0:01

The New Statesman

0:08

Hello I'm Katie Stallard and you're listening

0:10

to World Review, The New Statesman's

0:12

international news podcast.

0:18

Today I'm speaking to Bruno Maçaias,

0:20

the former Europe Minister for Portugal,

0:22

author of multiple books, and

0:25

most importantly, also my colleague here

0:27

at The New Statesman, where he is a roving

0:29

foreign affairs correspondent. We'll

0:31

discuss his recent interview with China's

0:34

ambassador to the EU and whether

0:36

China and Europe could be headed for a

0:38

trade war.

0:45

Bruno thanks for joining me, it's great to have

0:47

you on the podcast. Thanks Katie, great to be here. So

0:50

you recently sat down with Fu

0:52

Zong, China's ambassador to the EU, for

0:54

a wide-ranging interview. You

0:57

started by asking him about the war

1:00

in Ukraine and whether China is

1:02

prepared to use the leverage it

1:04

now has over Russia to push it to

1:06

withdraw

1:07

its troops from Ukraine. What

1:10

did he tell you? Were you able to get a clear

1:12

answer from him on that?

1:14

Not entirely clear. You can

1:16

tell that China

1:19

is not entirely aligned with Russia on

1:21

the war. I think they're worried about some

1:23

of the consequences of the war.

1:25

It's put China in a difficult position because

1:27

on the one hand, they don't want to lose their

1:29

relationship, strategic relationship with

1:32

Russia, which is important.

1:33

Imagine a world where Russia is suddenly

1:36

after Putin aligned with the West and

1:38

putting pressure on China together with the

1:40

West on commodities, on exports, on

1:42

energy exports. This is a nightmare for

1:44

Beijing. So they don't want that. But on

1:46

the other hand, they don't want to lose Europe. This is

1:48

very clear and it's relatively new. China,

1:52

the ambassador, you could see in our

1:54

conversation

1:55

after the interview, is fully

1:57

committed to, let us say, saving Europe.

2:00

The question now in Beijing is who lost

2:02

Europe or who is going to lose Europe and Xi

2:05

Jinping clearly came out of COVID

2:07

and the party congress with one priority

2:10

to produce a split between

2:12

Europe and the US and to preserve relations

2:15

with Europe. So in that sense, the

2:17

war in Ukraine is actually very inconvenient.

2:20

I disagree with those who think China

2:22

is celebrating the war.

2:24

It's very inconvenient, put China in a difficult position.

2:26

And so they're trying to maneuver and thread a very

2:28

thin line where they don't lose Russia and they

2:30

don't lose Europe. It's Eurasian geopolitics

2:33

on a grand scale.

2:35

And from the EU officials

2:37

and the diplomats that you talk to,

2:39

is China managing that

2:42

balance successfully or is

2:44

there a growing sense that China

2:46

has to some extent chosen sides?

2:49

That is a clear sense in the corridors

2:51

in Brussels that China has chosen

2:54

Russia side. The ambassador denies,

2:56

I'm sure every Chinese official

2:58

is going to deny that. I believe

3:00

they are correcting the trajectory.

3:03

The first six months I think were pretty disastrous.

3:06

I was interested, for example, that I had interviewed

3:08

Chinese officials before and they tried

3:11

to publish the interview as they always do in

3:13

Chinese and in China with some of the independent

3:16

outlets and they couldn't in interviews that I've

3:18

done before. Well here is quite the opposite. The

3:20

interview was all over Chinese media in Mandarin

3:22

and in English. We went with

3:24

my, what I thought, inconvenient

3:26

and difficult question on the

3:28

five principles of peaceful coexistence

3:31

affirmed by Zhou Enlai in the Chinese

3:33

constitution and whether they are contradictory

3:36

with their position on Ukraine. And all

3:38

this was quickly translated. So

3:40

I sense a shift of

3:43

direction where I think China is trying

3:45

to correct a little bit. They probably now think

3:47

they went a little bit too far

3:49

on Russia side and trying to get

3:51

back to the middle, let us say, to the middle.

