poster: “飞到星星去 , fei dao xing xing qu, flying to the stars”, late 1950’s, designer Yang Furu, https://chineseposters.net/posters/e37-316 © No copyright infringement intended. All rights belong to their respective copyright owners
January 17 2023_The Dutch government’s China policy from 2019 up to today has been formulated in three memoranda by the Ministry of Foreign Affairs. These notes give an indication of how the Dutch government, under the influence of the changing geopolitical climate, has tried – rather timidly and hesitantly – to adapt its policy to the new reality. The reality is that we have entered what appears to be a protracted period of systemic rivalry with the PRC, which increasingly and proudly wants to show its (military) muscles to the world. Under President Xi Jinping, China has moved from its previous position as a “rule-taker” and status quo keeper at the UN and on the international stage to an assertive “rule-maker”, loudly demanding or commanding international respect.
China-memorandum May 2019
While in 2019 under the Trump administration the US relationship with the PRC deteriorated rapidly and a partial decoupling between the economies of China and the US began to unfold, the China memorandum of our Minister of Foreign Affairs Stef Blok in May 2019 still mainly focussed on the opportunities in the relationship with China that had to be capitalized on by opening doors in Beijing and stimulating cooperation based on shared interests. At the same time, the Netherlands had to be aware of the challenges that China presented our country, according to the same memorandum. Although China would not pose a military threat to our country in the short term, economic and cyber security had to be guaranteed. Or as the cabinet put it: “Open where possible, protect where necessary”
This Dutch position was in line with the March 2019 “Strategic Outlook” of the EU in which China was described as a partner for cooperation and negotiation, an economic competitor and a systemic rival. The latter addition was new in the European assessment of relations with the People’s Republic and a first acknowledgment of the changing geopolitical climate as well as the first formal sign of a growing European concern about Xi’s China. Unsurprisingly Beijing was very dismayed at being called a system rival: Xi’s regime is keen to portray itself as an extremely responsible player in the multilateral system that is only reasserting its rightful position on the international stage after ‘the century of humiliation’ at the hands of the colonial powers (1839-1949).
A Mad Hope
It was stated that the Dutch and European objective would be to maintain a balance between these three roles/aspects of the PRC and between all those opportunities and risks. But in 2019 countries such as the Netherlands and Germany, the key European traders with the Chinese, still cherished a strong hope that partnership would predominate in their ties with Beijing, preventing the two other aspects of China from putting undesired strains on the relationship. This hope may also have been based on the assumption that in view of the PRC’s floundering relationship with the US Xi would be more inclined to take a constructive and positive attitude towards a much more benevolent Europe.
Mijngroeve.nl, however, was of the opinion that in 2019 the systemic rivalry had already penetrated the international order so deeply that the longed for partnership with China would be unattainable and the hoped-for balance mostly wishful thinking. After all, the emerging ‘US-China trade war’ was/is in reality a geopolitical technology war and a clash between different ideologies and value systems with a huge global impact: the winner in this war is expected to largely determine the course and character of the multilateral system and the international order. Xi Jinping himself made no bones about it in 2017: “Technology is the core of the ability to wage war”.
Mijngroeve.nl described at an early stage how the Netherlands and ASML in particular would be drawn into this geopolitical battle, forcing the Dutch government to review and tighten its export control policy in order to prevent unwanted technology- and knowledge transfer to China for the protection of our national security. How to maintain the balance in the relationship with Beijing when the geopolitical climate increasingly was calling for a clear stance?
Dutch and European hopes may also have been built upon the persistent idea that as long as business and politics were kept separate in the exchange with China, the former could flourish and automatically result in better political relations. In this way, European and American policymakers tried for years to separate human rights from commercial and other interests in the discussion with Beijing.
Nevertheless, while trade grew, the human rights situation in the People’s Republic became increasingly precarious. China’s threats of commercial repercussions in case of criticism subsequently resulted in “preemptive obedience” and even self-censorship in Europe’s boardrooms and government offices. ‘Without friendly political relations with the PRC, no good economic relations’ was becoming the main warning.
