Abstract
In the post-Covid world, patterns seem to be emerging that put to question the viability of the world order as we have know it until now. Western democracies seem to have handled the situation worse than China, with its authoritarian model, and the PRC is capitalising on it, building the image of a new world power, better suited to the challenges of the modern world than the West, which is supposed to be in decline. Meanwhile, China is becoming increasingly assertive, aiming to become able to challenge militarily the United States, while conducting serious diplomacy and increasing its economic influence to enhance its soft power and presence in countries either of the West, or considered to be traditionally within the western sphere of influence. At the same time, there are divisions within Europe regarding China, while the EU finds itself in the middle of the increasing rivalry between China and the US. Within the scope of this project, we are conducting a series of interviews with experts on a variety of fields and disciplines, providing answers to these questions: a) Where can Europe and China cooperate and where are they clearly rivals? b) What is the extent of their economic ties? c) How does the increasing rivalry between China and the US affect Europe? d) Are there any attempts of chinese infiltration/ influencing in Europe that should be noted and given special attention to? e) What should the EU’s stance be towards China?
Introduction
The rise of China during the first decades of the twenty-first century was not unexpected. The People’s Republic of China (PRC) has been regarded as the ‘world’s factory’ for decades, so it made sense that China would eventually turn into one of the great economic powerhouses of the century. However, for many years the notion of a potential rivalry between China and the West seemed more a product of hawkish minds trained in Cold War-style thinking than a potential reality. In an increasingly globalised world, the idea of an Asian superpower willing to challenge the powerful countries of the West economically, technologically, and even geopolitically/militarily – especially after the fall of the USSR – seemed a bit outlandish. After all, in the age of the Internet and the globalised economy, these kinds of rivalries seemed counterproductive, to say the least, especially in the light of so-called Pax Americana and increasing European integration.
This was, more or less, the thinking towards the end of the 1990s and in the early 2000s; however, things began to change with the global economic crisis during the late 2010s, the ‘explosion’ of the Internet and ‘Big Tech’, and the (re-)emergence of security threats that had either been underestimated or not foreseen. Thus, in 2021, China is widely regarded as the rising superpower of this century, willing and able to challenge Western democracies – thought to be in decline on every front in a new, odd ‘Cold War’. This time, the rivals are continually positioning themselves to gain advantage over one another, while at the same time they co-exist and are co-dependent within the fabric of this new, digital, and interconnected world. Donald Trump’s presidency of the United States appeared to be a starting point for all the world to see, as it was characterised by a series of clashes with China including, among others, sabre-rattling in the Pacific (South China Sea), accusations about cyberespionage and propaganda, the Huawei ban, and the Covid-19 pandemic – with origin theories floated in the US about a possible lab leak in Wuhan and China’s ‘retaliation’, accusing the US of politicising the pandemic and spreading theories about alleged US origins of the coronavirus. The Biden administration seems to be willing to follow the same path, clearly defining China as a rival.
Within this context, Europe finds itself in a challenging position. The EU is not the US, so it cannot be considered a (direct) strategic rival to China. At the same time, the economic ties between Europe and China are extremely strong – their full extent will be demonstrated in this article. However, the challenge posed by the Eastern, authoritarian model to the ‘European/Western way’ cannot be overlooked, while the digitalisation of the economy and the pandemic have brought matters of security and threats to the very fabric of European societies themselves.
The question that arises is obvious: In an age of renewed great power competition, how should Europe handle China?
Economic relations between China and the EU
As we have seen, the economic ties between the EU and China are very strong, and this is something that cannot be overlooked in any analysis of Sino-European relations.