3:53

How does

3:55

Ambassador Fu to try to square

3:58

that circle of on the one hand?

5:50

with

6:00

the sanctions against the Chinese companies.

6:03

It's not really that big a deal. They are

6:05

not really sanctions. That's just what I'm hearing from

6:07

the officials in Brussels. But on the other hand,

6:10

his job as an ambassador is not to convey

6:12

back to Beijing explanations. His

6:15

job as an ambassador, that's what he gets paid for,

6:17

is

6:17

to get results. So you

6:20

could see he's under pressure, which

6:22

he enjoys, but he's under pressure to deliver

6:25

next week by stopping these

6:27

sanctions.

6:28

Now, I think he's going to be unsuccessful because

6:30

my latest conversations today

6:32

is that the sanctions, a little surprisingly

6:34

to me,

6:35

I didn't entirely expect the sanctions

6:37

against the Chinese companies are really going to go

6:39

through next week.

6:41

That will be later this week by the time that this

6:44

podcast goes out. So what can

6:46

you tell us about what to expect from that

6:49

sanctions package? I

6:49

believe it's the meeting of the EU

6:51

investors is on June 7th, is

6:54

that Tuesday, Wednesday around that, right? And

6:57

to all indications, the decision has

6:59

been made, and it's going to happen. A

7:01

Chinese companies are accused

7:03

or suspect

7:05

of circumventing

7:06

EU sanctions against Russia.

7:09

So basically what they do is they've

7:11

been created very recently, they are to

7:13

some extent shell companies

7:15

of some kind, they import

7:17

electronic components from Europe and immediately

7:20

re export those components to Russia. So

7:23

obviously, the EU cannot accept this, he

7:25

would render the sanctions against Russia

7:27

avoid and ineffective. So

7:29

the EU is going to determine that

7:31

these Chinese companies are going to

7:33

go into a list and

7:36

x3,

7:36

and they are now bared from importing

7:39

those components.

7:41

I don't know how effective this is, because other companies

7:44

could be created for the same purpose. Politically,

7:46

it is a bit of an earthquake

7:48

for the EU, not just us to sanction

7:50

to create a list.

7:52

The ambassador was very

7:53

worried and concerned about the image

7:56

that conveys that there's a list

7:58

of Chinese companies that are accused.

7:59

used of circumventing

8:01

and voiding EU sanctions. It is a,

8:04

politically, it is a big moment actually.

8:06

And what do you anticipate,

8:09

given your conversation with Ambassador Fu,

8:11

about what Beijing's response might be?

8:13

I asked him on and off the record

8:16

if I could know a little more about the response.

8:18

He would only go so far as to say

8:20

that the response will be very strong and

8:23

it won't be good for, this is in the under record

8:25

version, it won't be good for any side.

8:27

I'm not entirely sure, I suspect he doesn't

8:29

know himself what the response will

8:32

be. There must be a menu of options

8:34

in Beijing and still being considered

8:37

from a more harsher response

8:39

to a more conciliatory response to something that

8:41

they can concern might trigger a spiral

8:44

of responses. I suspect it's going to be more

8:46

on the softer side.

8:48

It's very obvious that China does not want

8:50

and does not need a full-blown trade

8:53

war. But the thing is, Katie, this

8:55

is only the first chapter in the story. That's why I've been

8:57

so interested in the story because it's ongoing.

9:00

On June 23rd, the

9:02

EU is going to approve a new mechanism

9:04

to restrict and limit outward

9:07

investment from Europe to the

9:09

rest of the world. But everyone will tell you in Brussels,

9:11

this is about restricting outward investment

9:14

from Europe to China.

9:15

So that will be the second chapter. Things

9:18

are getting really quite tense when it comes

9:20

to EU-China relations.