Cooperation almost became an end in itself. European governments and companies regularly made compromises with Beijing in favor of economic interests, while in return just silently accepting the ongoing curtailment of freedoms in the People’s Republic under Xi’s neo-totalitarian rule.
Xi in 2020
In 2020 Xi made it abundantly clear that he wasn’t in any constructive mood. First he swept the Corona outbreak in Wuhan under the carpet and then, during the peak of the pandemic in the West in July 2020, introduced the National Security Law in Hong Kong. Aside from some lame expressions of concern, the EU did nothing to show its disapproval of Xi’s dismantling of the last vestiges of democracy, independent courts and free journalism in the city-state. No sanctions or measures were taken against Xi’s regime or any of his collaborators in Hong Kong: Europe’s dependence on Chinese medical equipment and face masks apparently limited the room for maneuver in the eyes of our European political leaders.
To once more underline the great importance of China as a partner, Merkel and Macron decided at the end of 2020 to rush through the comprehensive agreement on investment (CAI) with China: a strange timing, especially in light of the growing international outrage about the abuses in Xinjiang and Hong Kong.
However, this benevolent European attitude towards Beijing did not pay off: politics and economics in communist China indeed turned out to be inextricably linked. National (Sjoerdsma) and European parliamentarians came under Chinese sanctions after criticism of China’s Xinjiang policy and the introduction of a few European sanctions against local Chinese officials. Ratification of the CAI had to be suspended because a large majority of European and national MPs refused to approve the investment agreement under these circumstances…
The EU and the Dutch government nonetheless stuck to the mantra of China as a partner, competitor and system rival, still in the same order in 2021. A new China memorandum followed in 2021, containing a few more critical comments than the previous version. For example, Sigrid Kaag, then Minister of Foreign Affairs, wrote: “Human rights, security and economy in relation to China cannot be seen in isolation and actions in one area can have direct consequences for the other. Integrated policy is therefore crucial. There is currently close government-wide cooperation with regard to China via the China Taskforce, at a higher level and with a higher frequency than before… Precisely because the Netherlands and the EU cannot ignore China in so many areas, the government is actively working to effectively address fundamental differences in order to continue to optimally shape the cooperation with China as a partner, competitor and system rival.”
This optimal cooperation was again thwarted by Xi in 2022 by the conclusion of the ‘Sino-Russian partnership without limits’ and the subsequent Russian invasion of Ukraine. The Chinese media enthusiastically copied and pasted the Russian propaganda and blamed the West, especially the US and NATO, for the war. Xi adopted a “pro-Russian neutrality” stance: as an important or positive sign of Beijing’s restraint in the conflict Western commentators have been keen to point out that China has -at least as far as we know – refrained from arms deliveries to Moscow.
China and Russia
Whether the Chinese will continue to show the same restraint if the war drags on and Russia will be short of arms and ammunition is however by no means certain. Moscow and Beijing have meanwhile conducted several joint military exercises as part of their partnership. Coordination between China and Russia with regard to so-called hybrid warfare against the West is also a scenario that increasingly needs to be taken very serious. Finally, the question is still open whether China does play or has played any role in the Iranian drone program. Or has Iran independently kicked off the production of large numbers of drones that are used by Russia in the war in Ukraine?
Xi of course didn’t refrain from buying Russian gas and oil at cheap prices and on a large scale, despite the Western sanctions policy against Moscow. To make matters worse, in the autumn of 2022, Europe was also shocked by the news that China had been running illegal ‘police stations’ in various member states, including the Netherlands, for several years. These stations are believed to have monitored, among other things, activities by local Chinese citizens and dissidents. European investigations into the exact activities are still ongoing, the police offices have reportedly been closed and the Chinese embassies “reprimanded” by the related European governments.
Add to that the (daily) ongoing Chinese cyberattacks, the regular ‘wolf warrior’ statements, the relentless harassment of Taiwan, the border skirmishes with India, the Chinese expansion in the South China Sea and the absurd Chinese Corona policy, then the conclusion must be that we are dealing with a very special ‘partner’ here.