The numbers speak for themselves. According to figures provided to Future Europe Journal(FEJ) by MEP Iuliu Winkler (of the European People’s Party Group – Christian Democrats, vice-chair of the Committee on International Trade, and member of the delegation for relations with the People’s Republic of China), China is the EU’s biggest source of imported goods and its second-biggest goods export market. Trade between China and Europe averages more than €1 billion a day.In 2020, the EU imported goods worth €383.4 billion and exported goods worth €202 billion, bringing the total volume of trade in goods to over half a trillion euros annually. ‘When it comes to services, the EU imported a volume reaching €32 billion and exported €52.5 billion. In terms of foreign direct investment (FDI), the EU has an inward stock of €69.3 billion and outward stocks worth €198.7 billion’, he adds.
Matej Šimalčík, Executive Director at CEIAS (Central European Institute of Asian Studies), points out to FEJ that, strictly economically speaking, China and the EU have one of the most important trade relationships in the world. He notes that the EU is China’s largest trading partner and maintains a long-term negative trade balance with it, meaning that the EU’s imports from China are more than its exports to the country. ‘This negative trade balance is actually quite natural, as it is a result of how the global value chains are structured. While China’s economy is still largely dependent on the manufacture and export of goods, the EU’s is more service-centred. … Over the past ten years we have seen a boom in Chinese investment in Europe. This boom peaked in 2016, when projects worth some €44 billion were completed. Since then, yearly investment flows from China have substantially decreased. However, overall, the EU has invested far more in China than China has invested in the EU. The total stock of Chinese FDI in Europe is currently valued at around €70 billion. The EU has invested almost triple the amount in China (around €200 billion).’
The EU’s main imports from China are industrial and consumer goods, machinery and equipment, and footwear and clothing, while the EU’s main exports to China are machinery and equipment, motor vehicles, aircraft, and chemicals. As for Chinese investments in Europe, they have recently been focused on the information and communication technology (ICT), electronics, and transportation sectors, while in the past there were substantial investments into the entertainment and agricultural sectors. However, as Mr Šimalčík points out to FEJ, ‘a purely quantitative outlook may be somewhat misleading. China has made eyebrow-raising investments also in sectors which may not represent a large share of the overall investment package, yet their strategic significance is much larger. Investment into areas like health and biotech, aviation, or advanced material research may not reach high volumes, yet their impact on security is unparalleled.’
MEP Hilde Vautmans (Renew Europe Group), a member of the Committee on Foreign Affairs who has done extensive work on EU–China relations (Report on a new EU–China Strategy, rapporteur), underscores that in 2020 China overtook the US to become the EU’s biggest partner for trade in goods. ‘The recent EU–China GI agreement is a positive development, if properly implemented’, she adds, also mentioning that the sheer amount of trade between China and the EU is indicative of a multidimensional economic relationship that covers a wide range of fields. ‘This is to be expected considering the immense internal market value and industrial base of both China and the EU. Technological products, intellectual property, electrical appliances, minerals, and others are of particular importance,and they are also the source of tension and controversy’, she tells FEJ.
China’s ‘gateways’ to Europe
Trade and the economy need access points in order to exist – portals where wealth-producing interaction takes place. EU–China economic relations are no exception to this rule, using terrestrial and maritime connections, with some countries being better gateways than others.
China utilises a variety of access points to the EU/European market. According to MEP Winkler, to a limited extentit is using terrestrial routes, mostly by rail, such as the East–West rail corridor, which passes through Kazakhstan, Russia, Belarus, and Poland and ends up in Germany.To a larger extent, China is using maritime corridors, such as the Suez route, which links up with the port of Piraeus in Greece, or the Northern Sea Route, ending in some of the EU’s biggest ports (Antwerp, Rotterdam, and Hamburg).
In addition, Hungary, the Czech Republic, Poland, and Slovakia have emerged as important entry points for Chinese goods into European markets, as mentioned by Dr Ilaria Carrozza, Senior Researcher at PRIO (Peace Research Institute Oslo), who specialises in Chinese foreign policy, the Belt and Road Initiative (BRI), and the Digital Silk Road, among other topics. Chinese companies, she tells FEJ, have furthermore been very active in Germany, often establishing a physical base there in order to tap into Germany’s advanced high-tech and manufacturing industries. ‘China has also eyed the Balkans as a potential gateway for Belt and Road projects (mostly infrastructure, but also Smart City programmes), although challenges remain in the region in terms of feasibility, economic and infrastructure development, and disappointment in the actual results of past investments’, she adds. On the topic of access points, Mr Šimalčík points out that Chinese investment in the EU is chiefly located in Germany, France, Italy, and Finland; prior to Brexit, the largest recipient of Chinese FDI was the UK.
