At China Summit, EU Leaders Pushed Xi Jinping on Chinese Firms’ Breach of Russia Sanctions

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At China Summit, EU Leaders Pushed Xi Jinping on Chinese Firms’ Breach of Russia Sanctions

Thirteen Chinese entities were included on a list of companies alleged to be breaching sanctions, which was shown to Xi in Beijing. 

At China Summit, EU Leaders Pushed Xi Jinping on Chinese Firms’ Breach of Russia Sanctions

From left: European Council President Charles Michel, Chinese President Xi Jinping, and European Commission President Ursula von der Leyen meet in Beijing ahead of the China-EU Summit on Dec. 7, 2023.

Credit: European Council

When the leaders of EU countries gather in Brussels for a summit on December 14 and 15, they will turn to their two most trusted representatives for advice on whether to impose further sanctions on Chinese companies.

European Commission President Ursula von der Leyen and European Council President Charles Michel have just returned from a trip to Beijing, where they held frank discussions with President Xi Jinping and Premier Li Qiang.

Von der Leyen stated that the defining issue in terms of bilateral relations is China’s response to the “Russian war of aggression against Ukraine.” 

Michel told reporters in Beijing: “We insisted that China should not supply military tools to Russia.” He added, “As a permanent member of the U.N. Security Council, China has a special responsibility, because this Russian war threatens global stability and the world economy. It also affects the most vulnerable around the world, for instance by increasing food insecurity and driving up commodity prices. This is not in Europe’s interest, this is not in China’s interest, this is not in the world’s interests.”

The Europeans confronted Xi with a list of 13 China-based entities, which Brussels accuses of circumventing sanctions against Russia. Michel and von der Leyen asked Xi to deal with these firms. 

There is mounting evidence that China is propping up the Russian war effort, according to Noah Barkin, a visiting senior fellow at the German Marshall Fund (GMF) think tank in Berlin. He said he was informed by a diplomat from a large EU member state that China has been identified as a “hub” for the export and re-export of equipment found on the battlefield in Ukraine.

This matches analysis provided by EU sanctions envoy David O’Sullivan, who stated in September that Chinese technology is enabling the Russians to use weapons that are “killing Ukrainians.”

Professor Steve Tsang, director of the SOAS China Institute in London, pointed out that the Chinese side has insisted it is not supplying the types of weapons that were defined as triggering EU sanctions. “However, the original list did not cover dual-use technology,” Tsang noted. “So the Chinese side may claim that the Europeans are not playing fair because they have changed the rules. For that reason, China is unlikely to submit to the European request to clamp down on those companies.”

There has been debate within Europe over how far to go in the next round of sanctions on China.

“Back in June, the EU introduced curbs on China-based entities for the first time. But following howls of protest from Beijing, Brussels ended up reducing the number it targeted from eight to three,” said Barkin from GMF.

For Tsang, the key issue is whether the EU is prepared to cut off China’s access to the European market if Beijing does not follow EU rules.

“With the weakness of the Chinese economy, and the focus they have at the moment on fixing it, Xi might conclude that a loss of access to Europe would be a significant risk. Clearly, the Europeans are taking a much more robust stance than the Chinese were expecting, or wanting to see. But they only take threats seriously when they believe them to be credible,” said Tsang. 

Several EU leaders joined a G-7 summit with Ukraine’s President Volodymyr Zelenskyy, which took place by video link at the same time as the heads of the European institutions were talking to the Chinese leaders in Beijing. 

Without specifically mentioning China, the G-7 leaders issued a statement in which they pledged to step up efforts against “evasion and circumvention of sanctions and export controls measures.”

The group reaffirmed its “steadfast commitment to supporting Ukraine’s fight for its independence, sovereignty, and territorial integrity” and promised action “against third country actors which materially support Russia’s war.” 

The language adopted in Brussels has a similar tone to that of the G-7. EU leaders are still demanding that Russia immediately and unconditionally withdraw its forces from Ukraine.

Nevertheless, the cost of long-term support for Kyiv places a strain upon European nations, especially Germany.  

Chancellor Olaf Scholz is attempting to avoid a full-blown economic crisis in 2024, stemming from a 17 billion euro shortfall in the country’s public finances. Every major item of expenditure, including military support for Ukraine, causes quarrels among the three political parties that make up Germany’s coalition government.

The Financial Times has reported that an EU proposal to provide 50 billion euros to prop up Kyiv’s budget for the next four years “hangs in the balance” following months of bickering between member states on how to fund it. 

Furthermore, a proposal to start negotiations over Ukraine’s accession to join the EU is in jeopardy, after Hungary vowed to block the plan, which requires unanimous support from all EU member states.

Xi is indifferent to Europe’s calls on him to press Putin to halt the war, given the “no limits” partnership with Russia, according to Abigaël Vasselier, an expert on EU-China relations at the MERICS think tank. She believes that the EU should focus on challenging the Chinese over the violation of sanctions.

Vasselier said that December’s meeting between the Chinese and European leaders in Beijing enabled the delivery of “difficult messages.” “Even though few concrete results can be expected, the simple fact that both sides are engaging in dialogue is a success in itself in these difficult times,” she added.  

European officials who observed the meeting in Beijing described Xi Jinping’s approach as “relaxed and non-confrontational.” Chinese state media was largely positive about the event, but glossed over areas of disagreement.

Xi apparently told Michel and von der Leyen that China considers Europe to be a “pole” in its own right, and certainly not a “vassal” of anyone, according to several people briefed on the talks.

Furthermore, Xi told his visitors that warnings about China’s shaky economic recovery from the credit-ratings agency Moody are simply an example of how the West “fails to understand” China.

The day after the Europeans left Beijing, Xi used a speech to outline his view on the pressures facing the nation.

According to Xinhua, he said that China faces an “adverse international political and economic environment.” He also cited domestic cyclical and structural challenges,” saying that economic recovery still remains at a critical stage.