Prolonged fighting with Russia puts at risk billions of dollars in economic ties between the target country, Ukraine, and its top trading partner, China, experts say.
If the Russian invasion endures, a 3-year-old deal by Chinese networking giant Huawei to install 4G wireless services in the Kyiv metro system will go on hold, and massive agricultural shipments will slow, said Dexter Roberts, U.S.-based author of “The Myth of Chinese Capitalism.”
Russia and Ukraine also do a brisk aerospace and defense trade that began with the delivery of China’s first aircraft carrier in the late 1990s.
“If the war goes on, then construction on the metro in Kyiv is going to stop, opportunities for Huawei and putting in the telecoms will stop. Even getting grains and things like iron ore out of the Ukraine will become a problem. So that’s just sort of on the physical challenge of trying to run an economy and do trade in a war situation,” Roberts said.
Russia began a full-scale military invasion of Ukraine on Thursday. A day later, Chinese media outlets reported that Chinese President Xi Jinping suggested to Russian President Vladimir Putin that Russia and Ukraine solve their dispute through negotiation.
Billions in annual trade
The Ukraine-China trade turnover grew in 2017 to $7.69 billion and reached $8.82 billion in the first 11 months of 2018, according to Ukraine’s Ministry of Economic Affairs website. The two sides set a goal in 2019 of $10 billion per year, the ministry says.
China became Ukraine’s biggest trading partner in 2019, according to data gathered by the Ukrainian law firm Crane IP. Analysts estimate today’s two-way trade between $10 billion and $20 billion annually.
Chinese investments in Ukraine total about $150 million per year, said Yan Liang, professor and endowed chair of economics at Willamette University in the U.S. state of Oregon. She said the investments include a wind power plant, agricultural projects and transport infrastructure.
A Chinese consortium agreed in 2017 to build a fourth line for the same metro system where Huawei is installing 4G.
China sells machinery and consumer goods to Ukraine and has an overall trade surplus, Roberts said. He called Chinese trade “very important for Ukraine.”
Ukraine also exports commodities to China, such as corn, barley and sunflower oil. About one-third of China’s corn comes from Ukraine. China orders nuclear reactor parts from Ukraine too, said Yun Sun, director of the China program at the Stimson Center in Washington.
China has also been eyeing Ukraine’s aerospace industry. Beijing Skyrizon Aviation, part of a Chinese state-owned aerospace manufacturer, had tried to acquire a controlling stake in Motor Sich, a Ukrainian producer of plane and helicopter engines. However, a court in Kyiv stopped the deal last year. Ukrainian state security service Chairman Ivan Bakanov described Motor Sich in a statement as “a matter of national security.”
The case is now in an international tribunal, where Beijing Skyrizon Aviation is seeking $4.5 billion in compensation from the Ukrainian government for the failed deal.
Impacts of warfare
China may become an even more significant trading partner of Ukraine if Russia takes over and installs a pro-Moscow government, Yun said, because Ukraine would then fall under Western sanctions that have emerged this week. U.S. President Joe Biden already announced a cut in Western financing to Russia on Thursday.
“China will be one of the few options left,” Yun said.
Ukrainian officials will hope to keep the trade doors open if they stay independent of Russian rule after the invasion, she added. “If the question is, will Ukraine stop selling things to China because of China’s unwillingness to punish Russia, I think the answer is going to be no because China is such a large client and these are economic transactions,” Yun said.
After the war ends, China will still see Ukraine as a “strategic location” for its economic interests regardless of who runs the government in Kyiv, Liang said. Long-term Chinese investments such as power plants will pick up again after peace is restored, she predicted.
“I think just from an economic point of view, China and Ukraine’s trade (to) a great extent is supplementary, so China will be more than willing to trade with this big European food producer,” Liang added. “On the other hand, Ukraine needs China’s manufactured goods.”
A major initiative to strengthen and cement America’s ties with Asia and counterbalance China’s expanding influence lacks robust trade incentives that are viewed as politically perilous in the United States, where protectionist sentiment runs high, experts told VOA.
The United States needs to intensify its focus on the Indo-Pacific region because of the “mounting challenges” posed by the rise of China, according to a strategy document released by the Biden administration last week.
