Switzerland, which is not part of the European Union, has generally had closer ties with the People’s Republic of China (PRC) than other Western European countries. The Swiss foreign policy approach, which is based on the principle of neutrality and is predominantly economy-oriented, has facilitated this.
In January 1950, Switzerland was one of the first countries to officially recognise the PRC—a fact that Chinese diplomats continue to appreciate and stress today. During the Cold War, Switzerland, as the base of many international organisations, served as a hub for Chinese intelligence networks, propaganda, and soft power in Europe. The PRC’s first diplomatic mission in central Western Europe was in Switzerland and, until the mid 1960s, Chinese scientific, commercial, and political interests in Europe were handled by the Chinese Embassy in Bern. During the Cold War, other Western European and North American countries placed an embargo on the PRC. Switzerland, however, continued trading with China—until the pressure from the United States became too great.
From the mid 1970s, economic ties grew closer again. In December 1974, during the Cultural Revolution in China, Switzerland signed a trade agreement with the PRC and established a Joint Economic Commission. In the decades after the beginning of economic reforms in China in 1978, bilateral and economic ties deepened further. In the early 1980s, it was a Swiss company, the elevator producer Schindler, that established the first Western joint venture in China. It became a model for Euro-American knowledge and technology transfers to the PRC. In 2014, a free-trade agreement (FTA) between Switzerland and China came into force—the only Chinese FTA in continental Europe. In 2015, direct trading between the Chinese renminbi and Swiss franc was launched, making Switzerland one of the few clearing and trading centres in Europe for the Chinese currency. In 2016, Switzerland became a member of the Asian Infrastructure Investment Bank (AIIB), a Chinese initiative.
Alongside the economy, research, innovation, and education are essential components of both countries’ foreign policies. In 1989, China and Switzerland launched a bilateral agreement on science and technology cooperation, followed by numerous bilateral research, innovation, and education agreements and dialogues in the 2000s and 2010s. These include a 2007 Memorandum of Understanding on Promoting Dialogue and Cooperation, as well as the 2016 Innovative Strategic Partnership. To date, there are 30 bilateral dialogues, on areas including human rights, science, intellectual property, finance, and tax matters. Some 15 of these are ongoing at the time of writing.
Overall, in line with Switzerland’s ‘economic pragmatism’, the Chinese Government considers Switzerland more pragmatic and less confrontational than other European countries and their relationship as a model for other European countries. However, this has been tempered somewhat by the publication of the more critical Swiss China Strategy 2021–24. This strategy builds on the Swiss Foreign Policy Strategy 2020–23 and outlines a range of challenges related to Sino-Swiss collaborations (see Key Controversies).
In April 2019, Switzerland was one of the first Western European countries to sign a Belt and Road Memorandum of Understanding (MoU). In contrast to other Belt and Road Initiative (BRI) countries that serve as sites for Chinese infrastructure construction, no official BRI infrastructure projects have been established in Switzerland to date. This is related to the type of MoU and its focus on third countries.
The MoU aims, first, ‘to further deepen the innovative strategic partnership between Switzerland and China’ and, second, ‘to expand areas of collaboration in trade, investment and finance for projects in third countries along the Belt and Road Initiative’. The emphasis is on supporting Swiss and Chinese companies to jointly explore ‘opportunities … in third-party markets’. Swiss and Chinese enterprises, industry associations, financial institutions, and insurers are mentioned as the main actors. According to the MoU, collaboration should comply with international practices and norms like the UN Sustainable Development Goals, as well as principles of social and environmental sustainability. Moreover, the MoU includes facilitating a ‘BRI Competence-Building Platform’ in Switzerland for Chinese and third-country BRI stakeholders.
The BRI has been taken up in the Swiss Foreign Policy Strategy 2020–23, which assigns the PRC the status of a priority country. It highlights, on the one hand, the objective of improving the general conditions for Swiss companies to participate in BRI projects while ‘making the most of the opportunities of the BRI for Swiss interests and the economy’. On the other hand, it calls for ‘compliance with universal values and rules to ensure that the BRI can be implemented in an economically, socially and environmentally sustainable manner for the benefit of target countries’.
In practice, Switzerland’s participation in BRI projects remains modest. Only some big Swiss companies like ABB or the banks Credit Suisse (now part of UBS) and Vontobel, which have close relationships with China, have reportedly participated in such projects—both before and after the BRI’s 2013 launch. As a result, the MoU has aroused relatively little criticism from the Swiss public, many of whom seem unaware of Switzerland’s status as a BRI country.