MEP Vautmans regards China’s various diplomatic and economic initiatives with individual EU Member States or groups of Member States as ‘worrying’. As she says, this is an attempt to eschew a common European approach and create favourable conditions for its penetration into the EU market: China is approaching Central and Eastern European states with the 16+1 initiative, and Italy, Malta, and Luxembourg through the BRI; and, as she adds, ‘during the past decade it has also penetrated the Greek market with FDI, acquiring critical trade infrastructure’.
Europe and China as partners
Beyond the field of economic relations, where could China and Europe be considered partners? The fight against climate change seems to be an obvious answer, while issues such as multilateralism and international peace come to mind, too.
Climate change especially appears to be one field of general agreement. ‘Climate change is one of the global security challenges where the EU has to cooperate with China if it wants to find effective solutions’, explains Dr Dominika Kunertova, Senior Researcher at the Center for Security Studies, ETH Zurich. This opinion is shared by MEP Winkler, who considers climate change and environmental protections as areas where the two are potentially partners, but he is also quick to point out that this depends on the methodology China will apply towards meeting its climate objectives and cutting its CO2 emissions.
‘Environmental governance and security are two global policy sectors where the EU can really partner with China in order to address common challenges. No state can fight climate change or terrorism alone’, adds MEP Vautmans.
Mr Šimalčík, for his part, elaborates on the complicated nature of the EU–China partnership/ rivalry: ‘Since 2019, the EU refers to China using a trifecta (sic) of terms. It is simultaneously a negotiation partner, economic competitor, and systemic rival. Much of the EU’s focus in relations with China is centred on the partnership aspect. Issues such as trade and investment regimes or environmental governance are most typically mentioned here. Yet it needs to be remembered that this partnership does not and should not mean condoning or accepting China’s weaker regulatory regimes. That would be a race to the bottom. On the contrary, this partnership should aim at motivating China to accede to high regulatory standards in market access, labour rights, environmental preservation, and other areas.’
Europe and China as rivals
According to the interviewees, though, the areas of rivalry (current or potential) are quite serious. The EU and China are now (or at least seem to be) seated on opposing sides of the spectrum regarding topics such as human rights, types of governance, competition, and even geopolitics. Generally speaking, China is now openly promoting its authoritarian model as a more successful and effective alternative to the model(s) of Western democracies – and this is something that spills over to many other fields of interaction between it and the EU. It also leads to a picture of systemic rivalry, of two systems that are (obviously) co-existing and interacting in our interconnected world, but whose actual ‘compatibility’ is a topic that should be discussed further.
‘There are several fields where the two can be considered rivals, for instance when it comes to human rights and political freedoms, data protection, cyber, intellectual property rights, and privacy; geopolitically, the Chinese approach towards Hong Kongas well as the balance of power in the South China Sea can be furthermore considered as highly contentious issues in the bilateral agenda’, says MEP Winkler, adding that one could also include areas where the two are competitors, such as production standards, international standards for critical infrastructure, the Internet of Things, digitalisation, telecommunications, transport, geo-economics, and regional trade architecture.
Human rights are also considered to be a field of major divergence (Hong Kong, Xinjiang): MEP Vautmans even states that the EU’s and China’s values are incompatible when it comes to trade rules, human rights, and democracy. Her assessment is that China has been growing in assertiveness lately and, because of its authoritarian and totalitarian tendencies, it can be seen as a systemic rival.