“The PRC [People’s Republic of China] is combining its economic, diplomatic, military and technological might as it pursues a sphere of influence in the Indo-Pacific and seeks to become the world’s most influential power,” the strategy document said.
That description of China largely mirrors the view taken by the former Trump administration, which often took a bluntly adversarial stance toward Beijing. Beyond rhetoric, however, Biden’s strategy seeks to shore up regional alliances and partnerships that many see as critical to U.S. strategy in Asia.
It responds to the desire of many countries in the region for the United States to play a galvanizing role in addressing common challenges such as public health, climate change and anti-corruption, Ryan Hass, senior fellow at the Brookings Institution, told VOA.
“It is a welcome departure from the America-first mindset during the Trump era,” Hass said.
No economic framework, leadership
The new strategy calls for advancing freedom and openness, building collective defense capacity within and beyond the region, and building regional resilience. It also embraces what the administration calls “promoting shared prosperity.”
But Hass and other observers say the Indo-Pacific strategy lacks a coherent trade framework that gives countries in the region a good economic reason to deepen relations with the U.S. They say Washington’s international economic agenda should match the leadership role the United States seeks for itself in the region.
Robert Daly, director of the Wilson Center’s Kissinger Institute on China and the United States, told VOA the strategy suffers from a fundamental contradiction in that it implies that the U.S. will engage in a high degree of global activism, following years of far more isolationist foreign policy under the Trump administration. At the same time, the Biden administration has not primed the American public to shift away from the Trumpian critique of globalization.
“They’ve put themselves in a box where they, for political reasons, seem to accept the Trump view that globalization is the playground of self-indulgent coastal American elites who don’t care about the heartland [of America],” Daly said. “What was needed was a better form of globalization that serves American interests — the Biden administration has chosen not to take that on.
Preceding Trump, the former Obama administration championed the Trans-Pacific Partnership, a massive trade agreement with 11 other countries designed to be the cornerstone of U.S. economic policy in the region. The Trump administration withdrew from the TPP in 2017, leaving the other members to sign a revised deal, called Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
With no public support for multilateral trade agreements, the Biden administration has said it has no plans to join the CPTPP and has made clear it intends to continue its predecessor’s protectionist trade policies.
The White House has not yet shared details of its Indo-Pacific Economic Framework, a component of the larger Indo-Pacific Strategy. The framework, which they billed as a “multilateral partnership for the 21st century,” was scheduled for launch early this year.
“As we consult with the Indo-Pacific partners, Congress and other stakeholders, we will have more to share as the process is ongoing,” deputy White House press secretary Karine Jean-Pierre told VOA on Thursday. “It’s underway.”
The administration said the framework would “promote and facilitate high-standards trade, govern the digital economy, improve supply-chain resiliency and security, catalyze investment in transparent, high-standards infrastructure, and build digital connectivity — doubling down on our economic ties to the region while contributing to broadly shared Indo-Pacific opportunity.”
But officials have acknowledged the framework will not include opening up American markets, the economic carrot that analysts say is missing from the strategy.
“Why would regional states agree to serious concessions on climate or labor standards if the United States is unwilling to discuss trade or investment liberalization?” asked Zack Cooper, senior fellow at the American Enterprise Institute. “It appears that Washington is content to remain on the sidelines as Beijing integrates more deeply into the region’s economic order.”
In a briefing to reporters this month, a senior administration official acknowledged that regional countries want more but are “very realistic” about the constraints and challenges that shape the Biden trade policy.
Build Back Better World
Some analysts see the potential for incentives beyond market access.
“The promise of this [Indo-Pacific] initiative is that it will offer some other things that aren’t market access,” said Matthew Goodman, senior vice president for economics at the Center for Strategic and International Studies. Goodman told VOA those may include improving international trade regulations or investing in infrastructure as promised in the Build Back Better World initiative.
Biden launched his Build Back Better World plan (B3W) during the June 2021 Group of Seven summit, with the goal of creating “a values-driven, high-standard and transparent infrastructure partnership” to help finance projects in developing countries.
U.S. officials led by Daleep Singh, the deputy national security adviser for international economics, have scouted several countries in Latin America and Africa to identify potential infrastructure projects, particularly those that focus on climate, health, digital technology and gender equality.