This is somewhat different in industry circles, especially regarding digital infrastructure. Here, both Swiss and Chinese company representatives and Chinese diplomats in Switzerland repeatedly foster the narrative of a Digital Silk Road (DSR), the BRI’s digital component. Existing fibre-optic cable connections and data centres that link the two countries and transmit data faster and with lower latency are readily linked to the DSR narrative—albeit collaboration in this field pre-dates the BRI. Chinese enterprises in Switzerland and Swiss multinational enterprises with premises in China feel especially strongly the difference that improved fibre-optic connections make. These enterprises, such as the multinational Swiss Bühler Group and China Construction Bank’s Zurich branch, are also the main target group for Chinese telecommunication companies in Switzerland.
Current Economic Relations
Trade: Over recent decades, trade between the PRC and Switzerland has been growing. The 2014 bilateral FTA includes provisions on trade in goods and services, non-tariff barriers to trade, intellectual property protection, and sustainable trade and development.
For Switzerland, the PRC is an important trading partner. Since 2010, China has been Switzerland’s biggest trading partner in Asia. Moreover, it is Switzerland’s third-largest trading partner globally, after the European Union and the United States. However, for the PRC, trade with Switzerland plays a rather marginal role. In 2021, exports to Switzerland constituted only 0.2 per cent of total Chinese exports. Meanwhile, Swiss imports to China made up only 1.5 per cent of all Chinese imports.
In 2021, gold, pharmaceutical products, and watches were the most important goods being exported from Switzerland to China. Mainly due to the gold trade, Switzerland usually has a trade surplus with the PRC, which is rare among Western countries. Yet, the gold trade is highly volatile and trade numbers fluctuate accordingly. In 2021, the most important goods imported to Switzerland from the PRC were computers, mobile phones, and watch parts containing precious metals. Moreover, trade in services in both directions is of growing importance.
Investment: Generally, Chinese investments in Switzerland are rather modest, although the 2010s saw strong growth. Between 2016 and 2019, Chinese investments in Switzerland increased sharply. In 2016, the state-owned ChemChina acquired the Swiss agrochemical company Syngenta for 43 billion USD. This not only marked a peak in Chinese investments in Switzerland but also was the biggest acquisition ever made by a Chinese company. It raised public and political awareness as well as controversy about Chinese investments (see Key Controversies). In the years since, Chinese investments in Switzerland have slowed and maintained a steadier pace. In 2021, investments amounted to about 17.7 billion CHF (about 20 billion USD). In view of the total Chinese outward foreign direct investment (FDI) in 2021, this constituted only a minimal share—close to 1 per cent. In comparison, Swiss FDI in the PRC is higher. By the end of 2021, total Swiss FDI in China was about 26 billion CHF (about 29 billion USD). Yet this, too, was low from a monetary standpoint, accounting for only about 1 per cent of inward FDI in the PRC. From the perspective of technology and knowledge transfers, these Swiss investments nevertheless play a role in the Chinese industrial context. At the same time, while China is a pivotal market for Swiss exporters, Switzerland significantly relies on Chinese imports, particularly in the field of machinery.
Notably, to date, there are no general foreign investment controls in Switzerland, although this could soon change. Partly sparked by Chinese investments, the draft of a new law controlling foreign investment has been debated since at least 2018 and is expected to be proposed by the end of 2023. Accordingly, the number of Chinese companies is currently difficult to ascertain. In 2021, there were reportedly 133 companies in Switzerland owned by Chinese multinationals, meaning that Switzerland had the sixth-highest number of Chinese company transactions in Europe. Yet, most FDI capital in Switzerland still stems from the United States and the European Union. In 2019, Chinese FDI made up only 1.1 per cent of the total FDI Switzerland received that year.
Other Finance: Amid growing Sino-US tensions and increasing hurdles for Chinese company listings on US stock exchanges, Switzerland has emerged as a new favoured place for Chinese listings in Europe, alongside Frankfurt and London (which has also recently raised its barriers to Chinese listings). In July 2022, the SIX Swiss Exchange and stock exchanges in Shanghai and Shenzhen launched the ‘China–Switzerland Stock Connect’ program, which allows Chinese companies listed on the two Chinese exchanges to access the Swiss capital market by listing Global Depositary Receipts on the SIX. As of September 2023, 15 Chinese companies had done this. These are large, often domestically leading companies that operate in diverse sectors related to recycling, batteries, medical products, pharmaceuticals, chemicals, carbon, machinery, and tool production. Another 30 or so Chinese companies have reportedly announced their intention to follow suit.