China as a systemic rivalis a view shared by Mr Šimalčík. As he points out, the competition aspect refers mainly to the fact that the two entities are competing against each other for technological leadership, which goes hand in hand with economic competition in third countries, but China is simultaneously a systemic rival, per EU policy, which promotes alternative models of governance. China’s views on human rights, optimal governance models, and even the meaning of democracy differ significantly from those of the EU, he states, adding that China has been increasingly active in promoting this alternative vision, both inside and outside the UN system: ‘These three aspects are not independent of each other and do not exist in a vacuum. They are rather mutually intertwined. To illustrate, consider Chinese lending practices. Chinese developmental finance is typically not tied to conditions of good governance, transparency, or anti-corruption reforms in target countries.’ In this case, he continues, China is acting both as an economic competitor, as Chinese financing provides opportunities for Chinese companies to operate abroad, but also a systemic rival, as a lack of focus on good governance practices can ‘lead to stalling of reform efforts and even democratic backsliding in the recipient countries’.
The systemic rivalry is underlined by Dr Carrozza as well. As was outlined in the EU’s 2019 EU–China Strategic Outlook, one of the biggest challenges for the years ahead lies in the technological domain, where ‘China is viewed not only as an economic competitor but also a systemic rival attempting to promote alternative modes of governance which are not compatible with the EU’s values and vision’. Further challenges are expected to remain in international security, competition in third-country investments, and China’s lack of reciprocation in granting market access to European companies.
These differences between the EU and China are not likely to go away. Dr Kunertova’s assessment is that the divergencies between the EU and China about what constitutes good governance are widening and deepening, and EU–China competition, even rivalry, will characterise their relations in an increasing number of fields (human rights standards, finance and trade, investment, and research and development). ‘This has already created some clashes in UN tech agencies in charge of international norms and standards setting’, she points out.
Security: Could China be considered a military threat to the EU and its interests?
Security is defined to a large extent by geography, so talking about China as a potential military threat to EU Member States obviously seems (and is) quite far-fetched. However, in the third decade of the twenty-first century, security extends far beyond troops and military hardware. Simply put, China does not pose a military threat to Europe – the prime candidate for that role is still Russia. However, things seem to be heating up in the Pacific, as recently shown by the signing of AUKUS between Australia, the UK, and the US, and this is something that affects Europe, too. The so-called ‘AUKUS rift’ with France should not be underestimated; furthermore, any tensions in the Pacific could threaten supply chains to Europe. There is, in addition, the issue of events happening in the cyber realm, where China is accused of extensive controversial (if not outright aggressive) activities.
Security-wise, the relationship between the EU and the PRC has, generally speaking, been transformed from ‘naive and docile’ to ‘incoherent and shaky’, according to Dr Kunertova. ‘The EU countries were naive about China being a benign trade partner and docile in response to Chinese investments. Now their national policies on China are incoherent and EU–China relations are shaky’, she tells FEJ.
She points out, however, that there are signs that the mood in the EU is changing. After the 2019 EU–China Strategic Outlook portrayed China as a partner, an economic competitor, and a systemic rival, in 2020 the EU introduced investment screening regulations to protect EU strategic economic interests. ‘Importantly, in March 2021 the EU did impose the first significant sanctions on China since the 1989 Tiananmen Square massacre for human rights abuses in Xinjiang, in coordination with the US, the UK, and Canada, which put the investment agreement negotiated between China and the EU in December 2020 on ice. However, the EU is about to update its policy on China, and it remains an open question whether the EU will reclassify China as no longer a systemic rival, and it is unclear how the nature and depth of its relations with China will evolve.’
Moreover, there is always the ‘elephant in the room’ of cyberespionage, cyberattacks, information warfare, and so forth.According to Dr Kunertova, European countries are starting to take industrial espionage and state-sponsored hacking from China more seriously. She points out that in summer 2021, to the outrage of Beijing, both the EU and NATO joined the US (as well as Australia, Japan, and New Zealand) in publicly accusing Chinese security agencies of malign cyber activities with effects on the economy, security, democracy, and society that targeted, among others, government institutions and political organisations in the EU and its Member States. ‘Although the EU–China summit in June 2020 discussed new digital technologies, data protection, and cybersecurity and promoted cooperation on responsible behaviour in cyberspace, these two actors have very different ideas about global cyber governance: China defends state-based Internet governance and cyber sovereignty, while the EU is vocal about a free cyberspace based on a multiple stakeholder model’, she adds.
