What is the outlook for EU-China relations?

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In this interview Alice Politi looks at relations between the EU and China and considers future engagement in a climate that has become more risk-averse. Politi focuses on Western European relations with China more specifically.

How is the European Union (EU) taking an increasingly active stance in its relationship with China, through what the European Commission President von der Leyen termed “derisking”, now the commonly agreed upon economic engagement model, departing from the previous American articulation of “decoupling”?

“De-risking” has been coined as an alternative to the now-outdated “decoupling” model which had characterised American strategy towards China. “De-risking” is best understood through the EU’s three-pronged approach in its relationship with China. The EU’s first consideration is of China as a partner for cooperation with whom it can tackle transnational security issues such as climate change.

Yet China is also a competitor, notably economic, and lastly, a systemic rival. This dimension of “systemic rivalry” was introduced for the first time in 2019 with the Strategic Outlook.

The need to de-risk hence stems from the need and desire to focus the strategy on this systemic rivalry dimension rather than the economic competition and partnership in transnational security issues.

This will entail focusing on areas that are particularly strategic, such as highly sensitive technologies (where concerns have been raised concerning Intellectual Property theft and Research & Development going to China), and on critical raw materials – as expressed in the Critical Raw Materials Act . Given the EU’s digital and energy ambitions, we can surely expect more developments specifically designed to reduce the EU’s dependence on China for critical raw materials.

Moreover, the wider context of Covid coupled with Russian aggression against Ukraine have been big factors highlighting the EU’s vulnerabilities and making more urgent a “de-risking strategy”. They have highlighted the risks of supply chain dependencies. The EU therefore is attempting to safeguard critical areas, dealing with sensitive technologies and issues of economic security, whilst maintaining mutually beneficial engagement with China.

Different countries within the EU have different economic objectives and stronger or less strong ties with China. Given these different relationships, can the EU present a united stance in negotiations with China? What different interests or concerns do EU member states have that could act as obstacles to consensus and policy-making?

Cohesion is a serious issue for the EU. China itself prefers to handle its relationships with European member states on a bilateral level. Chinese actors are aware that despite guidelines, such as the Security Toolkit, there is no such thing as a European “common foreign policy strategy”.

Member states retain control over their commercial decisions, a reality highlighted in the previous year as European countries sought to reengage economically with China following the end of the Zero-Covid policy. Such interactions have been predominantly bilateral, as seen in the joint visit of French President Macron and European Commission President von der Leyen in April 2023.

Despite being joined by President von der Leyen, President Macron clearly outlined where French interests were. China also treated the two Presidents in a very different manner. President von der Leyen was treated with much less regard – it was very clear that French commercial interests overshadowed engagement on broader European policies. German Chancellor Olaf Scholz’s visit in November 2022 also stands out. He was the first European leader to visit China after the lockdown. His trip with a delegation of CEOs of the biggest German firms clearly shows that the main intentions were re-connecting with in-person engagement specifically on the commercial level and in a bilateral manner.

The favouring of bilateral connections with China stems not just from China’s preference for such relationships but also from a competitive imperative. It is crucial to acknowledge that European member states engage in economic competition among themselves, and China stands as a significant partner in this competition. This introduces an extra layer of complexity. Despite a clearer European de-risking strategy, such competition further contributes to the diverse dynamics at play.

Moreover, the Netherlands announced a new national export restriction measure on advanced chip manufacturing equipment, unofficially targeting China. This was the result of an agreement between the Netherlands and the USA in January 2023. With technological competition growing between China and the US, the US has and will continue to exert a certain level of pressure on its allies to align their China policies on certain issues.

Countries like the Netherlands can thus take decisions that are aligned with their interests, but not necessarily part of the shared European toolkit.

Through what lenses does the EU view its relationship with China? Do these mainly relate to economic and national security, or does the EU also champion other approaches?

Putting economic and national security concerns aside, the EU also engages with China on a valuesbased and ideological level. This is particularly relevant to remember because the EU is not a traditional security actor. It does not possess a unique military power, but rather is a normative power. Values and ideology are central and highlighted in the Treaty of Lisbon drafted in 2007.

Over the years, values have become more prominent in speeches by EU officials regarding China.