9:22

Do you think there is likely

9:25

to be much credence given

9:27

in Beijing to the idea that these are not really

9:29

sanctions? That this is about restricting

9:32

the activities of these specific eight

9:35

companies rather than targeting

9:38

Chinese companies in a more general sense? I don't

9:40

think so. Economically, they can see that maybe the

9:42

impact will be limited. But

9:44

this is great power politics. And

9:47

I think China, just as the EU or

9:49

the US really, or India for that

9:51

matter, great powers cannot

9:54

take these blows. They have to respond.

9:57

This is a rule whether you like it or not. whether

10:00

we think we could have a better global system than

10:02

this.

10:03

That great powers cannot take

10:05

direct blows with our it's a question of national

10:07

prestige. It's a question of the balance

10:10

of power.

10:11

It's a question in a way of economic deterrence,

10:14

that if you don't respond, you're opening up your planks

10:16

to

10:16

get more of these measures in the future.

10:19

And it does work to some extent, if you respond harshly,

10:21

then next time around, the other blocks are going

10:23

to think twice.

10:25

So I think that's really the explanation here

10:27

is not about economic substance. It's about geopolitics

10:30

and relations between great powers.

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12:21

To some extent,

12:22

we've been here before in 2021 with the

12:26

reciprocal sanctions between China

12:28

and the EU, which has led to

12:30

the shelving slash deep freezing

12:33

of the comprehensive agreement on investment, which

12:35

is arguably against what Beijing

12:37

is really trying to

12:38

achieve, but yet it didn't seem able

12:41

to do otherwise than to immediately

12:43

hit back with sanctions and quite provocative

12:45

sanctions, including against

12:47

members of parliament. You think lessons

12:50

may have been learned from that with this,

12:52

as you set out, the sort of

12:53

medium-term goal in mind of creating

12:55

a division between Europe and the United

12:58

States. If Beijing is

12:59

harsh in its response here, that

13:01

could do some of Washington's work

13:03

for it. I think so. I think I don't see anyone

13:05

on the EU side that regrets what

13:07

happened in 2021.

13:09

I think the Chinese side very clearly regrets.

13:12

They thought they reacted too brutally,

13:14

but

13:15

it was a mistake. They come very close

13:17

to accepting it was a mistake.

13:19

I heard from three sources

13:21

in Brussels that China is willing to

13:24

remove those sanctions in order to get

13:26

the guy moving again, to remove the sanctions

13:28

against the EU that they approved in 2021

13:31

without asking the EU to remove its own

13:33

sanctions

13:35

with which the process started. That's an incredible

13:38

move by China that I never expected.

13:41

So I think out of that event process

13:43

in 2021, the EU doesn't regret

13:45

it. I think China

13:46

actually deeply regrets it. And

13:49

that leads me to think that this time

13:51

around, the response, which I think is inevitable,

13:54

will be much more surgical. And with

13:56

a certain concern to communicate to the EU

13:58

that we're responding as soft as possible.

13:59

as we can. We understand

14:03

that your sanctions are not as harsh as they could

14:05

be. We get that. We're not going to respond

14:07

harshly as well.

14:09

So that's my prediction for next

14:11

week. But then we get to June and the process reopens

14:13

again. Where

14:16

do you see this heading based

14:18

on, I know you've done a lot of reporting in the corridors

14:20

of Brussels lately to the extent that you

14:23

can share it. What are attitudes to where

14:25

this is heading in the medium and longer term?

14:27

Look, it's very exciting and very unpredictable,

14:29

Katie. As I look at the world today, there's

14:32

some variables that are pretty much fixed. Relations

14:35

between the US and China are not going to change significantly.

14:38

India's position is not going to change significantly.

14:40

I think Russia is on a path that is pretty

14:43

easy to predict. It's not going to

14:45

come back to the Western fold and so on and

14:47

so forth. I think

14:48

the greatest level of unpredictability

14:50

is actually when it comes to EU-China

14:53

relations. Lots of divisions inside Europe.