Beyond all this, though, there is always the topic of ‘hard’ military power and the potential for Chinese and EU interests to be directly at odds. Such a thing could occur in the South China Sea (freedom of navigation), as some 40 per cent of Europe’s foreign trade passes through this area. ‘China is not a military threat to Europe, yetits aggressive islands-grabbing policies in the South China Sea can endanger supply chains to Europe’, Dr Kunertova’s asserts.
Last but not least, there is always the matter of the technological ‘arms race’ involving artificial intelligence, hypersonics, quantum computing, and so forth. China has gone on the offensive in all these new technologies, and this is something that could affect Europe. ‘Geopolitically, these technological advancements will help China establish its status as a great power and geostrategically improve its military capabilities to install military dominance in the South China Sea and curb the United States’ strike capabilities in the Asia-Pacific region. However, China does not pose a military threat to Europe; that place is still attributed to Russia’, concludes Dr Kunertova.
China’s EU strategy
How does China regard the EU? Apart from the field of economic cooperation, strained Sino-American relations inevitably affect China’s view of Europe, as the latter is a close US ally. However, the EU is not the US, and Beijing cannot adopt a common strategy towards it as a whole, but rather has to adapt individually to every Member State/European region it interacts with. Generally speaking, China fully understands the economic value of its relations with Europe and attempts to promote its interests while taking into account the EU’s complex nature (multiple Member States and varied contexts). However, this is something that proves troublesome at times – especially considering the fact that China, on the one hand, likes to take advantage of the opportunities provided by the liberal order to further its interests (economic, political, and strategic), but, on the other hand, does not seem to like its rules. The result is a complicated situation that becomes even more complicated as China widens its geostrategic/geopolitical ambitions – and seems to adopt a somewhat opportunistic strategy towards Europe, trying to take advantage where it can, reaping any benefits it can, while trying to avoid too much trouble in areas that might cause ‘headaches’.
According to MEP Winkler, China looks at Europe through the paradigm of China–US relations, seeking tensions that it can exploit (for example, 5G, strategic autonomy, or CAI, the Comprehensive Agreement on Investment). ‘It engages with Europe based on solid economic interests, as well as seeing it as a tool to help it move up the global value chain, innovate and tap into new technologies. China moreover sees Europe as the final destination of its BRI/New Silk Road trade and infrastructure project, seeking to maximise the economic benefits of the initiative’, he tells FEJ.
Dr Carrozza’s assessment is that China does not have a single strategy for the EU/Europe, as Beijing has thus far preferred a relatively flexible policy, which mostly attempts to take advantage of (economic) opportunities when and where they present themselves. The modalities of its interaction with individual countries or regions have also been varied, she explains to FEJ, elaborating that ‘China has been keen on boosting relations with Central and Eastern Europe, while it has encountered more resistance in Western Europe where political leaders are generally more wary of China’s influence and presence; and in Southern Europe, China has recently attempted to increase its investments and profile (that is, in Italy and Greece). Overall, it can be said that China does view Europe as an important and strategic player in the global arena and is investing substantially across the bloc in an attempt to establish friendly relations and a favourable environment for the promotion of its initiatives, not the least the Belt and Road and its various components.’