Within the March 2023 speech outlining the de-risking strategy, von der Leyen concentrated on values, namely how China will behave with Russia. Yet, there is also a growing frustration born from a lack of reciprocity and investment. In the past, there was a cooperative willingness to see China as a potential partner and not a security threat. Such a partnership vision is exemplified by the 2013 EU-China Agenda for Strategic Cooperation. However, many of the expected outcomes expressed in this Agenda were not achieved. This can be attributed to miscommunication from both sides, and to China’s increasing diplomatic assertiveness under the leadership of Xi Jinping. This context has prompted the development of a European Security Toolkit, rendering the security dimension more prominent, even though economic engagement remains a cornerstone of the relationship.

What are the future goals for engagement with China? A valuesled engagement perhaps? What are the future areas of cooperation?

The necessary component of the relationship will always be a certain level of healthy engagement vital for the EU’s economic survival. China is the EU’s largest trading partner in goods. The data speaks for itself and this will remain the main feature of the relationship for the decades ahead.

The EU is confronted with a difficult situation in which it will need to find a balance between necessary engagement and security. Addressing market distortions and lessening reliance on China in critical technologies are some of the major challenges. It is worth noting that on the Chinese side, this tripartite strategy (partner but also competitor and rival) had not been received particularly well. Chinese Minister of Foreign Affairs Wang Yi first termed it a “cognitive dissonance”.

Only recently has he stated that there will of course “be competition in cooperation, but we should not be afraid of cooperation because of competition.”

What role does the BRI play in the EU’s approach to China and how does it impact European interests?

Initially, when the BRI began expanding into Europe and EU member states began to sign Memoranda of Understanding (MOUs) or started expressing their desire to join the BRI, this was not a concern for the EU. It became one as time passed.

There are two levels to understanding how the BRI is increasingly being seen as a threat to EU interests. The first level is that of economic security. It is widely recognised that the BRI and many of its projects are not sustainable: neither financially, environmentally, nor socially. Many objections to the BRI, based on sustainability, therefore raise valid concerns, especially where projects have not complied with EU regulations. Furthermore, many projects agreed to under the BRI umbrella have not been delivered.

Take the 17+1 initiative for example, a cooperation initiative between China and Central and Eastern Europe (CEE), which sought to promote the BRI to CEE nations. The failure to meet many of the expressed goals of this initiative led countries to withdraw. Hence, sustainability concerns, along with BRI shortcomings and a generalised Chinese security threat have not been favourable to the development of the BRI in Europe.

The second level is symbolic in nature and Italy serves as a good example. In 2019, the Italian government signed an MOU, from which it has since given notice of its withdrawal in December 2023, at a time when the EU’s strategy towards China shifted, identifying China as a “systemic rival.” Although there was no immediate risk for Italy since the MOU was more of an empty agreement, it became a symbolic problem for the EU and the US, given Italy’s membership in G7 and NATO.

Is Italy’s newly cautious approach to China and the BRI symptomatic of a wider vigilance within the EU?

Understanding Italy’s approach to China involves both domestic and international concerns. Domestic politics played a crucial role in the signing of the MOU itself in 2019. The coalition at the time between Lega and Movimento 5 Stelle, both anti-EU and anti-NATO parties, sought to demonstrate their ability to architect a major agreement with an important partner, like China, independently of the EU or the US. Thereafter, Italy’s position dramatically changed when the coalition changed, and notably when Draghi became Prime Minister. Talks to withdraw from the Belt and Road Initiative (BRI) began, and the current Meloni government has been very clear in emphasising a close relationship with the US and its EuroAtlantic partners.

While the domestic aspect is crucial, the broader international context is also essential. In the West, engagement with China has been marked by tension. Heightened security concerns and a more cautious diplomatic environment have influenced Italy’s relations with China.

How can the EU present a united stance when dealing with China? To what extent do differing objectives from EU member states pose a problem in reaching consensus?

The EU is not a superstate. It is a union of countries with varying economic and political ties to China. Consider, for instance, Germany, whose largest trading partner for the last 8 years has been China, and which has an interest in maintaining strong commercial relations. On the other hand, Eastern European and Baltic countries have comparatively weaker economic relationships with China and can afford to adopt a more assertive political stance. These divergent levels of engagement create challenges for the EU in presenting a unified front in its dealings with China. Moreover, a key problem that the EU faces is its lack of strategic autonomy. To borrow a Chinese idiom, the EU is “standing in two boats”. It finds itself in an unstable position trying to maintain a strategic defence alliance with the US whilst deepening economic ties with China.

