Europe’s Chinese New Year

Over the last three years, Europe has been forced to abandon its geopolitical naiveté and recognize that normative power is no longer sufficient to wield strategic influence. If the EU is to thrive in a harsher, more conflict-ridden world, striking the right balance in its relations with China is essential.

BRUSSELS – The last year has solidified China’s status as one of the most salient foreign-policy challenges facing Europe. But it has been a long time coming. In fact, China’s emergence at the forefront of debate in Europe is the product of three political realizations that have occurred since 2020.

The first was the recognition, triggered by the COVID-19 pandemic, that Europe had become dependent on China for a wide range of goods. After decades of single-mindedly pursuing comparative advantage by relocating industries, including polluting industries, beyond its borders, Europe had to face hard facts. Distance might not matter anymore, but geopolitics does. And a product that is not strategic can quickly become so if a crisis erupts, if production or trade is disrupted, or if a single producer gains monopoly power.

But the pandemic, with its shortages of ordinary-turned-critical goods like masks and chemical reagents, was just the beginning. The stakes have since risen considerably, because China has a virtual monopoly over the production and/or refining of raw materials essential to the clean-energy transition. There is no ready-made solution to this challenge. Both vigilance and political prudence will be necessary.

The second political realization came after Russia’s full-scale invasion of Ukraine. Though China did not, strictly speaking, support Russia’s actions – and thus avoided exposure to the diplomatic and economic costs Russia has incurred, especially via sanctions – it also refused to push back against the Kremlin, in the hopes that the war would weaken the United States and NATO. Having adopted a zero-sum mindset, Chinese leaders assumed that any such weakening would automatically benefit China, just as anything that harms China benefits the West.

With Russia struggling to achieve its goals in Ukraine, China’s hopes of a major blow to the West are probably dwindling; its main objective now is to limit its exposure to the ongoing conflict. Still, China’s leaders recognize that Russia is becoming practically a vassal state, which lends China greater strategic depth and enables it to extract economic benefits, such as favorable energy deals, from the Kremlin.

China wants Russia to remain afloat economically, though just above the waterline. But what tacit support China has offered Russia has been enough to do severe damage to its relationship with the European Union, which always saw through China’s façade of neutrality. While China never crossed whatever “red line” would get it added to the list of countries deliberately violating Western sanctions, it has increased its commercial relations with Russia (though it is far from alone).

The third realization that propelled China to the forefront of European foreign-policy concerns arose from the intensification of the country’s competition with the US. Here, Europe walks a fine line. Of course, it cannot establish itself as fully neutral, standing equidistant between the two powers, on issues such as Taiwan, human rights, or conflicts in the South China Sea. But nor can Europe give up its room for maneuver, especially given the breadth of US sanctions and the rivalry’s impact on virtually all global issues.

For Europe, the Sino-American competition does not drive every global trend or development, let alone justify every action or response. That is why the EU has assured China repeatedly that it is not committed to a confrontational approach. Europe is willing to recognize and accept China’s systemic importance, and has no desire to block its rise or to engage in strategic competition with it.

Given this, Europe has not struggled to clarify its position on Taiwan, which is based on both non-recognition of the island’s independence and opposition to the use of force (including provocation or coercion) to change the status quo. The EU is willing to maintain and develop multifaceted ties with Taiwan, as long as they do not imply recognition of Taiwan’s sovereignty.

At the same time, the EU has remained steadfast in its assertion that a systemic rivalry with China does exist. While China insists that its only rival is the US, Josep Borrell, the EU’s High Representative for Foreign Affairs and Security Policy, explained to Chinese leaders in Beijing in October that China and Europe disagree on several important issues and, fundamentally, on values.

By establishing the primacy of economic growth and eschewing civil and political rights, China aims to challenge Europe’s vision of such rights as universal, essential, and inalienable. And it has worked hard to bring the countries of the Global South on side. This clash of visions shapes some of today’s most consequential debates, not least on global standards for digital technology and artificial intelligence.

Another political message that the EU has been keen to send to China is that the favorable terms under which Chinese firms access the European market are not guaranteed. European firms are finding it increasingly difficult to compete with their Chinese counterparts, and not just because of their own shortcomings. China offers massive subsidies to its firms, while erecting high entry barriers – both regulatory and informal, national and regional – for foreign companies. As China seeks to enlarge its footprint in industries that Europe has traditionally dominated, such as automobiles and chemicals, this imbalance is becoming even more consequential. Unless China changes course, Europe may have to adopt measures to protect domestic industries.

Already, Europe is pursuing a “de-risking” strategy, which entails the diversification of its supply chains, especially in strategically important sectors. But, as it has also sought to communicate to China, this is a practical move, not an ideological one. The EU is merely attempting to mitigate the risks associated with excessive dependence on one source. De-risking is a shield, not a banner.

Ultimately, the EU is committed to maintaining a high level of cooperation with China. There is no denying that China is a systemically important country with a huge market, or that many developing countries view it as a valuable political and economic counterweight to the West. It must be included in any effort to tackle global issues such as climate change, debt sustainability, and public health. Even regional challenges, such as the Israeli-Palestinian conflict, call for cooperation with China.

Over the last three years, Europe has been forced to abandon its geopolitical naiveté and recognize that normative power is no longer sufficient to wield strategic influence, and that multilateralism is giving way to transactional logic. If the EU is to thrive in a harsher, more conflict-ridden world, striking the right balance in its relations with China is essential. But that does not mean Europe has already done so. Far from it.