CEEasia Briefing #7: Chinese ‘sticks’ & ‘carrots’ diplomacy in V4, CEE reactions to Hong Kong security law, Malaysia’s WTO lawsuit against EU over palm oil, India-EU summit amid heightened tensions with China


Aug 1, 2020 in CEIAS Insights

CEEasia Briefing #7: Chinese ‘sticks’ & ‘carrots’ diplomacy in V4, CEE reactions to Hong Kong security law, Malaysia’s WTO lawsuit against EU over palm oil, India-EU summit amid heightened tensions with China

Welcome to the 7th issue of the #CEEasia Briefing.

In this issue, we dissect the following topics:

  • Chinese ‘sticks’ & ‘carrots’ diplomacy in V4
  • CEE reactions to Hong Kong security law
  • Malaysia’s WTO lawsuit against EU over palm oil
  • India-EU summit amid heightened tensions with China

Do you need to know more about East Asia? Don’t hesitate to shoot us a message about custom analysis tailored to your needs.

Chinese ‘sticks’ & ‘carrots’ diplomacy in V4

What’s going on? A new comparative study by MapInfluenCE, in collaboration with CEIAS, has shown that China has been using a targeted mix of ‘carrots’ and ‘sticks’ to increase its influence in Central European countries. The study focuses on cases of Czech Republic, Slovakia, Poland, and Hungary and their interactions with China on a number of different levels such as state to state relations, paradiplomacy, government-to-people relations, and interaction with businesses.

Going deeper. According to the study, in Hungary, China uses exclusively ‘carrots’ without any need to apply ‘sticks’ given its favorable standing in the eyes of the local government. In Poland, it also employs mainly ‘carrots’, while in the Czech Republic, a state with a tradition of opposing China, it uses a mixture of ‘carrots’ with a recent increase in the use of ‘sticks’. Lastly, in Slovakia, China’s influence is muted to a level where the notion of ‘carrots’ and ‘sticks’ applies only in a limited way as Beijing continues to remain on the sidelines of the country’s foreign interests. However, recent turn in Slovak policy towards a value-based approach to China may cause increased use of both ‘sticks’ and ‘carrots’ down the line.

This means… While China’s strategy for establishing a friendlier environment is similar in all four countries, its tactics differ in each one depending on the local political climate, geopolitical standing, and various levels of interactions.

So why does it matter? The study shows that it is not only China’s intentions but also the Central European states’ and their political and economic elites’ interest in attracting China’s attention which is helping to provide openings for Chinese influence to enter and thrive in the region. Strengthening domestic governance in Central European states is thus a key precondition to prevent further spreading of Chinese influence vie strategic corruption and elite capture.

Further reading:
MapInfluenCE: China’s Sticks and Carrots in Central Europe: The Logic and Power of Chinese Influence
MapInfluenCE: Handbook for stakeholders: China’s Sticks and Carrots in Central Europe

CEE reactions to Hong Kong security law

What is going on? While many of the Western countries criticized the controversial Hong Kong security law passed by the Chinese National People’s Congress this June – Britain and Australia even extended Hong Kong residents a broader path to citizenship – most of the CEE states refrained from any resounding critical reactions.

Going deeper… In total, 28 democratic countries, including 15 EU states, signed a joint statement regarding the situation in Hong Kong and Xinjiang, expressing their deep concerns over the situation in the Uyghur region and the security law in Hong Kong which they believe “undermines” the rights and freedoms of the Hong Kong people. However, many of the Central and Eastern European countries did not join their signatures. The CEE countries supporting the statement urging the Chinese government to reconsider the imposition of this legislation include Slovakia, Slovenia, Albania, Latvia, Lithuania, and Estonia.

Why it matters? Even though all the 27 EU states deplored the decision of China to pass the legislation and agreed on a series of sanctions, including limiting exports of sensitive equipment and technologies for end-use in Hong Kong, the CEE region did not present their own statements nor did they express their concerns over human rights violation in China. But some of the countries’ officials called for withdrawal from the Hong Kong extradition treaty. The Czech MPs for instance urged the government to offer asylum to citizens of Hong Kong. However, neither the Czech Republic nor Poland, Hungary, Croatia, and other countries of the CEE region released any statement regarding the situation. This shows that some countries are not willing to risk confrontation with China and therefore choose not to comment on the country’s problems of freedom and democratic mechanisms.