14:56

And you can either get the model of Cold

14:58

War II with two blocks,

15:01

very clearly demarcated

15:03

and on a confrontational path.

15:05

Or you could actually have something quite different

15:08

from Cold War I,

15:11

where Europe, I mean, I think the idea

15:13

of Europe as a kind of bridge and connecting

15:15

link between China and the US is not

15:18

entirely implausible. Depends on how things

15:20

evolve. A lot of uncertainty

15:22

here and certainly one of the biggest stories

15:24

for the next five years. Everything is determined

15:27

yet. I can tell you one thing that

15:29

I see a huge difference between

15:31

Washington and Brussels.

15:33

That people in Brussels listen

15:35

and talk to the Chinese side and the two

15:37

sides understand each other. And there's

15:39

an ongoing dialogue, lots of meetings going

15:41

on. And they do understand each other.

15:44

Very different from Washington that you know well. Right.

15:48

I mean, there's a real difficulty at the moment just getting

15:50

meaningful dialogue at a high level. When

15:53

you talked about divisions in inside Europe

15:55

there, I wonder if you could unpack that a little bit

15:57

to give us a sense of who...

16:00

the kind of key players here and what

16:02

is the spectrum

16:02

of opinion? I can quote a EU official

16:05

that actually uses the word spectrum and he calls

16:07

it the spectrum from Vilnius

16:09

to Budapest. So

16:11

you've got Vilnius, Lithuania, foreign

16:13

minister is as hawkish

16:16

or more hawkish than the hawks in

16:18

Washington but

16:19

very aligned with Washington and then you

16:21

got Budapest that was resisting the sanctions.

16:24

Now I see here heard today

16:26

that Budapest lifted its

16:28

objections and

16:29

and I understood that Budapest likes

16:31

to throw those objections out there as a way

16:33

to communicate to Beijing that they tried.

16:37

They made a genuine effort

16:38

and they are concerned about the Chinese

16:41

sensibilities but they don't take that to the end

16:43

of actually blocking the measures.

16:46

I suspect Hungary in the end thinks

16:48

that they will reserve that video to things

16:50

involving directly the Hungarian national interest.

16:53

They're not going to spend their capital

16:55

with Chinese national interest but

16:57

they communicate that in different ways to Beijing

16:59

that they are to some extent on their

17:02

side. So this is the spectrum from a

17:05

genuine hawk, a sort of European

17:08

Tim Cotton to a

17:10

friend of Beijing. It's a huge spectrum

17:13

right probably larger

17:15

in the range of views

17:16

that you have on Russia. Is

17:20

there also a spectrum in terms of views

17:22

of the US and how the US

17:25

is handling relations with China and

17:27

how stable or otherwise

17:29

the political system here looks?

17:31

Yeah I think when it comes to the US

17:34

there's many people along this spectrum

17:37

that have many reservations about

17:39

the American position on China. Here

17:41

it's not just Budapest, it's a lot

17:43

of people in Germany, in France. You saw Macron's

17:45

interview. It's a lot of people in Brussels.

17:49

The EU official that I discussed this at length,

17:51

he expressed many reservations about

17:53

Washington's position, even put it in a very

17:55

philosophical way saying that we

17:57

in Europe understand that empires rise

17:59

and they fall, and this is all the game

18:02

of empire. And we accept that we

18:04

don't have this anxiety that the Americans have

18:06

about being replaced at the top

18:08

of the world order.

18:10

We want to create a system that is balanced

18:12

and where there are rules applicable to everyone.

18:15

That's our goal. We're not fighting for EU primacy,

18:18

the way the US is fighting for EU primacy. So

18:20

you see there's

18:21

even philosophical differences, rather

18:23

deep differences between the Europeans and the

18:25

Americans on this. We're

18:29

seeing this

18:30

very concerted diplomatic push by

18:33

China in Europe, of which

18:35

Ambassador Fu is at the leading edge. But would

18:37

you say that there are similar

18:40

efforts from the US, or is

18:42

China perhaps doing more and

18:44

more actively at the moment to cultivate a picture?

