China’s role at the Munich Security Conference

As already indicated in the last newsletter, China is very quiet at the moment and relevant political news are a bit sparse. Spring festival celebrations (including travel) are in full swing and before diving into today’s topic, I would therefore like to take the opportunity again to wish everyone a happy, healthy and successful new year of the fire horse.

Because China has largely shut down for the holiday period, we have to look outside of China to see if there are any relevant news. An obvious event for this is last week’s annual security conference in Munich that saw political, military and business leaders as well as academics gathered in southern Germany to discuss the status of security in the world. For China, foreign minister Wang Yi travelled to Munich to attend the conference and, like many other political leaders, held a number of meetings on the sidelines of the conference.

Especially for European countries, much attention at the conference was focussed on the speech of American foreign minister Marco Rubio after last year’s inflammatory address of American vice president J.D. Vance. Compared to this, Rubio’s address appeared more restrained, at least in tone, and triggered some hope among Europeans that the US can still be a partner, albeit one to be watched more carefully. In contrast to this focus on America, China was not really a main focus for European leaders at this conference.

In spite of or even more so because of this, it is relevant to see how the Chinese media report on the conference and Wang Yi’s meetings. Two elements are relevant in this regard. First is the continuous Chinese call for commonly building and upholding multilateralism and deepening cooperation. This call especially went to European leaders and can be seen as part of China’s global diplomatic charm offensive in light of current America foreign policy. The Chinese press reports on Wang Yi’s meetings with three European foreign ministers from Germany, France and the UK and all are reasonably similar in tone. China is portrayed as a reasonable and important economic and political partner and an alternative to the capricious United States.

This is closely connected to the second message that the Chinese press sends. It is included in press reporting about Wang Yi’s meetings with the president of Serbia and the foreign minister of Argentina, also on the sidelines of the security conference. This message is about how many advantages other states can get if only they decided to cooperate more with China. This is especially obvious in the reporting on the meeting with the Serbian president as Serbia has been a long-term close economic partner of China.

What is important to note in the Chinese reporting on these meetings at the security conference is that nothing of this is new. It has been part of the Chinese narrative and charm offensive for a while and the messaging is consistent. It is exactly this consistency in messaging that is important to note for businesses and politicians alike. Particularly because the messaging is consistent, it has a good chance to eventually cut through to many leaders and decision-makers in business and politics alike and ultimately put China into the position of the major go-to partner when it comes to solving economic and political problems. That said, the risks of engaging with and in the Chinese market have not changed and a low-key and consistent profile of China at the Munich Security Conference does nothing to change this either. Businesses still need to keep asking themselves the same questions about their China (and US) engagement as before the conference:

1. What are their exposures to these markets in terms of market size and customer relevance?

2. How relevant are they for China itself and how vulnerable does that make them to trade retaliations and sanctions?

3. How resilient (or vulnerable) are their supply chains to trade limitations and export controls?

4. How exposed to and at risk from Chinese competition are they in their respective industry or sector?

The Munich Security Conference has come and gone, the American foreign minister appeared more conciliatory at least in tone and the Chinese message on international political and business investment has been consistent with everything we have seen before. For businesses, this means even more than ever to do their homework and look at the basic questions outlined above: managing political risks is not rocket science, but it is the result of thorough and level-headed due diligence and analysis beyond news headlines.