Switzerland ponders response to China’s expansion

Switzerland is searching for a way to deal with the emerging Chinese dragon. Keystone

China is in the fast lane towards becoming the leading world power. This has consequences for other nations, including Switzerland, which some people say demands a response. In Switzerland, there is mounting criticism of Bern’s perceived domestic, economic, and diplomatic compromises. 

Barbara Gysi, a centre-left Social Democratic Party parliamentarian, is concerned. Some of her colleagues didn’t want to sign her parliamentary motion this spring — because they were afraid of China. “They feared a telephone call from the Chinese Embassy in Bern, or didn’t want to ruin their relationships with Beijing,” she says. That gave her food for thought – after all, it was just a harmless initiative.

In her motion, Gysi called for an appraisal of the human rights dialogue that Switzerland has conducted with China since 1991 “in confidentiality.” She asked the government to evaluate the results of this dialogue and publish a report.

In June this year, the 16th round of this dialogue took place. Press releases from the Foreign Office say these talks allowed “an open and mutually critical discussion on international and national human rights questions.”

The success of these rounds of talks is disputed. Non-governmental organisations have long demanded more information on the content of the exchange. On the official side, the dialogue is frequently alluded to, for example in response to criticism of the absence of human rights commitments in the Free Trade Agreement that Switzerland and China signed in 2013.

The Free Trade Agreement with China has been in force since summer 2014. Switzerland ratified the agreement despite a lack of commitment to human rights. There is no guarantee that, for example, goods produced by forced labour will not enter the Swiss market under favourable import conditions. All the other Free Trade Agreements Switzerland has signed in recent years affirm a commitment to human rights and the UN human rights declaration. (Source: humanrights.ch)

Does the Chinese Embassy attempt to apply political pressure on Swiss members of parliament to influence them? “It can happen,” says Christa Markwalder, a member of parliament from the Free Democrats. She experienced it herself eight years ago as president of the foreign policy parliamentary committee. It was just a question of a parliamentary interpellation. “I was asked, by telephone, not to put the motion on the agenda, in response to which I explained our democratic system, which works quite differently from the Chinese system.”

China is particularly sensitive when it comes to Tibet. The Swiss intelligence agency noted this in its 2016 status report, which made “China’s increasing strength and its ascent to a global power player” one of its key focuses. China’s “self-confident and demanding conduct” was particularly keenly felt by the Tibetan exile community in Switzerland, the report said.

“Official receptions for the Dalai Lama will no longer be tolerated by China and are punished retrospectively with a variety of measures.”

The Dalai Lama visited Switzerland for the 15th time in September. The occasion was to celebrate the 50th anniversary of the founding of the Tibet Institute in Rikon in canton Zurich. It is the only monastery outside Asia to be founded by the spiritual leader of the Tibetans. The Swiss government hasn’t given the 83-year-old Dalai Lama an official reception since 2005, and the Tibetan community regularly criticises this. The government argues that it doesn’t want to spark any controversies or unnecessarily politicise his frequent visits.

China and Swiss rule of law

It is not just politicians who feel China’s influence on Swiss soil. The Society for Threatened People (GfbV) and Tibet organisations recently submitted a petition calling on the Swiss government and parliament to better protect the rights of Tibetans in Switzerland.

In a report published in the spring, these NGOs analysed the effects of the Free Trade Agreement on the Tibetan community. They found that since the FTA was signed, the Tibetan community in Switzerland has been increasingly and directly subjected to “China’s power games.”

One example was in autumn 2014 in Basel. China was celebrating the annual Moon Festival. During a welcome speech by the Chinese ambassador at the time, about a dozen members of the Association of Tibetan Youth in Europe wanted to protest against the Chinese occupation of Tibet. But Chinese security forces snatched their signs from their hands and pushed one woman to the ground.

For Angela Mattli of the GfbV, there is no doubt about what is at stake. “We are dealing here with a clear violation of the right to freedom of expression and a diplomatic incident which cannot be tolerated in Switzerland’s democracy.”