China uses a variety of tools to promote its interests in the EU, including promoting trade and investment, influencing media narratives, and fostering ties to EU politicians. As Mr Šimalčík points out to FEJ, Beijing’s primary aim is toprevent the EU from speaking out against and taking actions regarding issues that China labels as its core interests: ‘Typically, these are issues related to China’s perception of its sovereignty and territorial integrity (for example, Taiwan, Tibet, Xinjiang, South China Sea). Secondly, it wishes to prevent the emergence of a strong EU–US alliance against China. The EU’s talk of “strategic autonomy” actually provided a useful rhetorical device to China in this regard. Publicly, Beijing uses the narrative on strategic autonomy to laud any China-friendly policy of the EU, while decrying more critical actions as a result of US pressure. In a sense, China managed to kidnap the discourse on strategic autonomy. Still, China’s understanding of the complex political dynamics of the EU is not perfect, and at times it miscalculates’, he adds.
MEP Vautmans tells FEJ that China wants to exploit the liberal international order – open markets and open societies, free trade, technological advancements, and so forth – as much as possible, but without respect for international rules (World Trade Organization [WTO] and International Labour Organization rules, for example) and without allowing its population to enjoy the same levels of freedom, human rights, and democracy. ‘They want all the benefits, without assuming responsibility. We see the same strategy in Europe. They want to penetrate the EU market, while they create obstacles for EU companies at home. They want to control critical infrastructure in Europe, but they have a whole strategy of avoiding dependencies on non-Chinese manufactured products and technology (that is, the “Dual Circulation” policy). Their state-owned companies exploit the openness and freedom of the European markets, but at the same time they are insulated from foreign competition. This creates an unfair, lopsided relationship that is non-viable in the long term’, she says.
Dr Kunertova underscores the fact that Europe is a strategic trade partner of China; however, the Chinese policy of keeping economic relations separate from political and strategic considerations is getting harder to sustain. As she points out to FEJ, the main tools used by the Chinese to project influence and control lie precisely in the economic sphere. These, she adds, include ‘encroachments on critical infrastructure (5G technology, buying control over strategic ports, monopolising the supply of rare earths), violations of intellectual property rights and industrial espionage to acquire European know-how and skills in some strategic areas; shady Chinese FDIs, or debt diplomacy disguised as development aid [… the] Chinese are content to take advantage of the fault lines within the EU, whose unity is undermined by members with close investment ties to China (Greece), and others admire Chinese autocracy (Hungary).’
Divisions within the EU: How divided is Europe vis-à-vis China?
As mentioned above, China has adopted a flexible, somewhat personalised strategy towards the multiple EU Member States; hence, it is only natural that Europe does not have one common strategy towards China. Simply put, some countries are friendlier than others, mostly due to economic factors, and this affects their sensitivities in various matters.
In any case, the EU would obviously like to be able to speak with one voice on China and, as MEP Winkler tells FEJ, it often does so, for example on human rights, condemning Chinese counter-sanctions, Hong Kong, Taiwan, and Xinjiang. However, there are also different sensitivities across Member States, depending on bilateral trade and investment relations, areas of bilateral interest, and the degree and weight of Chinese investments and political influence in certain Member States, he adds.
Dr Carrozza sees increasing convergence among Member States in terms of their positions on China. ‘The recent freezing of the CAI in response to Chinese sanctions on certain individuals and institutions is a practical example of this emerging consensus and the realisation that the EU–China relationship presents Europe with greater challenges than in the past. To be sure, differences remain across the bloc, especially if we consider that individual European countries’ strategies towards China are mostly still informed by an economic logic. For instance, countries in Central and Eastern Europe – traditionally more dependent on Russia – look to China for alternative sources of growth and investments’, she tells FEJ.
As for specific cases, Mr Šimalčík points to Hungary as one of the most peculiar cases. Under Prime Minister Viktor Orbán, there has been a strong shift towards China (and Russia) as part of the Eastern Opening Policy. His assessment is that, while at times this may seem like an ideological shift,it is in fact a very pragmatic policy. As he mentions to FEJ, ‘Orbán is actually often using the “Chinese card” as a sort of leverage in his negotiations with Brussels. Hungary’s pro-Chinese stances have been a chief reason that some analysts have labelled all the Central and Eastern European (CEE) countries as China’s Trojan horses in the EU. Such a view is, unfortunately, overly simplistic. There is a variance among CEE members in their perceptions of China. Recently, many of them became quite critical of China, a stance that grew in part from their disillusionment with China’s investment pledges, which remain undelivered.’