18:46

No, the US is doing a lot. The US was

18:48

very distracted in the Obama years,

18:51

up until Trump,

18:53

completely distracted and involved. And

18:55

that's why you got things like this grouping

18:57

of central and eastern European countries

18:59

working together with China, that we call back

19:01

then the 16 plus one. You

19:03

had countries like Romania, where

19:05

the US has so much leverage, they were working

19:08

very closely with China and welcoming Huawei

19:10

and so on.

19:11

Once the US woke up, many of these

19:13

countries suddenly became very

19:15

aligned with the American position, like

19:17

Romanian Baltic countries. And

19:19

to think back to those years, the only years in

19:22

Warsaw were welcoming

19:24

Chinese dignitaries, they were signing deals,

19:26

they were creating the 16 plus one.

19:28

Once the US called them back to reason,

19:30

let us put it that way,

19:32

they did return to a

19:34

more transatlantic approach. And these days,

19:36

the US is much more involved. But what's happening,

19:39

and a US expert, a think tanker told

19:41

me, and I think it's a great way to look

19:43

at it,

19:44

what's happening so far is that you have collected low

19:46

hanging fruit on transatlantic cooperation.

19:49

There are things where everyone agrees on there, we shouldn't be

19:51

exporting, particularly sensitive

19:53

dual US goods to China. So there

19:55

it's easy, but now we're reaching the point where all

19:57

the low hanging fruit on transatlantic cooperation.

19:59

has been collected

20:01

and it's going to become much more difficult

20:03

from now on because this is where the disagreements

20:06

I was talking about

20:07

start to appear.

20:10

Right. And are there also

20:12

concerns there as we're functionally

20:15

already really in an election cycle

20:17

here in the US as we head towards 2024 and what

20:21

looks at the moment to be possibly a rematch

20:23

with Trump and Biden? How is

20:25

that viewed from Brussels?

20:27

People are starting to wake up to this. I've actually

20:29

been in a round of conferences, has been speaking in

20:31

many panels and I'd like to bring up this

20:34

question up

20:35

four or five times over the past two weeks of

20:37

what happens if Trump wins

20:39

because I can see very easily a scenario where

20:42

Trump tries to get a deal with Russia

20:44

that involves concessions of Ukrainian territory.

20:47

And then you get into a really new situation

20:50

where it's countries like Poland

20:52

and the Czech Republic, the last time around they seem

20:54

to like Trump. This time around I can

20:56

see that feeling deeply betrayed by the US.

20:59

And then what happens? It's a real question.

21:02

Ukraine is going to turn to Europe and say,

21:04

now it's up to you to keep us fighting,

21:06

to keep us in the fight. We don't want to sign this agreement

21:09

that Trump has there.

21:10

And can you support us sufficiently that we'll

21:13

be able to say no to Trump?

21:14

Can you imagine this is going to be, I think, the real

21:16

Ukraine crisis if it happens, but I give this

21:19

quite a high level of probability,

21:21

actually, at least even odds,

21:23

because I can see Trump winning. And he's on the

21:25

record saying that this is what he wants to

21:28

do. And Ron DeSantis is on the record saying something

21:30

similar.

21:31

I asked General John Allen in Bratislava

21:33

a few days ago

21:35

what he thought about this. And

21:37

he hates Trump publicly. But so

21:39

on Trump, he agreed with me. He thinks that Ron DeSantis

21:41

you can still convince him.

21:43

I don't think so because we now get

21:46

news that Elbridge Colby is advising

21:48

Ron DeSantis on this. Elbridge Colby has

21:50

been pushing for

21:52

reduction of support for Ukraine. So

21:54

we're heading to, I think, unless

21:57

Biden wins, we're heading for a real

21:59

crisis.

21:59

that people are starting to realize

22:02

in European politics until it gets

22:04

to one year from a particular

22:06

event, you're not worried about it. But now we're getting to

22:08

that point.

