Xi's third term: what the 20th Party Congress asks of Europe

The 20th National Congress of the Communist Party of China sat in Beijing from 16 to 22 October[1]. On 23 October the Party presented a seven-member Politburo Standing Committee made up of men chosen by Xi Jinping, and it confirmed him for a third term as general secretary[3]. Premier Li Keqiang and Wang Yang, both 67, left the Central Committee; Li Qiang of Shanghai is on track to become premier, and Ding Xuexiang, at 60, is the youngest member of the new committee[3]. The Politburo shrank from 25 to 24 members, and for the first time in 20 years it has no woman[3]. The Party also amended its constitution to enshrine Xi's authority and ideas as its "core"[3]. Most of our generation came of age under one Chinese leader. This Congress makes it likely that we will know him for a long time yet.

What the Congress decided

The report that Xi delivered on 16 October sets the programme. It describes "Chinese modernization" as socialist modernisation under the leadership of the Party, and it presents that model as "a new choice for achieving modernization" for humanity[1]. It calls for "greater self-reliance and strength in science and technology" and for "a holistic approach to national security"[1]. On Taiwan, the report repeats the commitment to peaceful reunification and then adds the sentence that European readers should keep in mind: "we will never promise to renounce the use of force"[1]. The novelty is that the man who wrote it no longer faces any institutional counterweight.

One image summarised the week. On 22 October, at the closing session, two stewards led former general secretary Hu Jintao, aged 79, off the stage of the closing ceremony in Beijing, in front of the foreign press[2]. Reuters reported that he had appeared unsteady a week earlier when he was helped onto the stage[2]. The new Standing Committee is made up entirely of Xi loyalists[3]. A political system that removes its own former leader from view in front of cameras no longer manages how that scene reads abroad.

What the Union said the same week

The Union's doctrine on China dates from 12 March 2019. The Joint Communication of the Commission and the High Representative describes China, "simultaneously, in different policy areas," as a cooperation partner, a negotiating partner, "an economic competitor in the pursuit of technological leadership" and "a systemic rival promoting alternative models of governance"[4]. On 17 October, one day after Xi's speech, Josep Borrell told the press after the Foreign Affairs Council in Luxembourg that China is "a tough competitor, tougher and tougher, and a systemic rival," and that the Union's task includes "avoiding to turn dependencies into vulnerabilities"[5]. A paper by the European External Action Service, endorsed by ministers that day, called on Member States to reduce economic dependence on China and to resist Beijing's efforts to divide them[6].

The European Council of 20 and 21 October then held what its conclusions call "a strategic discussion on the European Union's relations with China"[7]. Charles Michel said afterwards that leaders did not want "a logic of systematic confrontation" and would "always be firm" on principles; Ursula von der Leyen said the Union must be "very vigilant when it comes to dependencies"[8]. The European Parliamentary Research Service notes that leaders took stock of the systemic differences on democracy, the rule of law and human rights and agreed on more reciprocity, but that they adopted no conclusions[14].

In 2021 the Union imported goods worth EUR 472 billion from China and exported EUR 223 billion, a deficit of EUR 249 billion; China supplied 22 per cent of extra-EU imports[9]. The Comprehensive Agreement on Investment has been frozen since 20 May 2021, when Parliament voted by 599 to 30 to refuse ratification while Chinese sanctions on five of its Members remain in place[10]. On 27 January 2022 the Commission requested WTO consultations with China over the de facto blocking of Lithuanian goods that began in December 2021[11]. The Commission's proposal for an anti-coercion instrument, tabled on 8 December 2021, would allow it to adopt countermeasures against a third country that uses trade to change a Member State's policy; it is still before the co-legislators[13].

The hardest test sits in Hamburg. The Chinese state carrier COSCO seeks 35 per cent of the Tollerort container terminal. According to NDR and WDR, all six federal ministries involved in the review oppose the sale, and the Chancellery supports it; the Economy Minister, Robert Habeck, said in September that he leaned towards refusal[12]. If the cabinet does nothing before the end of October, the sale goes through by default, days before the Chancellor's planned trip to Beijing with a business delegation[12][6]. Olaf Scholz said in Brussels that "there is great unanimity" among leaders[8]. The Hamburg file will show whether that sentence describes a policy.

What we recommend

The Congress has removed the ambiguity that the 2019 formula was designed to manage. A partner, competitor and rival that has concentrated power in one person, and that writes the possible use of force against Taiwan into its programme, requires a European answer that Member States cannot each give separately. We make four recommendations.

We recommend that the German federal cabinet take a formal decision on the Tollerort sale before the review period lapses, and that it either refuse the stake or cap it below any level that confers rights over the terminal's operation, so that the first European answer after the Congress comes from a vote in cabinet.

We recommend that the European Council return to China at its December meeting and adopt written conclusions that translate "reciprocity" and "dependencies" into instructions to the Commission.

We recommend that the Council and Parliament conclude the anti-coercion instrument before the end of 2023, so that the Lithuanian precedent has an answer in Union law as well as at the WTO.

We recommend that the Union keep the Comprehensive Agreement on Investment frozen until the sanctions on Members of the European Parliament are lifted, and that it say so publicly before the Chancellor lands in Beijing.