“There’s been enormous enthusiasm in every country we visited, Ecuador, Colombia, Panama, Ghana, Senegal, DRC [Democratic Republic of the Congo], parts of the Middle East, Indonesia, Thailand, and other parts of the world,” Singh told VOA Friday.
B3W has been framed as an alternative to China’s Belt and Road Initiative, Beijing’s international development program that has financed infrastructure projects in Asia, Africa and Latin America and has made inroads in Europe. China’s BRI investments have been criticized by outside groups for not assessing environmental and social impacts, lacking financial transparency and leaving some governments struggling to pay for costly infrastructure.
“The reason there’s so much enthusiasm is that countries do want a choice,” Singh said. “For a long time. China has been the only game in town for many of these countries, and in many cases, they have buyers regret.”
Last year the administration promised to include details of some initial projects during the formal launch of the initiative, originally scheduled for early 2022.
“We will have more details to come in the coming months on how to continue to implement this initiative, and the projects the U.S. government is investing in with allies and partners,” Jean-Pierre said to VOA Thursday. “This is something that the president is committed to.”
FILE – From left: U.S. Secretary of State Antony Blinken, Australia’s Minister for Foreign Affairs Marise Payne, India’s Minister of External Affairs S. Jaishankar, and Foreign Minister of Japan Yoshimasa Hayashi participate in the Quad foreign ministers’ press conference in Melbourne, Feb. 11, 2022.
Allies and partners
Biden’s Indo-Pacific strategy promises steps to deepen America’s existing treaty alliances with Australia, Japan, South Korea, the Philippines and Thailand. It also aims to strengthen relationships with regional partners such as India, Indonesia, Malaysia, Mongolia, New Zealand, Singapore, Taiwan, Vietnam and the Pacific Islands.
Continuing Trump’s approach, the administration is putting strong emphasis on the Quad – a regional grouping among the U.S., India, Japan and Australia.
Much of the strategy rests on the presumption of what the other actors will do, according to Aparna Pande, director of the Hudson Institute’s Initiative on the Future of India and South Asia.
“Japan and South Korea should get along, ASEAN should remain central, India should play a bigger role,” she told VOA, pointing out that with India’s plummeting economic growth, New Delhi may not be able to accept that challenge.
The strategy also aims to strengthen deterrence of military threats, with Japan and South Korea to pursue denuclearization of the Korean Peninsula. Pyongyang has taken a series of provocative steps while ignoring Washington’s offer of talks without preconditions.
North Korea conducted 11 missile launches in January, a record in a single month, including a new type of “hypersonic missile” able to maneuver at high speed. It has also raised the possibility of restarting nuclear or intercontinental ballistic missile tests.
FILE – In this U.S. Navy photo, the Virginia-class fast-attack submarine USS Missouri departs Joint Base Pearl Harbor-Hickam, Sept. 1, 2021. Australia decided to invest in U.S. nuclear-powered submarines and dump its contract with France to build diesel-electric submarines because of a changed strategic environment.
Military deals
While the Biden administration is not offering greater access to American markets, it has been handing out military deals.
Earlier this month, the administration approved a possible $100 million sale of equipment and services to Taiwan to “sustain, maintain and improve” its Patriot missile defense system.
The sale is in line with the Indo-Pacific Strategy goal of supporting Taipei’s self-defense capabilities in hopes of promoting peace and stability across the Taiwan Strait. However, it has triggered an angry threat of retaliation from Beijing, which claims the democratically self-governed Taiwan as its breakaway province.
Earlier this month, the administration also approved the potential sale of F-15ID aircraft and related equipment to Indonesia in a deal valued at up to $13.9 billion, despite human rights concerns that have delayed previous arms sales to the country. The last arms deal made by Washington and Jakarta was in 2011.
Other deals include AUKUS, the September trilateral security pact with Australia and the United Kingdom to provide Canberra with nuclear-powered submarines.
More deals are expected and sharper contours of the Indo-Pacific Strategy may take shape as Biden hosts ASEAN leaders in Washington in the coming months and travels to the region for summits later in the year.
China has failed to meet its commitments under a two-year Phase 1 trade deal that expired at the end of 2021, and discussions are continuing with Beijing on the matter, Deputy U.S. Trade Representative Sarah Bianchi said on Tuesday.