Further reading:
GOV.UK: UN Human Rights Council 44: Cross-regional statement on Hong Kong and Xinjiang
The New York Times: Australia Halts Hong Kong Extradition Agreement and Extends Visas
Czech Embassy in Beijing: Declaration of the HRVP on behalf of the EU on the adoption of China’s Legislation on Hong Kong
Expats: Czech officials urge government to offer asylum to citizens of Hong Kong facing persecution

Malaysia’s WTO lawsuit against EU over palm oil

What’s going on? Malaysia will take legal action against the European Union via WTO’s dispute settlement mechanism. The reason is to protect the interests of the second-largest palm oil producer against “discriminatory actions”. In March 2019, the EU announced that palm oil-based biofuel will not count towards renewable transportation targets. This is because of rapid deforestation and environmental degradation in Indonesia and Malaysia, the largest palm oil producers, that is likely caused by oil palms cultivation.

Going deeper… Palm oil is widely used in the production of biofuels, but their demand led to deforestation, especially in less developed countries. Also by taking up land suitable for farming, it increases food prices. A study by the University of Göttingen shows that “palm-oil biodiesel from the first-rotation cycle of palms produces 98% more emissions than fossil fuel.” Biofuel sector is the biggest consumer of imported palm oil in the EU while being the smallest employer in the EU´s bioeconomy. Restrictions of palm oil-based biofuels favor alternative additives such as rapeseed and soy. Those can be grown in Europe, but are even more land and pesticide demanding compared to oil palms.

This means… The EU´s decision can threaten up to 650 000 Malaysian households. Therefore, palm oil restrictions seem to be a deal-breaker in important EU-ASEAN trade relations. Indonesia already filed a similar lawsuit in 2019. Malaysian PM also said that they could look for alternatives to the planned purchase of European fighter jets as another way of retaliation. Due to the rising demand for palm oil from the rest of the world, the effectiveness of EU policy remains questionable.

Further reading:
Euractiv: Malaysia threatens to ditch EU fighter jet deal over palm oil curbs
Euractiv: Malaysian minister: ‘Palm oil is a deal-breaker for EU-ASEAN trade relations’
Science Daily: Eco-friendly biodiesel from palm oil?
Euractiv: Indonesia hits European Union with WTO lawsuit over palm oil

India-EU summit amid heightened tensions with China

What is going on? On July 15 India and European Union held a joint India-EU summit. The summit came after India mourned the death of 20 of its soldiers after clashes with Chinese forces at the Galwan River Valley. During the summit, both sides agreed to establish trade and investment agreements and to enhance naval cooperation and security consultations. Brussels also welcomed steps taken by India and China to de-escalate tensions in the border standoff. The President of the European Commission Von der Leyen appreciated the EU’s “important” ties with both India and China but added that while New Delhi and Brussels share common democratic values, EU relations with China remain rather “complex”.

This means… The COVID-19 pandemic has damaged the global image of China, particularly in Europe. In light of the prolonged Indo-China rivalry and the recent escalation of tension between the two countries, India can benefit from the souring Sino-European relations by gaining political leverage over China.

Going Deeper… After the China-India border clashes, India in retaliation banned several Chinese mobile apps and tech products. The extent of New Delhi’s response may be indicative of an acknowledgment by the Indian side of the economic and military gap between the two countries. Presently, the Chinese economy is $10.9 trillion bigger than the Indian economy. A strong Indian economy is imperative not only for the fulfillment of India’s strategic and security objectives but also for the meaningful containment of Chinese expansionism in the region.

Why is this significant? The India-EU virtual summit was the second most important meeting held by PM Modi during India’s violent border clashes with China. India is an emerging market with enormous potential to rival China based on its geographic position and economic capability. Common interests in economic prosperity and democratic values offer favorable conditions to enhance the Indian-European partnership. There is great potential for both sides to engage in economic and technological cooperation, which could influence the future trajectory of Chinese expansionism and aggression in the region.

Further reading:
The Economic Times: Huge potential between India & the EU to take economic partnership to next level: Germany’s Envoy
The Hindu: The sum and substance of the EU’s China dilemma
The Print: Modi raises China dispute at India-EU Summit, Brussels talks about both being ‘democracies’


Key Topics

ASEANCEECOVID-19EUHongkongpalm oilV4WTOChinaMalaysiaIndiaCzech RepublicHungaryPolandSlovakia


Murgašova 3131/2
81104 Bratislava

Sign up for our newsletter to receive the latest news and updates from CEIAS.

All rights reserved

CEIAS 2023