At times, Mr Šimalčík adds, States such as Germany and France have engaged in actions that are ‘highly counterproductive’ for establishing a common China policy, for example the recently rushed, as he calls them, negotiations over the CAI. However, he points out that the positions of individual States are not set in stone and are prone to change according to domestic political shifts, as various political groupings have differing perceptions of China, which can lead to rapid changes in anticipation of upcoming elections. ‘Recently we have seen that in Lithuania and Slovakia. In the next few months, we may see something similar occurring in Germany and Czech Republic. Even a changed approach by Hungary is not out of the question, as the opposition has a fighting chance to unseat Viktor Orbán in 2022’, he tells FEJ.
In any case, no EU Member State seems to have truly gone rogue regarding China – something pointed out by MEP Vautmans, who thinks that the problem most often is a lack of coordination. As she points out to FEJ, there are varying degrees of concern over this or that matter, and Hungary in particular seems to be making a unified EU position more difficult because it sees its cooperation with China as a way to give Brussels a hard time and decrease the latter’s influence. Yet, she adds, despite China’s diplomatic and economic offensive, no EU Member State has broken rank. ‘Not one EU country would disagree with the assessment, for example, that China is both a partner (economy, climate) and a rival (human rights, democracy). The problem, as is often the case in the EU, is a lack of coordination, and the absence of an institutional framework that can decide and implement a common European approach. For example, when it comes to foreign affairs, the unanimity rule in the Council slows down the EU as a geopolitical actor. China knows this and never misses a chance to exploit our weakness’, she says.
The US versus China, with Europe in the middle
The US–China rivalry is considered the ‘Cold War 2.0’ of our times (although many disagree with that approach in the wider context of our interconnected world). Whether this is true or not, it is a fact that relations between the US and China have grown increasingly tense of late. The question that arises is clear: Where does Europe find itself within this increasingly confrontational environment?
As MEP Winkler tells FEJ, Europe is avoiding having to choose between the US and China; rather, it formulates its values-based and interests-driven priorities and deals with the US and China on an objective basis. The US, he points out, is clearly the EU’s natural like-minded partner and ally, and it will remain so for the foreseeable future, mainly due to the deep geostrategic and security-related ties of the transatlantic partners, while China is yet another consequential global actor of strategic significance for the EU. The EU, he adds, has a clear interest in China behaving responsibly in the international arena, with deliverables on multilateral fronts at the UN and WTO on sustainable development and climate policy, as well as maintaining stability in the Far East. ‘Certainly, the economic and commercial ties between the EU (and its Member States) and China are an important factor that renders a possible decoupling between the two an inexpedient choice. The EU will continue engaging with both actors in line with its strategic interests’, MEP Winkler says.
To Mr Šimalčík, Europe finds itself somewhat in the cross hairs. On one side, it has a close alliance with the US that also involves security cooperation and a certain degree of dependence in this field. On the other, the EU is trying to find its own independent modus operandi of dealing with China in a way which allows it not only to engage in beneficial economic interactions but also to deal with various challenges posed by China as a rising power. In any case, as he points out to FEJ, ‘nevertheless, while it may not seem so at first glance, the EU and the US are actually at a high level of agreement on most major issues (for example, participation of Chinese vendors on 5G networks, corrosive impact of some Chinese investment projects, proliferation of Chinese political values) regarding China. However, the EU at times appears less vocal on high-profile issues. This is chiefly due not only to the need to balance overall EU interests vis-à-vis both China and the US but also to the need to balance various and at times contradictory interests of individual Member States.’