“You know, it is really clear that the Chinese haven’t met their commitment in Phase 1. That’s something we’re trying to address,” Bianchi told a virtual forum hosted by the Washington International Trade Association.
In the deal signed by former President Donald Trump in January 2020, China pledged to increase purchases of U.S. farm and manufactured goods, energy and services by $200 billion above 2017 levels during 2020 and 2021.
Through November, China had met only about 60% of that goal, according to trade data compiled by Peterson Institute for International Economics senior fellow Chad Bown.
The deal prevented the escalation of a nearly three-year trade war between the world’s two largest economies but left in place tariffs on hundreds of billions of dollars of imports on both sides of the Pacific.
Agriculture Secretary Tom Vilsack in late January told lawmakers that China’s purchases of U.S. farm goods fell short of the Phase 1 goal by about $13 billion.
The U.S. Census bureau is expected to release final 2021 trade data for goods and services on February 8, which will provide specifics on the shortfall.
Chinese customs data showed the country’s 2021 trade surplus with the United States surged 25% to $396.6 billion after declining for two straight years, with exports to the United States up 27% and imports of American goods rising 33%.
A spokesperson for China’s Embassy in Washington said Beijing has worked to implement the Phase 1 agreement “despite the impact of COVID-19, global recession and supply chain disruptions.”
“We hope the U.S. can create a sound atmosphere and conditions for expanded trade with China. The two trade teams are in normal communication,” the spokesperson said in an emailed statement.
Bianchi, whose portfolio includes China and Asian trade matters, did not identify steps the Biden administration is taking to hold China to its Phase 1 commitments, which also include some increased Chinese market access for U.S. agriculture, biotechnology and financial services.
“It’s not our goal to escalate here. But certainly, we’re looking at all the tools we have in our toolbox to make sure they’re held accountable,” Bianchi said, without providing details.
Bianchi, who served as an economic adviser in the Obama administration and took office in October, said the United States was trying to foster a “stable relationship” with China, but the two countries are at a “difficult stage in the relationship.”
“To be super-candid, the conversations are not easy. They’re very difficult. But you know, from my perspective, what’s important is that we’re having conversations and they will be unflinchingly honest,” Bianchi said.
She said USTR was emphasizing that China’s state aid to companies and non-market economic policies and practices are a “serious threat to American economic interests.”
Bianchi said USTR was consulting closely with Congress on the Biden administration’s planned Indo-Pacific Economic Framework to re-engage economically with the rest of Asia, and more details would be released in coming weeks.
The framework will not include improved market access for countries that sign up, Bianchi said, but said the United States will be seeking high standard “binding commitments” from trading partners in negotiations on digital trade policies, labor rules, environmental standards and supply chain resilience.
By filing a formal complaint against China at the World Trade Organization this week, the European Union is throwing its weight into support for member state Lithuania in what is being cast as a test of the EU’s willingness to defend the interests of even its smallest members in the face of Chinese power and aggression.
The complaint, which seeks a ruling from the WTO, alleges that China has violated the trade body’s rules by carrying out against Lithuania coercive actions that also interfered with the EU’s all-member-inclusive single market and supply chain.
China’s actions are widely seen as intending to punish the Baltic country of 2.8 million people for leaving the 17+1, a regional group Beijing established, and agreeing to host in its capital a Taiwanese representative office bearing the name “Taiwanese Representative Office in Lithuania” rather than “Taipei Representative Office,” as such offices are titled elsewhere.
“Over the past weeks, the European Commission has built up evidence of … a refusal to clear Lithuanian goods through customs, rejection of import applications from Lithuania, and pressuring EU companies operating out of other EU Member States to remove Lithuanian inputs from their supply chains when exporting to China,” the EU said in a statement Thursday, adding that China’s actions “appear to be discriminatory and illegal under WTO rules.”
Before the announcement, a European Commission spokesperson in Brussels told VOA, “As we have consistently stressed, the EU will stand up against all types of political pressure and coercive measures applied against any Member State. We stand by Lithuania. Lithuanian exports are EU exports.”
