Switzerland Re-Examines the CCP’s Human Rights Abuses, Weakens Trade Ties With China

The Alpine resort city of Davos in Switzerland, on June 9, 2021. (Arnd Wiegmann/Reuters)

Switzerland, a European country known for its neutral foreign policy, released its first China Strategy document last year, with emphasis on the Chinese Communist Party’s (CCP) human rights issues—a move strongly opposed by the CCP. Since then, there have been some subtle relationship changes between the two countries.

Swiss commodities trading giant Mercuria Energy Group bought back all of the minority stakes held by the CCP’s state-owned China National Chemical Corporation (ChemChina) since 2016, Chinese financial news outlet Caixin reported on Oct. 27.

A Mercuria spokesperson said that the company bought the minority stakes in the third quarter of 2022 following a six-year commercial and strategic partnership under the terms and timeframe originally envisaged for the investment.

ChemChina, the largest chemical industry group in China with a refining capacity of 530,000 barrels per day, bought a 12 percent stake in Mercuria. ChemChina merged with Sinochem in 2021. Mercuria is one of the top five oil traders in the world, trading about 2 million barrels per day of oil and refined products. It is also a major producer of electricity and natural gas, with record net profits of $1.3 billion and revenues of $130 billion in 2021.

Major Swiss Businesses May Break Ties With Chinese Companies

Swiss mining group Glencore is looking to cut ties with its current partner in China after two successive setbacks in the country. Glencore is one of the world’s largest commodity traders, with its three core areas of business being energy, metals and minerals, and agriculture. The first setback was a liquidity crisis for Maike Group, a key partner of Glencore in the sale of refined copper in China. Maike Group is located in Xi'an City, Shaanxi Province, and is the largest importer of copper in China. Glencore sells approximately 600,000 tonnes of high purity copper to China through Maike Group each year.

Maike Group founder He Jinbei publicly admitted in late August that his business was facing “temporary difficulties” due to the COVID-19 pandemic, with some shipments delayed and some suppliers canceling deliveries. He Jinbei has  reportedly invested heavily in China’s real estate market with funds raised through his copper trading business. As a result, the Chinese real estate market weakened after the outbreak of COVID-19, and his investments were hit hard.

Another Glencore setback was also related to copper. In August, Reuters reported that approximately $500 million worth of copper concentrates disappeared from the Huludao Ruisheng Trading Company in Liaoning Province, China. The company imports a large amount of copper concentrate each year for distribution to various smelters in China. The Financial Times reported that the 300,000 tons of copper concentrate (worth $740 million) in the hands of Ruisheng was owned by 13 Chinese companies. However, warehouse inspections found only one third of the stock, indicating a loss of $490 million worth of copper. The report suggests that the scandal likely involves China’s commodity financing problems, as there are known to be similar problems in China. Some companies use the same assets as security for multiple lenders which results in the lenders collecting the security at the same time. The Financial Times report said that although suppliers were not affected much, both Glencore and another Swiss metals trader, IXM, have stopped supplying Ruisheng. Glencore also moved some of its existing metal stocks urgently to avoid a similar problem.

Bilateral Trade Talks Stalled

Efforts to renew a free trade agreement (FTA) between Switzerland and China have stalled as the Swiss government takes a more critical approach to the CCP’s human rights record. In a statement sent to the Swiss weekly newspaper SonntagsBlick, the Swiss State Secretariat for Economic Affairs (SECO) said, “As of now, the two sides have been unable to reach a consensus on a list of relevant issues that should be explored more extensively,” Reuters quoted the Swiss German-language media on May 29.

In a story headlined “The Chinese impasse,” the Sunday newspaper NZZ am Sonntag also said that Switzerland has taken a more critical stance on the CCP’s human rights record. The legal committee of the National Council of Switzerland recently passed a resolution stating that forced labor of Uyghurs in Xinjiang, China, is a real problem.

Although the Chinese Ministry of Commerce later denied that the talks were at an impasse, neither side has yet renewed the FTA. Switzerland and China signed a free trade agreement in 2013, the first FTA between Beijing and a European country.

Switzerland Takes a Closer Look at China’s Human Rights Record

On March 19, 2021, the Swiss government released the China Strategy document. According to the document, China is Switzerland’s third largest trading partner, but there are clear differences in values between the two countries. Therefore, the document suggested that it is important to ensure a clear and consistent policy toward China.

The Swiss government acknowledged that the strategy was a response to current geopolitical developments. In his presentation on foreign policy toward China, Swiss Foreign Minister Ignazio Cassis emphasized that human rights dialogue and trade interests would be two of the main issues in bilateral relations between Switzerland and China. Switzerland wants to adopt an independent policy towards China and defend Switzerland’s fundamental values. Cassis stressed that the new proposal in the strategy towards China will focus all bilateral relations on human rights issues.

Following release of the Swiss document, the Chinese ambassador in Switzerland responded in a statement that Switzerland was sending the “wrong signals” to the outside world by attaching some “malicious labels’' to China (CCP). He said the China Strategy document as not conducive to the healthy development of Sino-Swiss relations and China is firmly opposed to it.

Switzerland is known for its neutrality in international politics. Over the past 200 years, its government has earned the  status of a neutral country amidst the chaos of European power struggles and wars. The basic principles of the Swiss government’s policy of neutrality: humanitarianism, no involvement in war, no permission for belligerents to use their territory, and no provision of mercenary troops to belligerents, are found on the Swiss government’s website.

Influenced by years of the CCP’s propaganda, Switzerland had a good relationship with the Chinese regime, but after the CCP became more and more authoritarian; suppressed Xinjiang, Tibet, Hong Kong, and religious minorities; and had  sharp conflicts with the United States, EU, Australia, and other countries, Switzerland developed the new strategy toward China.

According to the Chinese Foreign Ministry, Switzerland is China’s ninth largest trading partner in Europe, and in 2021, the trade volume between China and Switzerland was $44.11 billion, of which China exported $6.23 billion to Switzerland and imported $37.88 billion from Switzerland.

Fan Yi contributed to this article.