How the EU deals with China will have a profound effect on the sort of economic and geopolitical entity that the Union becomes in the mid-21st century. China is the world’s largest economy, measured at purchasing power parity, and the EU’s number one trading partner. It accounts for about 30 per cent of global carbon emissions. And it is a weighty military and diplomatic power, building a conventional and nuclear arsenal that will challenge the US’s position as the pre-eminent security actor in the Indo-Pacific region.
How is EU policy towards China evolving? How do the Chinese view the EU? Does it make sense for the US and the EU to work together on China, and is there scope for them to do so? Can the Europeans influence China’s actions? Are the British closer to the US or the EU on China? And how will changes within China affect Europe’s relationship with it?
In the early years of this century, many Europeans had quite warm feelings about China. There seemed to be a real possibility that it would become more liberal, not only economically, but even politically. When China joined the World Trade Organisation in 2001 there was a broad consensus among Western leaders on Wandel durch Handel – that trade changes countries for the better. But the Europeans have gradually become disillusioned with China, particularly over the past ten years or so, for three main sets of reasons.
- Europeans have given up hope that China will play by the rules on trade and investment. They accuse it of stealing intellectual property, denying Europeans reciprocal market access, using excessive amounts of state aid to help its firms take over European ones or win contracts at the expense of European competitors, and much else. The EU argues that a big reason for its trade deficit with China – almost €400 billion in 2022 compared to €165 billion in 2019 – is that China closes its markets much more than the EU does.
- Human rights have always been a source of tension between the EU and China, notably because of repression in Tibet. But the crackdown on Hong Kong in 2020, with the National Security Law effectively ending the territory’s ‘one country, two systems’ model of governance, upset many Europeans. So did the situation in Xinjiang, where reports emerged of the persecution of Uyghurs – and of some Western companies profiting from the exploitation of Uyghur labour.
- China has become much more assertive, geopolitically. It has raised the stakes in its dispute with Japan over the Senkaku/Diaoyu islands, displayed increasing amounts of military force near Taiwan, built artificial militarised islands to reinforce its claims in the South China Sea and sanctioned Lithuania for allowing Taiwan to open a representative office in Vilnius. Above all, China has given diplomatic support to Russia since its invasion of Ukraine, and helped the Russian economy to weather sanctions by stepping up purchases of Russian oil and gas. Chinese firms are quietly helping Russia to get around Western export controls by supplying machine tools and components that are no longer available from Germany or the US.
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About the author
Charles Grant is the director of the Centre for European Reform. His interests include Britain’s relationship with the EU, European institutions, European foreign and defence policy, Russia and China.