Jonathan Hackenbroich, a policy fellow at the European Council on Foreign Relations, told VOA that while some within the EU initially questioned the extent to which Lithuania had consulted other member states prior to announcing its decisions concerning China and Taiwan, those concerns paled compared with the seriousness of the threat China’s actions posed to the political and economic integrity of the 27-member bloc.
If China’s action is left unchallenged, EU member states and businesses will end up losing more of their freedom, Hackenbroich warned in a recent essay, Coercion With Chinese Characteristics: How Europe Should Respond to Interference in Its Internal Trade.
The essay states that while China’s aggressive thinking and deeds “should be a source of great worry for European businesses and governments,” the EU must urgently do more to promptly identify and effectively counter China’s coercive methods against nations that defy its wishes.
“Look, everyone can understand this is a test,” said Benjamin Haddad, senior director of the Europe Center at the Washington-based Atlantic Council. “This is a test of whether Europeans will break off their solidarity with one of their smaller members in exchange of economic interests.”
Haddad told VOA that he wouldn’t be surprised if the EU came up with strong measures in support of Lithuania. “Because I think there’s just this feeling that Lithuania should not be left on its own.”
Besides, doing so is consistent with the vision for Europe spelled out by French President Emmanuel Macron. France took over the six-month EU presidency Jan. 1. “If you talk about sovereignty, or if you talk about strategic autonomy, that means defending all of the EU members against external challenges and threats. Clearly we have China being aggressive against one of the smaller (EU) members.”
French and EU policymakers are no doubt mindful of “a broader shift in European mindsets about China,” Haddad said.
“Three years ago, the EU released a paper saying China is a trade partner, an economic competitor but also a systemic rival; I think now you see more and more of the systemic rival piece take precedence.”
The battle between Beijing and Vilnius has been closely watched around the world. Analysts in Poland recently wrote that China’s new, more aggressive tactics are also meant to intimidate other EU countries, mainly those in central Europe, “where the economic cooperation model with China is similar to Lithuania’s.”
That model involves only minor direct sales to China but significant indirect export through the supply chains of Western European companies. China is applying its punitive measures to products containing any Lithuanian-made content, in effect issuing what analysts describe as secondary sanctions that also harm businesses and industries from third countries, including other nations in the EU.
Lithuania’s direct exports to China constitute only 1% of its total exports, but its industry and manufacturing are closely linked with German and other multinational corporations that Beijing is pressuring to stop sourcing from Lithuania.
Given Germany’s status as an economic powerhouse in the EU, the reaction of the German businesses and government to China’s pressure is considered crucial.
Observers noticed that the Federation of German Industries, or BDI, supported the EU’s WTO filing, saying the union needs to take decisive measures.
New message from Berlin
Addressing an audience gathered at the Mercator Institute to discuss its China 2022 forecast, Tobias Lindner, a German deputy foreign minister, described the disagreements with China as touching “the core of European values and interests — not addressing this now will cost us dearly in the long run.”
“We will continue to seek cooperation between China and the EU and Germany,” Lindner said. “However, the partnership that we seek will be looked at strategically: Does it conform with our values? Is it in our interest?”
Lithuania’s top economic official said her government hasn’t ruled out a diplomatic solution, while also underscoring the EU’s role going forward. “If the EU talks in one voice, then there is always a solution,” Ausrine Armonaite told Politico.
“When it comes to a situation that Lithuania is in, today it’s Lithuania; day after tomorrow it may be any other European countries,” she said.
There are signs that mutual support and solidarity are taking root among EU nations as the bloc and member states individually face challenges from multiple directions.
“The fact that we’re a member of the European Union, it means we have to defend other member states of the EU should they feel they’re being coerced by third parties,” Anze Logar, Slovenian foreign minister, told VOA in an interview last month.
In September, Slovenian Prime Minister Janez Jansa wrote a letter to fellow EU member states urging them to support Lithuania as the latter started to receive punitive blows from Beijing.
Asked whether Slovenia came under fire from Beijing because of the letter, Logar said it wouldn’t have mattered.
“It’s a matter of principle,” he said. “If you’re a member of a club, you have to defend your partners in this club, because we expect we’ll be defended when somebody from outside attacks us, that other member states will come to our own defense.”