China memorandum 2023
The new Minister of Foreign Affairs, Hoekstra, apparently thought so too: on January 13, 2023, he published a new China memorandum. Hoekstra wrote: “Last year it was already mentioned that the center of gravity in the balance between openness and protection, as described in the 2019 China memorandum, was shifting. This trend has continued. The multiple approach of the EU remains in force: China as a partner, competitor and system rival, with the latter two receiving more emphasis….As discussed earlier, a Joint Economic Committee (JEC) is foreseen in 2023 between Minister Schreinemacher and the Chinese Secretary of Commerce to discuss the broad economic relationship, including trade barriers. The role of human rights and the importance of international corporate social responsibility will also be discussed.
In the context of the bilateral security dialogue with China, which was first held in October 2020, the Netherlands wants to contribute to keeping communication channels open in turbulent geopolitical circumstances and reducing the risk of escalation in the event of incidents. Despite the differences of opinion, multilateral cooperation with China remains important, if not indispensable, especially when it comes to achieving global climate goals, for example.”
Although the establishment of the interdepartmental China Taskforce, the China Knowledge Network and the socalled ‘China portal’ have contributed to a much greater awareness within government and industry about the risks of dealing with China, the Dutch government still too often seems to rely on best case scenarios only. The West, including the Netherlands, sometimes overestimates its power to change communist China, while the country’s ambitions to shape the international order have been systematically underestimated. There is an imbalance between expectations and reality, the wish often turns out to be the father of the thought.
Although mijngroeve.nl recognizes the importance of maintaining a positive agenda (e.g. with regard to climate policy, food safety, health issues) in the relationship with Beijing, our motto would be to first of all face and recognize the new reality: even the positive agenda items are viewed by Xi from the perspective of the (ideological) dogma of systemic rivalry.
Xi’s Corona U-Turn
His recent U-turn in China’s Corona policy is a good example. To disguise a failing Corona policy, he suddenly opened the borders when the infections were already exploding. He awaited the reaction of the rest of the world, while leaving the WHO in the dark. Meanwhile, the Chinese propaganda machine went into full swing to downplay the death toll related to Corona infections and mask Xi’s failure.
The Dutch response to the Chinese decision also immediately showed that the China Taskforce still falls short in places. In the Dutch media, health experts had the upper hand, explaining that testing Chinese tourists would have little effect and that the European population had built up sufficient immunity so that there was no need to fear the arrival of Chinese tourists.
Unfortunately, that explanation showed only one side of the coin. Xi’s turnaround was not driven by health concerns or compassion for the plight of his own population or people elsewhere in the world. It was driven by his fear to lose legitimacy and power. His sudden switch was actually a big middle finger to multilateral health cooperation. From the beginning, he had politicized China’s corona policy to demonstrate the superiority of his approach. In 2022, that superiority ultimately turned out to be a flop, although the glowing Chinese propaganda still frantically tries to make us believe otherwise.
Battle of Narratives
The ‘battle of the narratives’ is an important element in the systemic rivalry. The China Task Force should therefore have urged the Minister of Foreign Affairs to take matters into his own hands and send a clear signal to Beijing: that checks and tests on Chinese tourists would be fully justified, certainly as long as the Chinese statistics on the number of infections , the virus variants and deaths appeared to be completely intransparent and unreliable. And not least because China had not allowed any foreigner into its own country for almost 3 years without first taking or demanding a test.
Moreover, taking such a stance would have given the Netherlands and the EU a means of exerting pressure to urge the Chinese government to provide greater transparency and enable more multilateral cooperation, while at the same time exposing the absurdity of the Chinese propaganda. Unfortunately, also at the European level, government officials turned out to be completely unprepared for Xi’s ‘constructive’ maneuver. Each member state had its own approach to Xi’s U-turn, so that the EU once again shot itself in the foot as a geopolitical player.
