What next for EU ties as 'shocked' Beijing lashes out at Slovenia over Taiwan office plans?

Slovenia's plans to open a Taiwan office looks likely to provoke a "shocked" Beijing into yet another diplomatic spat despite hopes of mending ties with the European Union, analysts said.

This comes after Slovenian Prime Minister Janez Jansa revealed plans to "exchange representatives" with self-ruled Taiwan in an interview on Monday with Indian broadcaster Doordarshan, where he also strongly criticised Beijing's angry response to similar moves by Lithuania.

The Chinese foreign ministry said it was "shocked ... and strongly opposed" to the plans. Calling Jansa's comments "dangerous", spokesman Zhao Lijian on Wednesday urged the Slovenian government to abide by the one-China policy and warned that the decision would further damage ties between China and Europe.

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Taiwan plans representative office in Slovenia as the EU nation blasts Beijing

Beijing considers Taiwan a breakaway province that must be reunited, by force if necessary, and has time and again warned other countries against having official contact with the island.

Hence Slovenia's moves could make it yet another European country to find relations frayed with China, despite joining the China and Central and Eastern European countries (China-CEEC Cooperation) initiative, a Beijing-led programme that aims to woo smaller European nations by promising access to the Chinese market and investors.

The mechanism was known as the 17+1 until Lithuania walked out last year. Its relations with China have since gone into a downward spiral, propelled by a decision to let Taiwan open a de facto embassy in the capital Vilnius.

Beijing reacted furiously to that decision, downgrading bilateral relations and reportedly imposing a customs block on exports from the tiny Baltic nation.

European flags in front of the Slovenian Parliament building in the capital Ljubljana. Photo: AP alt=European flags in front of the Slovenian Parliament building in the capital Ljubljana. Photo: AP>

Beijing has repeatedly said it does not want more hiccups in its larger relations with the EU, which have been strained since the stalling last year of the EU-China Comprehensive Agreement on Investment and with the 27-nation bloc's support for Lithuania.

Relations have also suffered with EU countries continuously raising concerns over alleged human rights abuses in the far western Chinese region of Xinjiang, and Beijing's policies towards Hong Kong and Taiwan. Beijing rejects all accusations, and denounces interference in its internal affairs.

However, the Chinese government is likely to react to Slovenia the same way it did to Lithuania, according to Long Jing, deputy director of the Shanghai Institutes for International Studies' Centre for European Studies.

"The Chinese government will surely make corresponding moves on Slovenia if their plan goes ahead as announced," she said.

"The reason the Chinese government made quick and sharp moves regarding Lithuania was because of not wanting other countries to follow suit.

"As China has already made it clear that this issue is stepping on China's red line, there will be follow-up reactions [from Beijing]."

There would be some impact on economic ties, Long said, but there was no proof of Beijing having triggered economic retaliations, despite Lithuanian claims to this effect.

"It is natural for Chinese companies to be more cautious when they notice that the political ties between a certain country and China have turned sour, [and] this would affect their interest in investment," Long said.

While Beijing did not specify how it planned to react to Slovenia's moves related to Taiwan, there would be little economic loss at stake for either side.

Lithuania and Slovenia's economic ties with China were not among the strongest within the CEEC group, Long said.

"This is also why Beijing would like to ramp up economic cooperation with these countries, because the closer the economic ties are, the stronger 'the ballast' is in the relationship."

China says 'isolated incidents' won't stop European cooperation

At the last annual China-CEEC Summit, held virtually in February 2021, Chinese President Xi Jinping announced plans for China to import over US$170 billion of goods from the 17 nations over the next five years. That came after a number of members expressed disappointment with Beijing's promises under the mechanism.

Diplomats and Chinese officials have however told the South China Morning Post that they see a huge challenge in reaching such numbers.

When Lithuania decided to drop out of the 17+1, its officials said the framework did not improve market access to China, and caused no significant improvement in trade balance.

Taiwanese and Lithuanian flags displayed at the Taiwanese Representative Office in Vilnius. Photo: Reuters alt=Taiwanese and Lithuanian flags displayed at the Taiwanese Representative Office in Vilnius. Photo: Reuters>

A Slovenian statistical office report in 2020 said while trade with China was increasing, so was the trade deficit - exports to China were four times lower than imports in 2019.

"The value of exports to China had been growing until 2017, when it started to decline," the report said.

The latest figures from Chinese customs said imports from Slovenia had grown 39 per cent in the first eight months of 2021 from the previous year.

Richard Turcsanyi, a researcher at a think tank in Bratislava, Slovakia, said while little direct economic exposure to China had played an important role in recent decisions from Lithuania and Slovenia, "these would not have happened without the political interest of their leaders".

"Both Lithuania and Slovenia were in the past under the communist rule of Moscow and Belgrade, respectively," noted Turcsanyi, a programme director at the Central European Institute of Asian Studies.

"Standing up against communist China can be appealing to many sections of society in both countries, be it for the reasons of human rights and democracy, dislike of the communist ideology, or support for freedom of smaller nations," he said.

"Developing relations with Taiwan fulfils most of these criteria, and it even promises some economic gains."

Taiwanese firm buys Lithuanian rum destined for mainland China amid row

The biggest Chinese investment project in Slovenia - an expansion of the country's second biggest airport in Maribor - has also turned ugly in recent years.

In 2020, the former Chinese operator of the airport, SHS Aviation, sued the Slovenian government for delaying the adoption of a zoning plan to allow the launch of a runway extension project, months after terminating a related €660 million (US$74.9 million), 15-year lease signed in 2017.

Identified as a "priority project" under China-CEEC ties, the revamped airport was expected to become a regional hub connecting eastern and western Europe.

The Slovenian infrastructure ministry said SHS, backed by the China State Construction Engineering Corporation, did not deliver on its promises, including turning Maribor airport into a hub for Chinese tourists. SHS was also accused of failing to pay monthly concession fees on a number of occasions.

"The Chinese owners who unilaterally pulled out of the lease agreement for no apparent reason are doing this to hinder the operations of Maribor airport and are implementing their interests at Slovenia's expense," the ministry said.

Live-streamers promote products at the second China-CEEC Expo in Ningbo, Zhejiang province, in June 2021. Photo: Xinhua alt=Live-streamers promote products at the second China-CEEC Expo in Ningbo, Zhejiang province, in June 2021. Photo: Xinhua>

Alicja Bachulska, an analyst at the Asia Research Centre in Warsaw and MapInfluenCE, a project that tracks China and Russia's influence in the region, said the China-CEEC Cooperation mechanism had failed to deliver and caused overall discontent towards Beijing's unfulfilled promises. Yet, whether more member countries would follow Lithuania's example remained to be seen.

"It depends on the ultimate outcome of the current crisis between Lithuania and China and the degree to which Beijing will be successful in coercing Vilnius and negatively affecting its domestic economic situation," Bachulska said.

While US diplomats have urged a de-escalation of tensions, the EU had not "really [offered] any tangible help for Lithuania except for symbolic support", she pointed out.

"If Beijing succeeds in its coercion campaign, this will set a very negative precedent in Sino-European relations, which will have implications for China's behaviour globally as it will further convince Beijing that the EU is unable to speak in one voice and act accordingly," she said.

"This will also discourage other countries from vocally supporting Taiwan on the international stage."

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.