Slovenia may need help from the EU club quite soon. Slovenian businesses reported their contracts were being canceled by China after Jansa described the tactics China deployed against Lithuania as “terrifying” and said his government is in talks with Taiwan to establish representative offices.
On Thursday, following the EU’s WTO filing announcement, the U.S. Trade Representative’s office announced that “the United States will request to join these @WTO consultations in solidarity with Lithuania and the European Union.”
The State Department announced Friday that Undersecretary for Economic Growth, Energy, and the Environment Jose Fernandez will travel to Vilnius on Sunday, followed by a stop in Brussels.
Washington’s “continuing strong support for Lithuania in the face of political pressure and economic coercion from the People’s Republic of China” is on the agenda of discussions between Fernandez and his Lithuanian counterparts, the State Department said. Fernandez will also be discussing measures to counter economic coercion with EU officials in Brussels.
A Slovenian business group has said its members are facing a Chinese backlash days after Prime Minister Janez Jansa publicly discussed his hopes for closer ties with Taiwan during an interview. It marks the latest case of China refusing to tolerate dissent on the issue of Taiwan’s autonomy.
On January 17, Jansa told Indian media that he hoped Taiwan and Slovenia could open mutual representative offices. He also praised Taiwan’s COVID-19 response and said Taiwan should determine its relationship with China independently. Opening offices in Taiwan would bring Slovenia in line with the rest of the European Union, as it is one of only a handful of countries — including Bulgaria, Croatia, Estonia, Malta, and Romania — without a Taiwanese mission.
Swift criticism against Jansa came from the Chinese government describing his remarks as “dangerous.” China considers Taiwan a province and treats any discussion of its disputed political status as taboo.
Moreover, within days of the interview, the Slovenian-Chinese Business Council said Chinese partners were already “terminating contracts and exiting the agreed investments,” according to the Slovenian Press Agency. The business group and its parent organization, the CCIS- Ljubljana Chamber of Commerce and Industry, did not immediately respond to VOA’s email inquiries.
The statement has also drawn fire both from Slovenia’s opposition and businesses with links to China. In an email response to VOA, Sasa Istenic, the director of the Taiwan Study Center at the University of Ljubljana, said his remarks “were his personal position not in tune with the National Assembly and could severely harm Slovenia’s economic cooperation with China.”
Business groups in Slovenia fear they could suffer the same fate as Lithuania, which is now under a Chinese trade embargo in retaliation for pursuing closer ties with Taiwan, Istenic said.
“The Chinese market remains important for Slovenian companies and [the] Slovenian government has certainly been paying attention to China’s retaliation measures directed toward Lithuania,” Istenic said. “We have yet to see how far China is willing to go in preventing the EU member states from upgrading their relationships with Taiwan.”
The EU maintains the “One China Policy” which recognizes Taiwan as part of the Chinese nation, and has traditionally had a less tumultuous relationship with Beijing than has the United States. But dissent is growing within the EU and some countries in Central and Eastern Europe have also found that promises of Chinese investment have not panned out as previously hoped, according to a 2021 report by the Central and Eastern Europe Center for Asian Studies.
China’s growing strength in the Asia-Pacific region has also alarmed both the EU and NATO. The COVID-19 pandemic, combined with Beijing’s human rights violations in Xinjiang, Hong Kong and Tibet, have raised questions about its suitability as a close partner.
These concerns have given Taiwan a wedge to improve its relationship with some countries in Europe such as the Czech Republic, Slovakia, and, most notably, Lithuania.
Lithuania and Taiwan have grown closer during the pandemic, swapping donations of vaccines and emergency protective gear. But, in April, Lithuania exited the Cooperation between China and Central and Eastern European Countries trade initiative, a group formed in 2012 to improve trade and investment and known colloquially as the “16+1.”
In November, Taiwan opened a controversially named “Taiwan representative office” in Lithuania. The office angered Beijing as it broke with the tradition of Taiwan using more politically neutral names like “Taipei Economic and Cultural Office” or “Taipei Representative Office” that did not suggest it was an independent political entity.
Aware of the economic cost of its closer ties, Taiwan has worked to offset some of the newfound economic pressure on Lithuania by pledging a combined $1.2 billion in investment across several sectors including industries like semiconductors, biotechnology and lasers.