For Dr Carrozza, the end of the Trump administration and the inauguration of President Biden provides hope that the EU and the US can work out their differences on this matter. For one, she tells FEJ, the US has typically adopted a much more confrontational posture vis-à-vis China than Europe has, although the current consensus emerging across the bloc signals that the EU is also likely to become tougher on China, at least on select issues. At the same time, she adds, the EU is looking to find its own way of dealing with China in an attempt to achieve strategic balance between Washington and Beijing so as to ensure that Europe is not too closely allied with either power in ways that would alienate the other. ‘The EU Strategy for Cooperation in the Indo-Pacific is a good example of this attempt to find a “European” approach’, Dr Carrozza concludes.
In turn, Dr Kunertova believes that most European democracies are wary of joining the US in anything resembling a Cold War-style effort to contain China’s aggression. For instance, she tells FEJ, German leaders tend to locate Europe at a strategic equidistancebetween the US and China, thus avoiding decoupling from China and protecting trade benefits. As Dr Kunertova points out, ‘most countries would prefer to escape from geopolitical tensions altogether. Europeans are afraid of being dragged into Sino-American trade wars that would have nefarious economic consequences […] Yet it is unreasonable to expect that Europe can escape the negative side effects of the great power competition. The US–China confrontation will only deepen and spill from the technology and trade domains to other policy areas, which will increase the pressure on European countries to make their positions explicit.’
Conclusions: How should Europe handle itself regarding China?
Iuliu Winkler: ‘Europe’s current multi-faceted approach to China (partner, competitor, rival) is a suitable strategy to deal with such a complex international actor. Cooperate where possible, compete where needed, and confront where necessary is the main mantra of the EU’s approach to China. Europe must, in my opinion, stand up for its values and principles in this key bilateral relationship, while robustly defending its economic and commercial interests.’
Ilaria Carrozza: ‘I think it will be crucial for the EU to acknowledge that individual Member States have different interests and priorities when it comes to their China strategies. At the same time, single countries do not have the power to match China’s political and economic sway; therefore, the EU will need to find a more coherent approach overall. There are challenges in moving from the Strategic Outlook to actual policy implementation. Common points among Member States can be found, for instance, in future talks about reviving (or not) the CAI and encouraging China to facilitate access to its markets for European companies. These goals will ultimately require strengthening the bloc’s negotiating power and improving cooperation and coordination among its members.’
Matej Šimalčík: ‘It is of utmost importance that Europe shows a united stance when it comes to challenges posed by China to the EU and to global governance as such. The current model of unanimous voting on issues of common foreign and security policy is a major obstacle, though, as it has been far too easy for China to find a single Member State to block decisions Beijing views unfavourably. Second, the EU needs to realise that China is to a large extent dependent on the EU market for its exports; this provides the EU with substantial leverage over China. Third, the EU needs to come to terms with the fact that most inroads made by China into the EU were thanks to domestic actors, such as various oligarchic groupings and kleptocratic networks, which have vested interests in business dealings with China. Thus, to counter Chinese influence, Europe needs to close existing governance gaps and promote transparency in various interactions with China, in order to mitigate their potential negative impact on European governance and policymaking.’
Dominika Kunertova: ‘European leaders need to acknowledge that China is not a benign trading partner and implement protection measures proactively. For instance, they should decrease reliance on China for supply chains in defence and intelligence areas; avoid countries becoming indebted to China; correct vulnerabilities in security, economics, and societal resilience; and make sure that European technology does not enable China’s military modernisation. Europeans should work closely with the US, for instance through the recently created EU–US Trade and Technology Council and the G7’s “Build Back Better World”, though this unfunded countermeasure to China’s BRI might be too little too late. Europeans need to be smart, as the stakes are getting higher: they not only need to keep the Chinese influence in Europe at bay, but they also need to keep the US engaged in deterring a nuclear-armed Russia. European countries must better coalesce to help the US counter China in the economic and technological domains; the US does not need an Asian NATO as much as it needs a European “Quad”.’
If you would like to read more on EU-China dynamics, feel free to read this other Future of Europe Journal article on the topic here.