China’s buying spree 

China also wields economic influence in Switzerland. More than 80 Swiss companies are already in Chinese hands, and China has so far invested CHF46 billion ($46.3 billion) in Switzerland. The most prominent example is the 2016 takeover by the Chinese publicly owned company ChemChina of Basel seed company Syngenta for around CHF44 billion.

The Chinese state’s growing influence on Swiss business life is increasingly provoking political criticism. In contrast to other countries, like Germany or the US, Switzerland has no veto right to prevent takeovers of strategically important infrastructure, for example electricity production. Several ongoing motions in parliament aim to change that.

In the last five years, Swiss ministers have increasingly traveled to China. The graph shows the number of trips has tripled in recent years. In 2016 there were four working visits and five in 2013. swissinfo.ch

Politicians are also angry that Swiss companies still face bureaucratic hurdles gaining a foothold in China. They say China is shielding its domestic market from foreign buyers, while the gates to Switzerland are wide open to Chinese investors.

The Swiss intelligence agency notes in its 2016 status report: “By taking over Swiss companies and increasingly Swiss hotels too, China is trying to milk Swiss know-how and acquire Swiss brands, along with their good reputation. But cooperation with China is not founded on the principle of reciprocity.”

China’s banks 

It’s not just a question of Swiss firms and hotels, but also of Switzerland’s financial industry. Paolo Bernasconi has made a name for himself by fighting money laundering, among other things. The former state prosecutor from Ticino is now focussing on China’s banks, which have set up branches in Geneva and Zurich.

Switzerland is particularly interesting because it is a western country but isn’t a member of either the EU or NATO and is also not bound by US President Donald Trump’s policies, he says.

Gong Weiyun manages the Zurich branch of the China Construction Bank (CCB). In a 2015 interview with the Chinese information platform Peng Pai, shortly after the bank had opened its doors in Zurich, he said that no bank had ever set up a subsidiary in Zurich as quickly as the CCB. “Chinese speed has caused a sensation in Switzerland.” 

He also said that the Free Trade Agreement with Switzerland was “a great opportunity” for China. “The importance of Switzerland is obvious: It serves as a bridge for us.” Since the FTA was signed, more and more Chinese companies and local governments have invested in or taken over Swiss companies. For these Chinese and Swiss SMEs to function, it is very important “to make progress in developing the renminbi offshore market from Switzerland.” 

“Beijing needs Switzerland as a hub for its banks,” says Bernasconi. “The Chinese can use it as a location to convert trade with Europe into the Chinese currency.” He wonders aloud how Switzerland would be able to control the “world’s biggest dinosaur.”

Because China’s banks are state-owned, their officials are politically exposed persons (PEPs). Successful oversight and, where necessary, criminal proceedings against such people – for example on suspicion of money-laundering – depends heavily on cooperation with their country of origin. Bernasconi sees problems looming for Switzerland in this respect.

Silk Road investment

The focus remains on foreign policy. Some members of parliament have voiced fears that Switzerland could set its agenda according to Chinese interests, particularly in the light of the “One Belt, One Road” project, valued at CHF1 trillion – of which Swiss business would like a share.

The Social Democrat lawmaker Carlo Sommaruga, a member of the foreign policy committee, puts it like this: If Switzerland wants its companies to have the option of participating in the Silk Road project by investing in the countries involved, then “the government has to take questions about human rights and democracy in these countries off the agenda.”

Sommaruga is a politician and a lawyer. One of his clients is Nawab Mir Brahamdagh Khan Bugti, a politician and activist for an independent Balochistan, who came to Switzerland as a political refugee in 2010 and has since then been trying to obtain asylum, so far to no avail.

“I am posing the rhetorical question of whether China could exert pressure on the government to prevent Switzerland from taking on asylum-seekers from Belochistan,” he says. He doesn’t see why Switzerland would cave in to pressure from Pakistan. “I think China has a finger in this pie,” he says.