The Hague and Brussels are constantly stressing the importance of a common European approach towards China. But the prospect of economic gain through a rapid recovery of Chinese tourism initially was favored in The Hague and in a number of other European cities over sending a strong political signal to Beijing in this ‘battle of narratives’. With its first reaction to Xi’s decision, the Netherlands set a bad example. The final European response became a watered down recommendation to individual member states about possible measures regarding testing and controls on Chinese tourists.
The Netherlands, the EU and geopolitical thinking as well as acting with conviction and courage, it leaves much to be desired.
The Dutch China memoranda have all talked about the (shifting) balance in the relationship with the PRC. It has not always been clear how this balance was envisioned. At the time of the first China memorandum in 2019, the Dutch government was insufficiently prepared or willing to shape the desired balance between openness and protection of Dutch society with far-reaching and quick action. In 2023, important steps have at least been taken in terms of awareness and legislation and regulations (e.g. the VIFO Act and the initiatives to foster knowledge security in higher education and science*) to protect our national security, although the new reality does not seem to have settled everywhere yet.
One could wonder, by the way, to what extent there has ever been a true balance in the relationship with the PRC. First of all, Xi’s China dream has never been the same as the China dream of Mark Rutte, the Dutch government or our business community. Next, the trade balance has always been in favor of China, although the surplus of imports by ‘Holland distribution country’ was mainly re-exported, which may have quelled any dissatisfaction about the Chinese surpluses.
Our strong ties with China have undeniably led to considerably lower prices for Dutch consumers. But it has never resulted in a real reciprocity in economic relations: the Dutch business community has never been given the access to the Chinese market and infrastructure that the open Netherlands has offered the People’s Republic for decades. Moreover, to set up JV’s in China Dutch companies were forced to transfer knowhow and technology, which in some cases may have been been a far too heavy prize to pay.
For a long time also little or nothing was done to obstruct Chinese takeovers of Dutch companies in sensitive and critical (hi-tech) sectors. Finally, the dangers of excessive dependence on China for the supply of critical raw materials and rare metals were neglected for far too long. Only fairly recently the Dutch have started to map out these dependencies in detail.
As of 2019, the Ministry of Foreign Affairs appears to have been particularly concerned about the dilemma of how to set up the relationship with China in such a way that it could properly inform Dutch stakeholders and MPs about the challenges that the PRC presented our country and what to do about them, and on the other hand, to prevent this from resulting in a backlash from China that would be undesirable for the Netherlands and the Dutch economy. Understandably, The Hague attached great importance to coordinating its policy with the EU as its main platform, with Germany serving as the most important anchor point. But as mijngroeve.nl has described, Merkel’s China policy wasn’t very courageous either: Berlin turned out to be even more afraid of Beijing’s wrath in the event of a critical attitude than The Hague.
The Dutch (and German) stance in the Huawei soap, reported in detail in mijngroeve.nl, is a striking example. Characteristic of that story is also that the long-awaited report from the Ministry of Economic Affairs’ Telecom Agency (AT) about possible eavesdropping/espionage by Huawei at KPN’s subsidiary Telfort around 2010 was issued last year with a delay of more than 8 months, precisely during the summer recess of the Dutch Parliament. KPN was fined EUR 450,000 by AT because the investigation had shown that their security policy had not complied with all legal requirements at the time. Those shortcomings have now been remedied, we have been told by AT. The story did not receive much media attention, no questions were asked in Parliament as far as I know.
Perhaps in this context it’s worthwhile to mention that KPN is still >70% dependent on Huawei for its 5G RAN equipment anno December 2022, according to a recent report**. To mijngroeve.nl this doesn’t come across as a healthy balance, certainly not in the context of the self-declared government policy to drastically reduce dependencies on suppliers from countries that that have a hostile cyber policy towards the Netherlands. Perhaps the China Taskforce or AT can find some time to also look into this…?
