China Warns of 'Strong' Reaction If EU Sanctions Its Companies

Well, give us a broad brush stroke of what's going on here. Well, we've seen Schultz sort of reaffirm that China is more of a rival than a partner to Europe and urging the bloc to take a more unified response. And alongside that, the EU has selected some Chinese firms to sanction because they say they're directly helping Russia's war in Ukraine. Now that sanctioning has happened alongside firms from other countries, so Uzbekistan, Armenia and so on. So they're not necessarily singling China out. And even though we have had this quite robust response from Tinggeng saying, you know, it sort of refutes any suggestion that it's involved in this type of behavior, it's important to note that Tinggeng was still standing alongside his German counterpart. He was in Berlin with her to sort of pave the way for this German-China government meeting that we're going to see in June.

So even though there is this sort of back and forth, we are seeing some sanctions, we're seeing this rhetorical push, still they are learning to figure out a way to disagree together. And that's a big change from what we've seen previously. You know, and then you have, we were talking about it the other day, about how they are looking at these consulting companies. And that's another form of tension taking place here as well. So, you know, that's, it's just a lot of niggling going on. Absolutely. And it's this tension between China on the one hand saying it wants to create this board space for more foreign investment, but on the other hand, launching this anti-spy campaign that as far as we've seen has so far only tackled foreign consultancies operating in China.

Again, of course, unnerving the business community there, unnerving investors about access to information and so on. And it is worth highlighting the company that they've sort of flagged cat vision. It is the only foreign firm and the only firm to be sort of selected and named and shamed as the Chinese authorities took and sort of launched its this campaign with local state media too. So, it certainly is a sort of prominent example. OK. So, you have this, you have also the trade war with the US. You've got Italy now leaving the Belt and Road infrastructure, a thing that China's, of course, done.

Initiative, sorry. And so, you just see this gradual decoupling as some people might call it de-risking. The thing about this is that as you get de-risking or decoupling, it gives China less, there'd be fewer costs for it if it invaded Taiwan ultimately in a diplomatic end game. This is the big debate whether engaging China can somehow influence it and whether this move to sort of move away from communicating with China from the West, both European nations and by DC, whether that actually limits the control that they can exert. But it's a big debate not just when it comes to China, but of course when it comes to Russia too, because that was the big question that Merkel's strategy of engagement with Russia ultimately didn't have any impact. And the question is whether there have to be more sort of economic statecraft, more economic leverages that are placed on China in order to more forcefully exert that influence. But you're totally right that at the heart of it is that geopolitical issue that Taiwan may be the ultimate sticking point when it comes to these increasing rivalries.

Bloomberg