“[This] investment is meant to shape Taiwan’s image as a reliable partner and viable democratic alternative to China, so there is both a financial and a political dimension to these financial proposals for investment,” said Zsuzsa Anna Ferenczy, postdoctoral researcher in Taiwan and former political adviser in the European Parliament, over email.
Access to Taiwan’s advanced technology sector could also be an attractive pull for other European countries, including Slovenia, whose automotive manufacturing and metallurgical industries rely on industrial robots.
Una Aleksandra Berzina-Cerenkova, a China scholar and head of the Asia program at the Latvian Institute of International Affairs, said Slovenia’s plan to potentially upgrade ties with Taiwan is a sign that Europe has not lost interest in democracy despite coercive measures from Beijing.
“It seemed that there was a bit of a loss of momentum when the Lithuania example was not being followed by others in terms of withdrawing from the 16+1 and then turning towards Taiwan,” said Berzina-Cerenkova by phone.
“But we actually see that Lithuania is leading … against the backdrop of attracting all the heat to itself. The other Central and Eastern European countries are actually also exploring opportunities, and trying to ride this train of momentum in their relations with Taiwan, because Taiwan, of course, is an interesting partner.”
Some sectors in Slovenia could have a lot more to lose, however, than Lithuania. While cumulative Chinese investment in Lithuania was just 82 million euros in 2020, according to the Central and Eastern Europe Center for Asian Studies, investment in Slovenia was valued at a far greater 1.5 billion euros over the same period. Much of that investment is represented by a single acquisition of a video game developer, the report said.
Other countries in the EU may need more support to weather the Chinese economic backlash if they choose to strengthen ties with Taiwan. So far, said Ferenczy, that support has taken the form of statements of support and resolutions in the EU Parliament, but she said more is needed.
“The EU’s toolbox is limited. It is in the process of drafting its anti-coercion instrument designed to reinforce its resilience. It will be key to ensure the instrument works effectively in order to make a difference in terms of pushing back against China’s coercion,” Ferenczy said. “So, whether Brussels will stand with Lithuania and jointly push back against such messaging all the way, is key for the EU’s credibility and its ambition to be able to defend its interests.”
North Korea this week resumed railway imports from China for the first time since its lockdown began in 2020, potentially signaling a new phase in its approach to the pandemic.
Since Sunday, North Korean freight trains have made several round trips across the Yalu River separating the North Korean city of Sinuiju and the Chinese city of Dandong.
That is a significant relaxation of COVID-19 measures for North Korea, which has taken perhaps the world’s most severe pandemic precautions.
However, there are more questions than answers about what the move says about North Korea’s future pandemic approach and when it will attempt to fully resume trade with China, its economic lifeline.
Why did North Korea resume trade now?
It is possible the decision was driven by desperation spurred by shortages of food or other supplies. There could also be far duller explanations, though, said Peter Ward, a Seoul-based specialist on North Korea’s economy.
“There are loads of reasons why you’d want to reopen it. And those reasons may not be, ‘Well, there’s going to be a revolution next week unless people in north Pyongyang get their food rations,’” he said.
North Korea, Ward suggested, might be increasing entry options for imports from China, which was already sending some goods to North Korea by ship. It is also possible a well-connected official in Sinuiju, which relies on trade with China and has suffered economically during the pandemic, may have lobbied North Korean leader Kim Jong Un to restart the railway imports.
Or it could be that North Korea is now confident enough in its import safety measures, following months of preparation.
What goods are North Korea importing so far?
During the pandemic, North Korea has experienced shortages of food, medicine, fertilizer, and construction supplies. Some of those items appeared to be included in the first shipments from China, according to video broadcast by several Japanese and South Korean media outlets.
“But I think there is a strong chance Kim Jong Un also used the deliveries to Pyongyang to stock up on the gifts he intends to dole out for upcoming celebrations in order to maintain loyalty to the Kim family,” Jean Lee, a senior fellow at the Wilson Center, a Washington-based research organization, said.
On Thursday, a state media readout of a high-profile Politburo meeting mentioned that North Korea should prepare to “grandly” celebrate the coming birthdays of late leaders Kim Il Sung and Kim Jong Il, which are major public holidays.