Switzerland has generally been less confrontational towards the PRC than other Western European and North American countries. In dealing with the PRC, the country has been facing an ongoing dilemma of how to balance economic interests with human and democratic values. In practice, Swiss foreign policy approaches have often given priority to economic interests. Accordingly, debates about China have been less heated than in other countries in Western Europe, North America, Australia, and New Zealand. Nevertheless, in recent years, more critical stances have come to the fore, especially with the publication of the Swiss China Strategy 2021–24. While the Chinese Ambassador in Switzerland promptly condemned the strategy, it remains unclear how the Swiss Government intends to implement it. Key controversies revolve around the following issues, most of which are mentioned in the China Strategy.
Free-Trade Agreement: Therehas been a debate among Swiss politicians and company representatives about the ‘modernisation’ of the FTA with China. The China Strategy 2021–24 mentions the objective to update the FTA to facilitate Swiss companies’ access to the Chinese market. In addition, a group of politicians from the Swiss Foreign Affairs Committees have suggested including in the FTA a binding chapter on compliance with human and labour rights. However, in September 2021, the Swiss National Council refused to add such a chapter, stating that the FTA and the Supplementary Agreement on Labour and Employment Issues already contained the elements needed to engage in dialogue with China on the issue of compliance with labour standards and human rights in the context of trade. In terms of human rights, in 2019, Beijing suspended a related dialogue with the Swiss Government that had existed since 1991. After a four-year break, in July 2023, the dialogue is about to be relaunched. Swiss politicians from various parties hold differing opinions on the usefulness of this dialogue.
BRI: There have been debates about the effects of the BRI for both Switzerland and third countries linked to the initiative. These were manifest in two parliamentary interpellations (requests for information) to the Federal Council on potential Swiss dependencies related to the BRI (in May 2019) and on the impact of the BRI on sustainable procurement (December 2020). The Swiss Federal Council concluded these with two official statements, in August 2019 and February 2021, respectively, confirming continued Swiss participation in the BRI.
Chinese Investments: Chinese investments in Switzerland have sparked some controversy, including the abovementioned 43 billion USD takeover of Syngenta in 2016. Another controversial case was the takeover of the Swiss flight catering company Gategroup through the state-affiliated Chinese conglomerate HNA in the same year. Additionally, HNA acquired the aircraft maintenance company SR Technics, aircraft and airport service provider Swissport, and more. In 2021, HNA made global headlines because of its disproportionate number of global acquisitions and subsequent insolvency. Moreover, several smaller takeovers have sparked emotional debates among the Swiss public and media, including takeovers of Zurich’s football club GCZ and several so-called traditional Swiss companies like the bottle producer Sigg and watch producers. Moreover, at the time of writing, debate continues about a planned Chinese takeover of the rights to the Mühlackern source—one of the largest sources of drinking water in Switzerland. Taken together, these controversies around Chinese investments fed into the adoption of the Parliamentary Motion 18.3021 Rieder, ‘Protection of the Swiss Economy through Investment Controls’, in March 2020, and the current creation of a legal basis to control foreign investments.
Digital Infrastructure: Cybersecurity debates involving Chinese information and communication technology (ICT) equipment have taken place in Switzerland, too. In addition, questions have been raised about how Switzerland should position itself in the context of the Sino-US trade war and growing US pressure to not rely on Chinese technologies. Nevertheless, to date, Switzerland has not banned Chinese digital infrastructure equipment providers. All major telecom operators in Switzerland continue to collaborate with Huawei Technologies. Moreover, in mid 2021, the Federal Government reportedly outsourced state data to the Chinese Alibaba Group, which caused some controversy. Meanwhile, the presence of the headquarters of international organisations such as the International Organization for Standardization (ISO) and the International Telecommunication Union (ITU) in Switzerland makes the country attractive to the Chinese Government and to technology companies that aim to set global technological standards. Partly related to this, in 2019 and 2020, Huawei opened research centres in Zurich and Lausanne, respectively.
Science and Technology Collaboration: Given that Switzerland scores particularly highly in global science and innovation rankings, there are growing concerns about science and technology collaborations with Chinese companies and scientists. Numerous Swiss universities, including universities of applied science, collaborate with Huawei Technologies. Moreover, companies like Huawei and Alibaba fund universities and research projects and equip universities’ telecommunication networks. Collaborations with Chinese companies and scientists and public incidents at universities in St Gallen and Zurich (for instance, at the Federal Institute of Technology and the Zurich University of the Arts) have sparked controversy in the public, media, and politics, raising questions about unwanted knowledge and technology flows to the PRC as well as Chinese influence on academic freedom in Switzerland. Swiss universities have responded by devising their own China strategies. Some have produced compliance guides and established export controls.