In order to present a united front, the EU must be able to show that it does not wish to remain entrenched in the US-China dispute, but rather must aim to develop its own policies, moving beyond a supportive role to the US

How does the EU view China?

The EU grapples with a multifaceted and somewhat contradictory perception of China, simultaneously viewing China as a partner, competitor, and systemic rival. Each of these perspectives can be seen as valid.

China is a partner in economic development through initiatives and institutions like the Belt and Road Initiative (BRI) and the Asian Infrastructure Investment Bank (AIIB). China also collaborates in education and research through institutions like Confucius Institutes. However, such partnership does not exclude competition or even rivalry. The BRI is evidence of this threefold characterisation which shapes the EU’s approach to China.

Another critical element involves the EU’s self-identification as a normative power, leading in areas such as democracy, human rights, global governance, and international aid and investment. However, the rise of China has challenged the EU’s ability to influence or reshape China through its own established norms and values.

The realisation of this failure has led to a certain disappointment and frustration in Europe, acknowledging that China is getting stronger, but on its own terms.

Despite wishful thinking that China might progressively adopt a Westernstyle democratic system through economic reform, China not only remains unchanged but now poses a challenge to the EU’s norms, extending its influence into the Global South. This creates a dilemma for the EU, which sees its grip on its traditional spheres of influence, particularly in Africa and Latin America, weakening. While the EU closes Confucius Institutes, countries in the Global South actively seek to establish more, highlighting a significant challenge to the EU’s normative and rules-based international approach.

The EU therefore faces a substantial challenge not only in navigating its complex perceptions of China but also in managing the impact of China’s influence on global norms, further emphasising the importance of perception in this dynamic relationship.

How does China view the EU when it engages with the EU?

There is a consensus in China that the EU acts as a shadow of the US in almost all global affairs, especially in security domains, and lacks foreign policy autonomy. European politicians find this perception frustrating, not wishing the EU to be considered a subordinate ally of the US. Indeed, whilst Western European leaders like Macron and Scholz express a strong desire for autonomy, Eastern European countries prefer strengthening the transatlantic alliance and closer ties with the US.

These Eastern European nations, then viewing the US as their primary protector, are often more assertive and hawkish on China, particularly regarding issues like human rights and Taiwan.

From a media perspective, the Chinese media tends to avoid demonising the West, even though it often presents counter-hegemonic discourse, seeking to defuse great power narratives. While the Chinese media argues against European criticism, it refrains from portraying the West as inherently evil. By contrast, the Western media often depicts China in a negative light, particularly concerning issues in Xinjiang and the handling of Covid. Such portrayals do not help to foster constructive dialogue. A survey published in 2023 on public opinion in China revealed that the general Chinese public expressed favourable views of European countries. By contrast, Western public opinion towards China tends to be more negative, influenced by media narratives. My view is that such divergence in public opinion underscores the impact media discourse can have on shaping perceptions and the potential burden of maintaining certain narrative frameworks.

How do the Nordic countries engage with the EU?

The Nordic countries, renowned for their robust welfare institutions and status as some of the happiest nations globally, are active participants in the general deterioration of relations between the Western world and China. Denmark for instance, was amongst the first of the Nordic nations to align with the U.S. securitisation discourse concerning Huawei and other perceived threats. And Sweden, has for many years arguably had the worst relationship with China of any EU countries.

Driven by strong norms and values, Nordic countries tend to be outspoken critics of China. Yet, such a normative focus does not impede a pragmatic business approach with China, even amidst growing economic competition. Denmark is illustrative of such growing competition. Two to three decades ago, Denmark stood as a formidable competitor in the wind power industry. Today however, China has emerged as the largest supplier of wind turbines globally, leaving Denmark a victim of the consequences of intensified Chinese competition.

Yet, China’s economic competition has also benefited other companies, such as Maersk, who has enjoyed growing business relations with China, given the nation’s reliance on container shipping for its exports.

What role did the BRI play and still plays in the EU’s approach to China? How does it impact European interests?

The Belt and Road Initiative (BRI) is the highlight of China’s current foreign policy agenda. During the BRI Forum held this October in Beijing, Xi Jinping expressed a hope that Western countries would be active actors in the project. While the beginning point of the BRI is China, Europe is ultimately one important desired terminus. Yet the BRI has met with much difficulty and sparked clear division within the EU. Most recently, in December 2023, Italy, the sole G7 country involved in the BRI, has notified China of its withdrawal, after a period of hesitant resistance.