FILE – Citizens visit the bronze statues of their late leaders Kim Il Sung, left, and Kim Jong Il on Mansu Hill in Pyongyang, North Korea Thursday, Dec. 16, 2021, on the occasion of 10th anniversary of demise of Kim Jong Il.
The Daily NK, a Seoul-based publication with a network of sources in North Korea, reported this week at least some of the initial shipments included soybean oil, a cooking staple, which will be distributed as gifts on the holidays, known as the Day of the Sun and the Day of the Shining Star.
“Everything right now is focused on preparations to glorify the Kim family — not necessarily on the well-being of the North Korean people,” Lee said.
What safety precautions is North Korea taking with the import process?
A lot. In fact, North Korea appears to be so cautious that it may not even be allowing any North Koreans to enter China to facilitate the shipments. Video of the transfers appears to show a Chinese locomotive dropping off train cars full of goods to North Korea, before bringing empty cars back to China to reload.
Once in North Korea, the cargo appears to enter a disinfection facility recently constructed at an airport near the border, according to commercial satellite photos reported by NK News, a Seoul-based outlet that covers North Korea. At the facility, the goods will likely be sterilized and quarantined, possibly for weeks, analysts say.
Many scientific studies conclude it is very difficult for people to be infected with COVID-19 through contact with contaminated surfaces or objects. However, North Korea is taking no chances, Colin Zwirko, senior NK News correspondent, said.
FILE – People wearing protective face masks walk amid concerns over the new coronavirus disease (COVID-19) in front of Pyongyang Station in Pyongyang, North Korea April 27, 2020, in this photo released by Kyodo.
“North Korea maintains the most severe ‘zero-COVID’ policy in the world because an outbreak could lead to the collapse of the entire system, they admit this in state media. This means they are willing to prevent infections at all costs, even if it requires quarantining objects for long periods that might stand little chance of transmitting the virus. It’s a better-safe-than-sorry approach,” Zwirko says.
In the past, North Korean officials have embraced numerous scientifically questionable theories about how COVID-19 spreads. The virus, state media have reported, could spread through migratory birds, snow, air pollution, or anti-Pyongyang propaganda leaflets sent by South Korean activists.
How much trade will North Korea allow?
So far, Japanese and South Korean media have reported at least three roundtrips by freight trains from Sunday through Wednesday. South Korean officials said Thursday they have “steadily detected” train activity, but they could not say how long the train service will continue.
On Monday, China’s Foreign Affairs Ministry confirmed that rail traffic between North Korea and China had “resumed operation,” suggesting the activity could become regular. It is not clear, however, how quickly the quarantine and disinfection facilities will fill up. Some analysts speculate that that process could be a choke point limiting a wider resumption in trade.
So far, it appears that the trains have only sent goods in one direction, to North Korea, but Daily NK reported Thursday that some North Korean trading companies have begun preparing items for export to China, following an order from authorities.
Both sides have a long way to go to restore pre-pandemic trade levels. According to Chinese government data released this week, China’s trade with North Korea in 2021 fell about 90% compared to 2019, the year before the pandemic restrictions began.
How will North Korea handle the pandemic moving forward?
While many analysts think North Korea’s trade with China will gradually increase this year, others warn there could be setbacks, especially as China calibrates its own “zero-COVID” policy and struggles to keep out the more transmissible omicron variant.
FILE – Staff of the Pyongyang Department Store No. 1 disinfect the store to help curb the spread of the coronavirus before it opens in Pyongyang, North Korea, Dec. 28, 2020.
It is also not clear whether North Korea will loosen other pandemic restrictions, such as its domestic travel restrictions and border security policies. Since the pandemic began, North Korea has dramatically increased patrols along its border with China, reportedly even issuing shoot-to-kill orders for illegal crossers. The measures have led to a drastic reduction in the number of North Korean escapees and cut off virtually all informal trade, such as smuggling and remittance payments.
Pyongyang may not feel comfortable easing many of those restrictions until it has tools, beyond lockdowns, to combat the virus.
North Korea has refused offers of COVID-19 vaccines from other countries and the United Nations-backed COVAX vaccine distribution initiative. According to the World Health Organization, it is one of only two countries yet to begin vaccination campaigns, the other being Eritrea.