Similarly, the EU’s perceived pragmatism of branding China as a partner, competitor and systemic rival all too often has resulted in a “have your cake and eat it too” approach, where difficult human rights issues were identified and discussed at a low level, while business was continued and expanded at full speed at high member state level. Here, too, the question arises as to whether the right balance has been found between economic gain and principles, which The Hague and Brussels so often profess to defend and stand for.
In other blog posts I have already indicated what the Netherlands and the EU could do to address the current imbalance in the relationship with China. It is crucial to first of all fully recognize the new reality: an era of – probably long-lasting – systemic rivalry has descended upon us, in which a form of ‘managed competition’ between the US and China seems to be the best achievable result at this moment.
That rivalry does not necessarily have to be a zero-sum game. China is indeed an important partaker and stakeholder in a number of global topics and problems (climate, energy transition, arms control, food supply), in which cooperation is not excluded by default. Whether it will actually act and behave as a (reliable) partner towards the EU and the Netherlands is however another matter. At the same time, complete decoupling is obviously in no one’s interest, and it isn’t achievable in the short term anyhow.
But even on the positive agenda items, one must constantly analyze, weigh, assess and verify which role and influence of China one considers to be inevitable, (un)desirable or (un)acceptable in the context of systemic rivalry and the management of dependencies. To give an example: would Europe consider it acceptable if Chinese companies would gain a dominant position in the European electric car market through significant Chinese state subsidies, as a result of which we could end up even more dependent on the PRC for our energy transition than what we already allowed to happen in the solar panel market? Worth a discussion according to Mijngroeve, also against the background of the broader question of the importance of open markets vs protectionism and market forces vs industrial policy.
While it is certainly advisable to keep a positive agenda alive, it would be even better if The Hague took into account worst-case scenarios and the capriciousness of a Chinese dictator, who in his decision making will ultimately always let his own power position, the stability of the Party, the sovereignty of the People’s Republic and his dream to revise the international order prevail over economic considerations, the public or global interest or even the international image of the CCP.
Keep open where possible, protect where necessary and decide where cooperation is not (or no longer) practicable…. that is the central challenge for the Rutte IV cabinet and the interdepartmental China Taskforce in The Hague, if they would like to avoid an even more uncomfortable ‘balance’ in the relationship with the PRC in the future.
* The VIFO law: “Security Test Act for Investment, Mergers and Acquisitions”.
The purpose of this bill is to lay down rules that can be used to manage risks to national security resulting from certain acquisition activities such as investments and mergers. Acquisition activities of this kind with regard to vital operators or companies that have sensitive technology can lead to risks to national security. This mainly concerns the risk of the continuity of vital processes being compromised, the integrity and exclusivity of knowledge and information being compromised, and the emergence of strategic dependencies. The safety test applies to three types of companies and organizations in the Netherlands: vital providers, companies with sensitive technology and administrators of company campuses. The companies and knowledge involved are described in the General Administrative Order Application Range of Sensitive Technology (AMvB). The Act has retroactive effect to September 8, 2020. The Vifo Act is expected to come into effect on July 1, 2023
The VIFO acts as a safety net for sectors for which testing is desirable but for which there is currently no specific law. Scope of application : The VIFO will be applicable to vital providers such as energy transport and in the financial sector and to companies with sensitive technology as also laid down in export control lists
Assessment factors that are taken into account in determining a possible security risk are the ownership structure of the organization in question, the security situation, the reputation of the acquirer, the track record of the country of origin. For the latter factor, for example, it is examined whether military and civilian programs are separated in the country and whether offensive programs exist from the country to acquire sensitive knowledge and technology.
Knowledge security/protection: the government has introduced measures along three lines and is working on a (statutory) assessment framework to be deployed in the near future (2024??). Knowledge institutions will also be subject to audits to see whether they sufficiently guarantee knowledge security in line with the measures announced by the government.
- Promoting awareness and self-regulation of knowledge institutions, supported by a national infrastructure: the Knowledge Security Dialogue; the National Knowledge Security Guideline; administrative agreements, and the Knowledge Security Desk.
- Assessment framework to prevent unwanted knowledge and technology transfers
- EU and international deployment