global boat, forcing us to work together closely regardless of systemic differences. The great majority of goods for which China, the United States or the EU have clear comparative advantages are not strategically concerning to either, providing strong opportunities for continued co-operation and commercial relations. The Dutch can still have their trade with China, but with more caution, restraints and oversight. Co-operation with the PRC on climate control and environmental protection is possible too.

But fundamental differences between the USA and the PRC are likely to last because the American Congress is united in its view that China forms a major threat to the international legal order, to its national security and its dominance. At best the Biden Presidency could usher in a period of détente, after the high tensions with China under Trump. A further decoupling between the West and China in sensitive areas like high-tech, semiconductors, 5 & 6G and aeronautics/space looks nevertheless increasingly likely if Xi’s China refrains from making significant reforms and rebuilding global trust.

The Chairman and his supporters’ conviction that America is on the decline may have been greatly re-inforced by the mess and political crisis Trump has left behind. The great helmsman Xi could be more stuck than ever in this mistaken belief, further fanning the flames within the Party that the PRC is on the right track with its mercantilist and aggressive policies to make China great again, en route to replace the USA as the world’s dominant power. Sofar nobody in the CCP has dared to step up to extinguish this perilous fire.

PS: Update: On January 21, 2020, Dutch parliament submitted a list of > 100 ‘factual questions’ regarding the nature, scope, content, timing, control, dispute settlement, etc. of the investment agreement with China for an answer by the (outgoing) Rutte government . In my opinion, it is the first time that Parliament has submitted more than 100 questions (!!) about an agreement with China; ratification by a new Dutch cabinet and the EP does not seem to be assured.

Refer also https://www.mijngroeve.nl/history/corona-and-5g-china-and-the-global-trust-crisis/ and https://www.mijngroeve.nl/history/export-stop-asml-euv-steppers-who-will-be-the-next-target-in-the-usa-prc-geopolitical-technology-war/ and https://www.mijngroeve.nl/history/taiwan-and-holland-sandwiched-in-the-geopolitical-technology-war/

**= the six involved universities: TU Delft, TU Eindhoven, TU Twente, : Wageningen University & Research, Erasmus University Rotterdam, University Groningen. The data on scientists from China do not include those of the University Utrecht plus the UVA and VU of Amsterdam because data by origin for these universities are lacking for the period from 2016 to 2019. RVO’s data exclude scientists who do not have an employment contract with the university (e.g. PhD students working at the university with an externally funded research grant).