Over the past few years, the European Union has taken an increasingly hawkish stance toward China. It declared it a “systemic rival” in 2019 and has taken steps to restrict Chinese investment in so-called critical sectors. Early this year, it demanded that China follow it in Western sanctions against Russia, warning that European-Chinese ties would be linked with the country’s response.
How will the EU’s policy toward China likely evolve? This will depend predominantly on two critical factors, one geopolitical, the other economic.
The EU aspires to be strategically autonomous, a goal that it believes will help it better protect its interests globally and contribute to a stable multilateral order. The realization of its ambition, however, requires the EU to break away from its reliance on Washington. The bloc would only be able to make decisions on security or foreign policy based on its own interests after it secures greater autonomy from Uncle Sam.
The transatlantic alliance, led by Washington, is a mixed blessing for the EU. While it may provide a bulwark for European security, it comes at a cost in stature and influence on the international stage, imperiling the EU’s status as a global power. As Brussels aligns itself with Washington, the EU is overshadowed by the oversize United States and seen by the rest of the world as a junior partner in transatlantic relations.
In Washington’s pursuit of its geopolitical goals — as the disastrous withdrawal of U.S. troops from Afghanistan and the nuclear submarine deal by AUKUS members demonstrate — European interests may be marginalized or even sacrificed. The EU runs the risk of being reduced to an insignificant force.
Consequently, there is a likelihood that the concept of the Group of Two would be revived and take on a new meaning. Rather than the U.S. and China working out solutions to global problems, as proposed by Fred Bergsten, it would mean that the world’s two largest economies would — rather oddly — by contest determine the fate of the world.
On the other hand, the EU distancing itself from the U.S. would go a long way toward removing a major obstacle to closer Sino-European ties. As with the ban on Huawei’s 5G equipment in Europe, America’s hostile China policy is largely responsible for the growing negative European sentiment toward the Asian giant. In its determination to thwart the rise of China, Washington has demanded nothing short of a complete support from its European allies, often at the expenses of the EU’s own interests.
For its part, China is supportive of the EU’s new strategic orientation, keen to see a unified and strong EU that would make the bloc an independent pole in an emerging multipolar world. For decades, China has sought to foster friendly and mutually beneficial relations with the EU, regarding it as a partner in upholding world peace and driving global economic growth. However, its efforts have sometimes backfired. Its rescue operations in Greece during the European sovereign debt crisis and infrastructure developments in Eastern Europe have been branded by some in the West as a Chinese ploy to divide the EU, only because they were thought to be the critical factor in the bloc’s failure to reach consensus on some decisions against China. Clearly, though, such notions reflect only the views of those intent on turning the EU and China into adversaries.
The EU’s China policy in years to come also depends on how committed the bloc is to the multilateral trading system, in which the EU has been a major beneficiary. Its sustained prosperity will continue to rely upon it. I remember hearing EU Ambassador to China Nicolas Chapuis intoning at a seminar in Beijing about two years ago that more than 80 percent of the EU’s future growth is expected to come from outside the bloc. If this is the case, it behooves the EU to make the multilateral trading system work, as it needs the system as much as any other countries do, if not more.
Accounting for around one-fourth of global GDP growth, China has served as a powerful engine for the world economy over the past decade, and is expected to do so in the foreseeable future. Equally important, the country has economic and commercial ties interwoven with the rest of the world. It is the world’s largest trading nation, and the No. 1 trading partner for more than 100 countries, including the EU bloc.
Apparently, China is an integral part of the multilateral trading system and an indispensable one at that. Without China, there would be neither a complete nor an effective multilateral trading system. As such, any attempt to isolate China — such as rebuilding supply chains that exclude the country — would amount to undermining the multilateral trading system, inevitably fracturing the world economic system we have today. Therefore, the EU’s China policy would have a significant bearing on the future of the multilateral trading system and the bloc’s global economic prospects. As Herbert Diess, CEO of Volkswagen, put it, to decouple from China is to decouple from growth and innovation.
If the EU desires a multipolar world, and intends to maintain the multilateral trading system, collaborating with China, rather than antagonizing it, is the way to go. Josep Borrell, the EU’s high representative for foreign affairs and security, told his Chinese counterpart, Wang Yi, in early July that the common interests of the EU and China are far greater than their differences, and he vowed to boost strategic coordination and cooperation between the two.
To be sure, both the EU and China would benefit by forging common ground. The EU’s grievances against China for its stance on the Russia-Ukraine conflict, for instance, may be approached using the same logic that Borrel employed to account for the different perceptions of strategic autonomy by EU states. He said that “not all European states see the problems through the same lens, because they share neither the same history nor the same geography.” It is understandable, then, that given their different histories and geographies, China and the EU have different positions on the issue.
Alternatively, Ukrainian President Volodymyr Zelensky’s position on the issue may serve as a reference. In an address during the World Economic Forum at Davos on May 25, he told his audience that “we are content with the status quo” — referring to China’s policy to stay away from the conflict.
Globally, China and the EU have a shared interest in defending the multilateral trading system at a time when the system has increasingly come under attack. The tasks would include reviving the dispute settlement system in the World Trade Organization and writing rules for new fields, such as the digital economy. In addition, it is their joint responsibility to lead the world in mitigating climate change at a time when the will of Washington to lead appears to be ebbing. Enhanced strategic coordination and cooperation between the two is also needed to drive the global economic recovery and — most importantly — to usher in a multipolar world.