Scholarly Publications and In-Depth Reports:
China Macro Group. 2023. ‘Sino-Swiss: From Honing a “Special Relationship” to Balancing New Geopolitical Complexities—Understanding Swiss Discourse, Policy and Outlook of Sino-Swiss Relations.’ CMG Primer. Zurich: China Macro Group. Link.
Coduri, Michele, Hans Keller, and Eleonore Baumberger. 2009. ‘China.’ In Historisches Lexikon der Schweiz [Historical Dictionary of Switzerland], edited by HLS, a company of the Swiss Academy of Humanities and Social Sciences. Bern: HLS. Link.
Cordoba, Cyril. 2022. China–Swiss Relations during the Cold War, 1949–89: Between Soft Power and Propaganda. London: Routledge. Link.
Dümmler, Patrick, Teresa Hug Alonso, and Mario Bonato. 2022. Navigating Troubled Waters: Three Options for Switzerland in Its Dealings with China. Strategy Report. Zurich: Avenir Suisse. Link.
Federal Department of Foreign Affairs of the Swiss Confederation. 2021. China Strategy 2021–24. Bern: Federal Department of Foreign Affairs. Link.
Fischer, Sophie-Charlotte. 2022. ‘US–China “Tech Decoupling”: A Swiss Perspective.’ CSS Policy Perspectives 10(10). Link.
Grano, Simona A., and Ralph Weber. 2023. ‘Strategic Choices for Switzerland in the US–China Competition.’ In China–US Competition: Impact on Small and Middle Powers’ Strategic Choices, edited by Simona A. Grano and David Wei Feng Huang, 85–112. Cham, Switzerland: Springer International Publishing. Link.
Herrmann, Markus, Patrick Renz, Michael Settelen, and Swiss Forum of Foreign Policy. 2020. ‘Switzerland: Covid-19 Has Not Altered Limited China Policy Debate.’ In COVID19 and Europe–China Relations: A Country-Level Analysis, edited by John Seaman, 71–73. European Think-Tank Network on China Special Report. Paris: French Institute of International Relations. Link.
Kaufmann, Lena. 2020. ‘Altdorf–Shanghai–Shenzhen–Liebefeld: Swiss–Chinese Entanglements in Digital Infrastructures.’ In Data Centers: Edges of a Digital Nation, edited by Monika Dommann, Hannes Rickli, and Max Stadler, 262–89. Zurich: Lars Müller Publishers. Link.
Kaufmann, Lena. 2021. ‘Prefiguring China’s Digital Silk Road to Europe: Connecting Switzerland.’ Transformations: Downstream Effects of the BRI, [Blog], Belt and Road in Global Perspective at the Munk School of Global Affairs & Public Policy, University of Toronto. Link.
Kaufmann, Lena, and Niklaus Remund. Forthcoming (2024). ‘Sino-Swiss Entanglements: Historical and Ethnographic Perspectives on Swiss–Chinese Economic Collaborations.’ Studies in Contemporary History.
Knüsel, Ariane. 2022. China’s European Headquarters: Switzerland and China during the Cold War. Cambridge, UK: Cambridge University Press. Link.
Knüsel, Ariane, Cyril Cordoba, and Matthieu Gillabert (eds). 2020. Schweiz und Ostasien/Suisse et Asie de l’Est: Vernetzungen und Verflechtungen/Réseaux et interconnexions [Switzerland and East Asia: Networks and Connections]. Traverse. Zeitschrift für Geschichte/Revue d’Histoire 1/2020. Zürich: Chronos. Link.
Wang, Shichen. 2017. ‘Sino-Swiss Strategic Partnership: A Model for China–Europe Relations.’ China Quarterly of International Strategic Studies 3(2): 267–82. Link.
Weber, Ralph. 2020. ‘Unified Message, Rhizomatic Delivery: A Preliminary Analysis of PRC/CCP Influence and the United Front in Switzerland.’ Sinopsis: China in Context and Perspective. Prague: AcaMedia and Charles University, Prague. Link.
Zhang, Zhan. 2022. ‘The Mediated Engagement of Switzerland with BRI: A Transnational Comparative Framing Analysis.’ Journal of Transcultural Communication 2(1): 1–23. Link.