The BRI thus reflects the EU’s struggle with the conflicting identities it ascribes to China, questioning whether it should be seen as a partner, competitor, or rival. The BRI does indeed encompass all these aspects.

It offers the EU opportunities for partnership, through joint ventures and infrastructure projects. It is evidently also competitive, given China’s globally competitive infrastructure industries which have earned China the reputation of an “infrastructure monster”. Finally, acting as a systemic rival, the BRI embodies Chinese foreign policy, embedding Chinese values, norms, policy-making, development models, and world views into the projects and engagements along the BRI route. Such an integration has naturally generated a nervousness from the EU.

The EU’s wariness of what was originally the 16+1 format underscores this dilemma. While aspiring for EU membership, Balkan countries seek to maintain economic ties with China, rendering their EU membership even more difficult. The EU fears that such strong Chinese connections would complicate membership due to competitive norms, values, and policy-making. The difficulties posed by the BRI also extend to the EU’s geopolitical ambitions.

The establishment of a European “geopolitical Commission”, announced by the Commission President von der Leyen, thus reflects an acknowledgment that normative and norm-setting power are insufficient means to strengthen the EU’s strategic autonomy. The EU recognises it will not go far unless it prioritises competition and market imperatives, lessening the sway of normative perspectives in its foreign policy. This shift highlights the evolving dynamics as the EU navigates its relationship with China in the context of the BRI.

Can there be a common European China strategy?

I am not convinced the EU has the ability to formulate a unified strategy toward China. A chief factor hindering the adoption of a common strategy is China’s sheer size and influence. Individual member states each have their own priorities and challenges with China. Internal disagreements, like in Germany, where despite the publication of a German Strategy on China over the summer, divisions on policy are still strong amongst rival parties.

Events like the Ukraine war emphasise this challenge.

Arguably, China’s policy in the Russian aggression on Ukraine has more to do with countering the US, leaving the EU caught in the crossfire. My view is that the EU recognises that, without China, Russia would struggle to sustain the war. Globally, competition centres on the US-China dynamic, taking in areas such as artificial intelligence, 5G, and quantum computing, leaving the EU lagging behind, once again to rely heavily on the US. Despite wishes to avoid entanglement in US-China rivalry, the EU, constrained by its lack of strategic autonomy, is ultimately confined to the parameters set by the US on security and technological issues. This includes following US sanctions on Huawei’s 5G and China’s semiconductor industry. As one scholar puts it, history has shown that “When the going gets tough, the EU has no choice between ‘strategic autonomy’ and ‘the transatlantic alliance’.” The Russian aggression on Ukraine has thus confirmed that the EU consistently prioritises the transatlantic alliance.

Furthermore, there is a significant disparity between discourse and reality. Negative narratives of China raise concern amongst the European public, who do not understand governments’ ambivalence regarding China. This can make policy-making substantially harder. By contrast, the Chinese media does not portray the EU in such a manner. Thus unburdened, China is evolving into an ordering power and rule-maker. Over the past decade, under Xi’s leadership, China has called for the reform of the global governance system and has accordingly initiated various global initiatives such as the Belt and Road Initiative, the Global Development Initiative, Global Security Initiative, and Global Civilization Initiative. These efforts challenge traditional Western dominance, and have prompted reactions from the West, such as the EU’s Global Gateway and America’s Build Back Better.

As expressed above, China is transforming into an ordering power, contributing to a multi-order world. This concept of a multi-order world envisions a shift from a singular US-led international order to a system consisting of several international orders.

The coming multi-order world is thus expected to be more diverse in power, principles, and practices. Instead of adhering to a single ideological and politically motivated order, countries will rationally align and cluster on specific issues in line with national interests. The challenge then will lie in the crafting of complex relationships among diverse actors in intricate intersections. Scholars and policymakers must therefore embrace new perspectives and institutions to adapt to this changing landscape, requiring a fundamental shift in thinking aligned with these complex realities.

China’s Belt and Road Initiative (BRI) can therefore be seen as constituting a new order with Chinese characteristics, challenging the existing world order. It represents a comprehensive, strategic, and transformative initiative to enhance regional connectivity, promote economic integration, foster cooperation, and reshape global development landscapes.

Understanding the Chinese BRI order then involves examining its objectives, principles, challenges and its implications for global governance. The question that remains now is how the EU will position itself in this evolving global landscape: as an independent order or whether it will align with one of the major orders led by the US or China.