Dear reader,
 

In this newsletter: Taiwan's rising status in Europe, opposition to the Chinese university campus in Budapest, Czechia's designation as an unfriendly country by Russia, and more.

Also, do not miss an invitation to an upcoming public presentation of brand-new research by the MapInfluenCE team of analysts! 

Despite Beijing‘s efforts to isolate Taiwan diplomatically, the island nation is nonetheless receiving added attention. In the final communique at the London summit, the foreign ministers of the G7 nations expressed support for including Taiwan in the work of WHO and WHA and granting the country the ability to share its experience with fighting COVID-19. The ministers also expressed concerns over the growing tensions in the Taiwan Strait, where China has been steadily stepping up its gray zone activities.

The support for Taiwan’s inclusion in the work of WHO has also been voiced by the Czech Senate and the Foreign Affairs Committee of the Slovak Parliament. While Taiwan participated in the annual WHA meeting between 2009-2016, Beijing blocked its participation after the victory of Tsai Ing-wen.

Taiwan is not officially recognized by any EU nation, a status unlikely to change anytime soon. Adherence to the One China Policy by each of the respective nations allows for quite a little space to maneuver, just as the visit of the Czech Senate President Miloš Vystrčil to Taiwan last year proved. However, in the context of the complicated ratification process of the EU-China investment agreement, the time might be right to jump-start similar negotiations with Taiwan, even if there still seems to be a lack of interest on the European side. Still, it is important that the EU does not see Taiwan only as an alternative to China and rather approaches it on its own merit.

The importance of Taiwan for European economies is exemplified by the semiconductor industry. In light of the global shortages, the EU has been trying to woo Taiwanese stalwart manufacturer TMSC to invest in setting up local foundries in Europe. However, it seems that so far Brussels has been unsuccessful, with TMSC planning to expand production in the US instead.

• Chinese Fudan University project moves forward despite criticism. According to the latest Hungarian media reports, the planned Fudan campus is to be located in the southern part of Budapest, occupying a significant part of the area originally designated for a student city project. The Hungarian government plans to take up a huge loan of €1.2 billion and will invest the remaining hundreds of millions euro on its own. The construction is to be taken up by a Chinese state-owned company, as is customary for similar Chinese projects. According to the Hungarian government, the project will help boost the competitiveness of the Hungarian educational system. However, critics believe it will only serve to weaken the role of the underfunded Hungarian universities. According to the available information, Fudan will be able to offer salaries to its faculty several times higher than its Hungarian counterparts, potentially leading to the drain of academics to the Chinese university. The issue has in the meantime become a hot topic in domestic politics in Hungary. Gergely Karácsony, the mayor of Budapest and a would-be contender of Orbán‘s Fidesz in the upcoming elections, has become one of the chief opponents of the Fudan campus. One of the tools of stopping the project could be holding a local referendum on the issue, as the local government proposed. However, it is not clear if the issue falls under the scope of issues that can be a subject of a local plebiscite. Moreover, it could be expected that the central government would find ways to circumvent the opposition to this key project.

• The EU gains a new defensive mechanism against China. European Commission has published its proposal for new regulations governing acquisitions and participation in public procurement by non-EU companies receiving state aid. While the new regulations are not explicitly aimed at any specific country, it is no secret they are mainly targeting China. The proposal will cover non-EU companies seeking acquisition of EU companies with turnover equal to or higher than €500 million, who have received a foreign financial contribution of at least €50 million in the preceding three years as well as those bidding for public contracts valued at more than €250 million. The companies involved will have to notify the Commission about these operations. Moreover, the Commission also reserves the right for ex-officio review in any market situations involving foreign subsidies. After consideration, the Commission will be able to require companies to make commitments to remedy the situation or outright ban the operation. In case of incorrect or misleading information, failing to meet the notification requirement, or not meeting the obligations, the Commission will be able to levy hefty fines. The proposed tool is yet another addition to the EU toolbox aimed at addressing the market distortions caused by the peculiarities of the Chinese economic system.

• Czechia earns the designation of an unfriendly country from Moscow. The Russian government published a list of “unfriendly nations” following a presidential decree by Vladimir Putin from late April, which was supposed to identify enemies of the Russian Federation. Perhaps surprisingly, some of the traditional rivals of Russia, such as Poland, the Baltic states or the United Kingdom, were not included. Instead, Czechia became the only EU member state to find itself on the list, alongside Russia's longstanding rival in the USA. Russian foreign minister Sergei Lavrov later confirmed the impetus as the most recent escalation of bilateral relations due to the Vrbětice affair. The Czech Ministry of Foreign Affairs as well as the EU condemned the move and reminded Russia of violations of the Vienna Convention, especially in terms of limiting the number of locally-hired staff at Moscow missions. The criticism was also shared by the generally pro-Russian president Miloš Zeman. This case illustrates how Russia maneuvers before the strategic reflection in the EU-Russia relations and how Putin's regime picks individual countries in order to test the European solidarity and create a showcase for other nations. Czechia might be a particularly attractive target due to the turbulent pre-election mood in the country, where the government is likely to face a vote of non-confidence.

• How does the EU’s China policy work (and sometimes does not work)? Filip Šebok explains the current dynamics of the European approach to China in his piece for the Russian media Insider (read here).

• “It is worrying because it is not like an anonymous attack – I get plenty of those. It’s coming from a place of power, someone is holding an official position with them and a Chinese semi-governmental organization,” our analyst Matej Šimalčík told the South China Morning Post in reaction to recent threats by Slovak Confucius Institute Director (read here).

• “He takes one step to the right, one step back, and tries to rattle his beautiful feathers to please everyone,” said Tamás Matura, describing the “peacock diplomacy” of Hungarian Prime Minister Orbán (read here).

• “The Czech Republic is being swamped by an ever-rising wave of disinformation from Russia, following the government’s revelation that Russian military intelligence was behind the Vrbětice ammunition depot explosions”, argues Pavel Havlíček for CEPA (read here).
• “I think that by offering only very little in terms of deterrence, Europe is showing weakness as well as a willingness to accept these punches from the Russian side”, Pavel Havlíček comments on the EU‘s reaction to the Vrbětice affair (read here).

Next week, the MapInfluenCE team of analysts will get together to discuss the results of the upcoming research on the media coverage of Chinese investment and Chinese involvement in 5G in the Visegrad countries.

What are the main features of the media coverage in Czechia, Poland, Hungary and Slovakia on these issues? Who are the main agenda setters? Are the discussions mainly influenced by domestic developments or international trends? What do the results tell us about the changing perception of China?

Tune in for the discussion, moderated by the excellent Justyna Szczudlik, Deputy Head of Research, Head of Asia-Pacific Programme and China analyst at the Polish Institute of International Relations (PISM), to find out.

The event will be streamed on Facebook.

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