Von der Leyen puts focus firmly on China in State of the Union address

In her annual State of the Union address, European Commission president Ursula von der Leyen announced EU plans for international infrastructure spending and proposed legislation that looks to position the bloc as a counterbalance to China's rapidly burgeoning economic and political influence.

In an hour-long speech entitled, "Strengthening the Soul of Our Union", the EC president covered several issues, many of which appeared to reveal the growing unease in Brussels about the rise of China to a European Parliament which still has Beijing's sanctions on its colleagues, imposed in March, firmly in mind. 

The first of these announcements that will have taken Beijing's interest was the proposal of a European Chips Act, legislation that seeks to place the EU inside the global semiconductor race at a time when the world is facing an ongoing shortage.

Semiconductors are essential for the working of essentially all digital products from smartphones and laptops to electric cars and bank ATMs. Global demand for products using these chips exploded during the pandemic in 2020, while the EU's ability to produce them across the value chain has diminished, meaning the bloc has to rely on imports, primarily from China and the US, and to a lesser extent South Korea and Taiwan.

Read more: EU sets 2030 target for semiconductors and quantum technology

"This is not just a matter of our competitiveness. This is also a matter of tech sovereignty," she said, adding that through the Chips Act the bloc's research, design and testing capacities could be linked together.

"We need to coordinate EU and national investment along the value chain. The aim is to jointly create a state-of-the-art European chip ecosystem, including production. That ensures our security of supply and will develop new markets for ground-breaking European tech."

Von der Leyen next turned her attention to the climate crisis, citing the wildfires in Greece and France and the floods in Germany and Belgium as some of the closest-to-home disasters that have kept the issue at the forefront of public concern.

She first cited the EU's achievements in this area, such as registration of electric cars in Germany exceeding those of diesel, Poland being the bloc's biggest exporter of electric buses and car batteries, and the proposed Social Climate Fund to tackle energy poverty.

Harking back to her 2020 State of the Union address, where she announced the target of 55% emissions reduction by 2030, which has since been turned into a legal obligation, she also revealed the doubling of external funding for biodiversity.

Read more: EU Lays Out "Fit For 55" Goals To Cut Carbon Emissions

"But Europe cannot do it alone," she said. "The COP26 in Glasgow will be a moment of truth for the global community. Major economies – from the US to Japan – have set ambitions for climate neutrality in 2050 or shortly after. These need now to be backed up by concrete plans in time for Glasgow. Every country has a responsibility!"

Honing in specifically on China, von der Leyen began by praising President Xi Jinping personally, before immediately changing tone. The fact that she namechecked the Chinese president - without once mentioning his US counterpart Joe Biden - is being seen as a major signal of where the EU's core priorities currently lie.

"The goals that President Xi has set for China are encouraging. But we call for that same leadership on setting out how China will get there. The world would be relieved if they showed they could peak emissions by mid-decade - and move away from coal at home and abroad," she said.

This may be interpreted in Beijing as a direct criticism. While China has a net-zero target of 2060, the government has been reluctant to divulge details on how it will get there or to increase its own climate pledges amid concerns that a rapid phasing out of coal could create supply insecurity.

Turning her attention to climate financing, she said: "While every country has a responsibility, major economies do have a special duty to the least developed and most vulnerable countries. Climate finance is essential for them - both for mitigation and adaptation."

She then proposed an additional €4 billion in climate financing until 2027, adding "but we expect the United States and our partners to step up too".

Read more: EU Parliament confirms green transition fund

After discussing the situation in Afghanistan, and proposing a European Defence Union, which would lessen EU reliance on the US military for its defence, she turned her attention back east with the announcement of an Indo-Pacific strategy, something which the US and some Asian countries, in particular India, have already used to form a stronger opposition to Chinese growth in the region.

"If Europe is to become a more active global player, it also needs to focus on the next generation of partnerships. In this spirit, today's new EU-Indo-Pacific strategy is a milestone. It reflects the growing importance of the region to our prosperity and security. But also the fact that autocratic regimes use it to try to expand their influence," she told MEPs.

Shortly after, the Commission president offered the most direct opposition to Beijing in the whole speech - a soon-to-be-proposed "connectivity strategy" called Global Gateway.

Read more: The EU's answer to China's Belt and Road Initiative

The project would compete with China's Belt and Road Initiative (BRI). First announced in 2013, the BRI is a sprawling network of transport and infrastructure investments that now has more than 130 countries attached to it, many of which are among the world's poorest. The Initiative was incorporated into the Chinese Communist Party's constitution in 2017 and has exponentially boosted Beijing's economic and geopolitical influence across the world.

"We will build Global Gateway partnerships with countries around the world. We want investments in quality infrastructure, connecting goods, people and services around the world. We will take a values-based approach, offering transparency and good governance to our partners.

"We want to create links and not dependencies," she added, in a thinly veiled reference to the criticism levied at the BRI by the West for extending China's strategic reach and creating debt traps through the multibillion-dollar loans that Beijing provides.

"[The EU] is good at financing roads. But it does not make sense for Europe to build a perfect road between a Chinese-owned copper mine and a Chinese-owned harbour. We have to get smarter when it comes to these kinds of investments."

Bringing up the subject of human rights, von der Leyen said that that business and global trade were "good and necessary" but that it "can never be done at the expense of people's dignity and freedom".

Mentioning the estimated 25 million people worldwide who are coerced or threatened into some kind of forced labour, she announced the proposal of a ban on products sold in the EU that have been made using forced labour.

Read more: EU mulls first China sanctions in three decades

While she did not mention China by name, this could be of major importance in Beijing as there is a strong chance the ban will target goods made in the western province of Xinjiang. Since Xi Jinping came to power in 2013, Xinjiang has seen an estimated one million Turkic Muslims, mostly Uyghurs, incarcerated in internment camps.

There have also been widespread reports of systematic human rights violations by the Chinese authorities in the region including torture, rape, mass arbitrary detention and forced sterilisation, leading some countries such as the US, Canada, the UK and the Netherlands to declare China's actions as genocide.

"Human rights are not for sale – at any price," von der Leyen told Parliament, though it is not yet clear how the Commission will establish whether products made in Xinjiang are made using forced labour or not as the province is largely off-limits to human rights groups and Western diplomats.

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