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Chinese Premier Li Qiang held talks with Ireland’s Taoiseach Leo Varadkar in Dublin on Wednesday as part of a trip that highlighted the nations’ close trade and investment ties — and their potential vulnerability to growing geopolitical tensions.
Ireland’s chip and other exports to China and its role as an increasingly important destination for Chinese investment have made the country a poster child for the benefits of friendly relations with Beijing.
But exports fell last year and the tight economic ties have put Dublin in the crossfire of US efforts to control technology flows to China and the EU’s policy of “de-risking” trade with the world’s second-largest economy.
Analysts said Li’s trip to Dublin, his only European destination outside Switzerland following an appearance at the World Economic Forum in Davos, was a chance to encourage Ireland to maintain close ties and keep semiconductor sales flowing at a time when larger EU states are taking a harder stance on Beijing.
China and Ireland had been “setting a good example of friendly coexistence and win-win co-operation” since they established diplomatic relations 45 years ago, Beijing’s embassy in Dublin quoted Li as saying after his arrival.
“Premier Li’s visit to the only EU country with a trade surplus with China speaks volumes. It shows China always has friends, somewhere,” said Philippe Le Corre, senior fellow at the Asia Society Policy Institute. “This is a message to its own people as well as to the world.”
While Dublin had endorsed “de-risking” the EU’s trade with China, it was seen as “more open to constructive relations” than some member states, said Ben Tonra, professor of international relations at University College Dublin.
Li’s visit could be an opportunity to “test the waters” on Ireland’s approach to the bigger geopolitical question of how the EU would deal with tensions between the US and China, Tonra said, adding: “Ireland is a very, very small player, but has some weight in terms of shifting debates.”
Speaking at a lunch with Varadkar — which featured Irish beef, banned by Beijing in November after a case of bovine spongiform encephalopathy or mad cow disease — Li said he saw “huge potential” for the two countries’ “longstanding friendship and co-operation”.
Integrated circuits made in Ireland — many of them by US chipmaker Intel — have in recent years accounted for about 60 per cent of the country’s rapidly expanding exports to China.
However, Washington has been tightening controls on exports of advanced semiconductors to China. And Intel’s chief executive was among top US chipmakers who were sent letters last week summoning them to testify before a House of Representatives panel scrutinising US companies with large interests in, or sales to, the Asian nation.
Ireland’s central bank said in its latest quarterly bulletin in September that it was not clear whether US restrictions on exports to China of advanced integrated circuits and semiconductors had affected Irish sales.
“However, since US-owned multinational enterprises account for a significant share of exports from this sector in Ireland, it is possible that the restrictions are playing a role in the weakness in Ireland-China ICT goods exports,” the bank said.
Alexander Davey, an analyst at Berlin-based think-tank Merics, said Li’s visit could be seen as an intervention to make clear China’s sensitivity to the pressure on Intel and also to new Irish laws that tighten controls on exports with potential military uses and investments that could pose security risks.
“I see Ireland as a site for US-China competition and especially for their companies,” Davey added. “Ireland has to be very careful because where tit-for-tat sanctions or restrictions play out . . . Chinese and American companies in Ireland could be seriously harmed.”
Beijing also sees Li’s visit — the first by a Chinese premier since 2015 — as a chance to showcase Ireland to its own companies as a way to access the EU market.
“There is a risk that the [EU’s] de-risking strategy will spill over into protectionism against China,” said one Chinese official in Europe, who asked not to be identified. “But Ireland’s experience shows how beneficial commercial ties with China really are.”
Long a base for US companies, Ireland has enjoyed increasing investment from Chinese businesses including tech group Huawei, social media platform TikTok, WuXi Biologics and online retailer PDD Holdings.
“If you look at FDI [from China], in 2015 it was practically non-existent. Now there’s €9bn of investment creating 5,000 jobs,” said Martin Murray, executive director of Irish think-tank Asia Matters. “Chinese companies are in Ireland to access the talent pool and to access EU markets.”
“Ireland is a good friend of China,” said the Chinese official. “We are both supporters of the role of the United Nations in international affairs. We have a strong trade and investment relationship and we agree on many matters of common concern.”
Micheál Martin, Ireland’s foreign minister, last year warned that Dublin shared the goal of “healthy EU engagement with China” but must be “clear-eyed” about Beijing’s different world view and strategic objectives.
At his lunch with Li, Varadkar urged China to use its “indispensable” role in world affairs to address conflicts including in Ukraine and the Middle East as well as challenges such as climate change. “I believe you can make transformative contributions to the resolution of these issues,” he said.
