1. Sanctioning Lithuania
Beijing has escalated its “retaliation” against Lithuania by removing it from China’s customs registry system, effectively barring all Lithuanian imports into China. This move will have a negligible effect on both economies due to the tiny size of bilateral trade. However, further escalation by Beijing is likely.
China’s latest “unofficial sanction” comes after its downgrade of diplomatic relations with Lithuania in response to Taiwan establishing a de facto embassy in Vilnius.
Beijing has used “unofficial sanctions” against other countries before. Against Australia, for example, it banned or restricted specific products rather than all imports. In the case of Lithuania, Beijing’s approach looks more like the US trade bans on North Korea and Iran.
The difference in Beijing's approach in the two cases comes down to the size of bilateral trade. Imposing a total trade ban against Australia would have been costly for China. But the size of China-Lithuania trade is so tiny to begin with — Lithuania only exported €300m worth of goods to China in 2020 — there is no point in picking a list of goods.
Indeed, this latest move will have a negligible effect on both economies. For Lithuania, it only affects less than 1 per cent of its total exports. For China, this move is about political symbolism.
The move comes days before Brussels proposes a law allowing it to retaliate against such economic sanctions. The anti-coercion instrument, to be agreed by the commission on Wednesday, would allow the EU to retaliate more swiftly against the measures and US action against companies trading with Cuba and Iran. However, it faces opposition from several EU members which fear it could breach international rules and damage global trade.
Interestingly, countries like Japan have lodged public objections against this anti-coercion instrument, citing concerns that it could break WTO rules.
2. Didi delisting
Just six months after listing on the New York Stock Exchange, Didi has announced that it is delisting from it and will go public in Hong Kong.
In July, the Cyberspace Administration of China announced that it was investigating Didi for collecting user data through illegal means. This announcement came mere days after Didi’s IPO in New York.
While Didi may have collected personal data, the request by the Cyberspace Administration for Didi to delist seems to be over the top for the alleged offence. Indeed, this delisting appears to have broader implications for Chinese companies listed outside China.
A core issue here is differing regulations, including data localisation. Many jurisdictions are exploring and implementing data localisation requirements for companies. Chinese authorities may be concerned about potential data transfer to the US due to data-rich companies listing there.
For the US, Trump Administration in 2020 came out with a memorandum on protecting US investors from significant risks from Chinese companies, such as failing to comply with reporting standards.
And just before Didi’s announcement, the US Securities and Exchange Commission finalised rules allowing it to delist foreign firms that refuse to comply with its disclosure requirements.
Companies like Didi are stuck between a rock and another rock. If they comply with the US rules, they may breach Chinese regulations. But if they comply with Chinese regulations (eg., to not share data with the US), they may be eventually delisted by the US anyway.
For Didi, since most of its market is inside China, complying with Chinese rules takes precedence over complying with US rules.
The conflict of data protection vs transparency, and more broadly, between regulations that are at odds across jurisdictions, means it will be increasingly difficult for Chinese data-rich companies to list or stay listed in the US.
3. China-Africa forum
The 8th Forum on China-Africa Cooperation (FOCAC) took place in Dakar, Senegal, on November 29 and 30, with attendance from officials from China and 53 African countries. The key outcome of the forum was the publication of four documents:
- Dakar Action Plan (2022-2024);
- China-Africa Cooperation Vision 2035;
- Sino-African Declaration on Climate Change; and
- Declaration of the Eighth Ministerial Conference of FOCAC.
The negotiation and publication of these four documents show that Africa remains a priority in Chinese foreign policymaking. Africa is important for China for many economic and political reasons. One of them is African countries’ support for Beijing in international forums. For example, at the United Nations, most African countries back China on issues such as Xinjiang and Hong Kong.
Shortly before the forum, China’s State Council published a white paper on China-Africa relations. This white paper tried to highlight the shared history, interests and future between China and Africa. This framing is apparent in the four documents of the forum.
The Dakar Action Plan (2022-2024) is a detailed document on political, development and economic, education, health, security and cyber cooperation. The Action Plan prioritises political collaboration between the CCP and other African political parties. It also outlines continued cooperation at international institutions, including the United Nations and the World Trade Organization.
The China-Africa Cooperation Vision 2035 calls for a “new development paradigm” for industry transformation and growth in China and Africa. For Beijing, the African publics’ continued scepticism of Chinese firms and investment remains a hurdle for deepening cooperation. The Vision seeks to address this by proposing increased localisation of Chinese corporations and more investment in African-owned businesses.
The Sino-African Declaration on Climate Change is an extension of the Dakar Action Plan. The Declaration focuses on climate change capacity building to help Africa accomplish the UN 2030 Agenda and its Sustainable Development Goal, and the African Union Agenda 2063. For example, it lists capacity building cooperation on green, circular, and low-carbon technologies.
Importantly, “Green development” has been elevated to a critical area of Sino-African collaboration for the first time.
Below is a summary of the goals and pledges from Xi Jinping’s keynote speech at the forum:
Edited by Adam Ni | Contributions by Yun Jiang and Jayshree Borah