Why the Swiss muddling through between the US and China could go wrong The Council of States Commission favors PUK for the acquisition of CS

The Swiss economy wants to participate in the Chinese mega market and the Federal Council supports this. At the same time, no problems are wanted, not with China, not with the US or the EU. But Professor Ralph Weber, a China expert at the University of Basel, says: “Having both is harder today than it was yesterday, and tomorrow it will be even harder.”

Nowadays, a mutual measurement is taking place on many fronts, says Weber. China is stepping on the West’s toes, not least to show that it can do this. The West, for its part, is ramping up the rhetoric and could soon resign. This escalation is evident in Chinese raids on Western companies, a tit-for-tat trade, or Adidas riding China’s nationalist wave. A classification.

Adidas makes patriotism in China

Adidas flew sky high in China for a long time. Until a shitstorm broke out on social media in China – and the German sporting goods manufacturer was boycotted. Adidas had previously done what was expected in the West, boycotting Xinjiang cotton. The UN recently documented in a report that “human rights are being seriously violated” in this Chinese region. In the US, President Joe Biden signed a law banning the importation of goods manufactured with forced labor in Xinjiang.

Previous storms passed quickly, this one did not. Months later, Adidas and Nike were trailed by Chinese competitors such as Anta Sports and Li Ning – who had publicly committed to Xinjiang cotton. Chinese shoppers had taken a “nationalistic turn,” as the Bloomberg news agency wrote. “Nike and Adidas were dethroned.”

Adidas now wants to win back “heads and hearts”, as the sporting goods manufacturer says. In return, he sells what the Financial Times calls a “patriotic clothing line”. Trainer tops in the red of the Chinese national flag are one of them, featuring “China” in Chinese characters. Thus, Adidas follows the “nationalist turn” in fashion and can probably boost sales. But reactions threaten: from oppressed minorities; by Western NGOs, shoppers or politicians.

Raids with humiliating pictures

Recently, the offices of several US consulting firms have been raided by Chinese authorities. At the same time, they were branded by state radio, as the New York Times reported. They would help Western countries steal sensitive information about key industries. Images appeared in the media of anxious-looking employees, with police officers behind them.

The background could be Chinese espionage laws, which have expanded. Now they are formulated so vaguely that everything that the government does not like can be included. In the worst case, imprisonment will follow. According to the Financial Times, the US Chamber of Commerce now fears that doing business in China has become riskier, to a “dramatic degree”.

EU considers countermeasures – China threatens a strong response

China had outright punished individual countries in recent years: Australia with exorbitant tariffs on its export hit wine; Taiwan with a pineapple import ban. Lithuania threatened a full blockade: if Lithuanian primary products were installed in German cars, they would not be allowed to enter the country. Lithuania was a wake-up call.

Now a counterattack threatens. The EU is preparing new tools to allow it to respond to “economic coercion” with sanctions. At the same time, efforts are being made to expand the Western Front to more countries. At a G7 meeting this weekend, major Western economies will work towards a common position. China, which would like to split the G7, responded with criticism: the G7 was “a small clique dominated by US interests”.

Russo-Ukrainian war worsens relations

Another breach that could escalate came with Russia’s attack on Ukraine. On the one hand, China has signaled neutrality towards the West and, on the other hand, has promised Russia “boundary friendship”. The West did not like this, but accepted it. That could change.

The European Commission wants to prevent sanctions – which could affect Chinese companies, among others – from being circumvented. Bloomberg reports this after viewing EU documents. In general, these are companies that provide the Kremlin with goods and technologies that can be used in two ways: civilian and military. Beijing threatened as a precaution. If Chinese companies faced sanctions, they would respond “strictly and forcefully”.

How it came to a head

The West could no longer maintain the comfortable myth that trade would transform China, says China expert Ralph Weber of the University of Basel. However, this break in relations is often misinterpreted in the West. “A review has not taken place in China; but in the West itself.”

China has become more authoritarian and cut off from the outside world under Xi Jinping, but he pursues the same goals as his predecessors. «The Communist Party wants to stay in power; to do that, it must keep the population in check.” This retention of power is internally justified with nationalism and with the hostile image of the US. Only the party can return China to its former greatness. It fits into this narrative that the US actually want to contain China as they push more for power expansion.

It had become clear what ambitions and ideology the Communist Party had. The West simply did not want to see this because trade with China brought so much economic profit. At some point, however, the contrast between fairy tales and reality was too great – at the latest when Beijing destroyed democracy in Hong Kong and became more global in research.

“Nowadays the EU and especially the US are looking much more critically at China and how companies and countries like Switzerland are positioning themselves,” says Weber. Yet Switzerland still follows a strategy of muddling through: take a stand when pressured; then wait and do only what is absolutely necessary. “However, Switzerland’s reputation suffers and the economy has no planning certainty,” says Weber. That seems like a risky path to him, but important parts of politics and business naturally want to continue like this. “It may go well for a long time — or not overnight.”