22:10

Last question, as I know we've

22:12

taken up enough of your time already, but you

22:15

also asked Ambassador Fu about the

22:17

distinction that Ursula von

22:19

der Leyen and others have begun to make between

22:22

de-whisking and decoupling,

22:24

and whether China sees any meaningful difference

22:27

between the two. What was his

22:29

response to that? Right,

22:30

because the word in Brussels is that it circulates

22:33

a lot and it's quite reliable, comes from

22:35

different sources, is that Xi Jinping didn't like the distinction.

22:38

He's a suspicious guy and he can see

22:40

that when things are not promising.

22:42

And he can see that when he says, we're going to eliminate

22:45

risks. And the risks are essentially too,

22:47

that we're exporting sensitive

22:50

material to China that China can use,

22:52

either for its technological development or military

22:55

development.

22:56

And then second, that we are becoming

22:58

dependent on China for certain

23:01

imports of critical materials,

23:03

solar panels, other things. So it's things

23:06

we export to China that we shouldn't be exporting

23:08

and things we import that we should have other

23:11

sources of supply, so that we're not dependent on

23:13

China. These are the two kinds of risks.

23:15

And de-risking would mean eliminating these risks,

23:18

but still having normal economic relations

23:20

with China.

23:21

But of course, I think the Chinese realized

23:23

that if you're very serious about eliminating

23:25

these two kinds of risks, you're going to eliminate

23:27

the most interesting parts of West

23:30

China trade.

23:31

Yeah, you're going to still be importing, you

23:34

don't longer import t-shirts from China anyway.

23:36

There may be

23:37

risks about importing autos, cars,

23:40

people are going to say there's a lot of data in

23:42

the new auto software. I think

23:44

the Chinese are

23:46

suspicious about this distinction. They're concerned

23:48

that

23:49

there won't be much of a distinction between this

23:51

de-risking and decoupling. If you're very serious about

23:54

eliminating every risk in

23:56

your trade relationship, you might end up

23:58

with the most important.

23:59

and significant parts of trade being

24:02

eliminated and cut off. But the

24:04

ambassador was,

24:05

and I think reflects his style,

24:08

was a bit more cautious and more moderate

24:10

on this. He wants to see where it's going.

24:13

And so he said that

24:15

it's up to you to explain what the difference

24:17

is between de-risking and decoupling. And he

24:19

hopes that de-risking is going to be quite

24:21

limited in its scope.

24:23

Maybe people in Beijing are unhappy

24:26

about this, but given what's available,

24:28

it's better to have something like de-risking

24:31

that you can try to keep within

24:33

strict limits

24:35

than the old language of decoupling that seemed

24:37

unlimited in its scope.

24:39

So I think they're suspicious, but ultimately,

24:42

they're going to try to use this distinction

24:45

and try to use it for their diplomacy

24:47

and their conversations,

24:49

pushing the Europeans into a very

24:51

limited concept of

24:53

de-risking. People in Europe like de-risking

24:56

because it's compatible with the Vilnius

24:58

approach and the Budapest approach. The

25:01

Hungarian foreign minister signed the statements

25:04

from the foreign ministers on de-risking,

25:06

and the next day he went to Beijing

25:08

and he signed some contracts with Huawei.

25:10

So for him, clearly signing contracts with

25:12

Huawei is compatible with de-risking.

25:15

And for others in Vilnius, de-risking is the same

25:17

as decoupling.

25:18

So you see, it's a very vague term, and that's maybe

25:20

why people like it.

25:22

Yeah, that's a brilliant diplomatic solution. Bruno

25:25

Massache, thank you so much for joining me today.

25:32

This has been World Review from The

25:34

New Statesman. You can read all our

25:36

international coverage on our website, newstatesman.com.

25:39

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25:44

Adrian Bradley. I'm Katie Stallard.

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Thanks for listening and until next time.