Toward a Pragmatic, Comprehensive Europe Strategy for China in 2024

July 23, 2024

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President Xi Jinping visited Europe in May. During his trip, he made three critical stops at three countries, each epitomizing a different facet of China's foreign policy efforts within the continent.

President Xi's Recent Visit to Europe and Why It Matters

France, Xi's first stop in Europe, has long been a relatively moderate and reasonable voice within the European Union (EU). As the sole European Union (post-Brexit) nation with veto power in the United Nations Security Council, and long-standing soft power and outsized cultural influence across the world, France is the most logical "gateway" to the rest of Europe for Chinese capital, investors, and businesses.

Under the incumbent leadership of President Emmanuel Macron, the French government has taken on a considerably more nuanced hedging position between Beijing and Washington regarding foreign policy. Indeed, during his 2023 visit to Guangzhou, Macron called upon Europe to resist the pressure to become "America's followers" and embrace strategic autonomy as a new modus vivendi in this multipolar era.

Yet, as with many of its neighboring partners and regional counterparts, the Élysée has maintained a conspicuous and trenchant position on the war in Ukraine, emphasizing the inalienable and non-negotiable nature of European security interests, as well as affirming the need for Russian actions in the country to be met with stiff sanctions and punishment. Such rhetoric may not be reflective of the views of an increasingly fragmented and disjointed global order and its disparate constituents. Indeed, it is by no means shared by Serbia or Hungary, the two other European states Xi visited.

While Serbia has long enjoyed complex collaborations with China as part of the former Yugoslavia and the Non-Aligned Movement during the Cold War,  the Sino-Hungarian partnership has been considerably enhanced under Hungary's current Prime Minister Viktor Orbán, who views China as not only a crucial economic partner, but also a foreign policy coordinative counterpart and partner in countering the excess influence and skewing of decision-making power toward the trans-Atlantic axis that is enhancing NATO's strength. Hungary is a EU member state, while Serbia is not.

In bolstering ties with Serbia, China is seeking to expand its presence and influence in the Balkans (e.g., Bulgaria, Croatia, Albania, etc.), Mediterranean Europe (e.g. Greece and Italy), and even the Eurasian Land Bridge in Turkey. These regions are conventionally overlooked in contemporary conversations on geopolitics yet play vastly important roles from the perspectives of geo-security and supply chain management. By rapidly strengthening and deepening relations with Hungary, China aims to signal explicitly to European states that it remains open for comprehensive economic reciprocity and developmental assistance, so long as European states accept and acknowledge what Beijing views as core national interests.

The above has demonstrated that Chinese diplomacy toward Europe can be flexible, dynamic, and attuned to the individual circumstances of different states. Considering that Europe is a loosely defined collective of over 40 countries (including but not limited to the states within the EU), dealing with Europe requires sensitivity to the needs, values, and attitudes of its disparate members. For example, Germany and Spain have vastly different energy needs and profiles, which in turn spur their significantly contrasting relationships with Russia. Germany was far more dependent upon cheap Russian oil and gas than Spain,  which was far more integrated into the trans-Pacific energy trade circuit. Alternatively, Mediterranean European states such as Greece and Italy have long been more open to Chinese trade than Baltic or Nordic states, given their significant manufacturing sectors and the portentous weight of the Chinese consumer markets. There is no singular body that presides over the entirety of Europe. Even within the EU, there are significant variations, disagreements, and fissures over how to deal with China.

Three Key Challenges that China and the EU Must Jointly Tackle

European states generally do not share the US political and defense establishments' fixation upon containing an ascendant China. With the exception of the US-UK special relationship, a vast majority of European states do not possess an innate preference for or against the US and China. Engaging with both is the most plausibly pragmatic option for them that maximizes prospective upsides. Yet as they stand, China's relationship with key European nations faces three key challenges, which can and must be addressed.

The first challenge revolves around the geo-security concerns and fundamental disparities in perceptions and judgments. In the eyes of many European politicians, especially those aligned with the center-left and center-right, as well as vast swathes of the European population, the ongoing conflict in Ukraine poses a systemic risk to their survival and stability. Some have conjectured that Russia would be eyeing the remainder of Europe, should it prevail in Ukraine. Such speculation does not, however, appear to be well-warranted or coherently argued. Others are wary of the possible threats posed to European defense down the line, given the over-extended nature of NATO and European troops, as well as perennial issues concerning mobilizing and motivating member states to pay their dues – an issue that also drew the chagrin of erstwhile US President Donald Trump.

In the eyes of many in China, however, such talk of defensive securitization appears to be little more than a resurgence of the "Cold War mentality."  Many think tank leaders and intellectuals are convinced that European leaders have come under the precipitously tightening grip of Washington and have no choice but to pivot toward more armament, military funding, and commitments to NATO. For these Chinese interlocutors, in inviting their counterparts to reconsider the Manichean worldview espoused by President Joe Biden's administration, it would perhaps be most helpful to shed light on alternative paths forward, through which peace can be enduringly restored to Eastern Europe. After all, this is precisely the top-line item of concern for many in European capitals pontificating over Trump's prospective return.

The second challenge concerns the shifting trade dynamics between China and the EU, particularly with manufacturing powerhouses such as Germany and Italy. The trade surplus between China and Europe has considerably widened over the past decade, both in absolute and percentage terms, as a reflection of China's highly successful investments in shoring up its manufacturing capacity and its supply chain wherewithal.  As a dominant powerhouse and the largest trading partner to a majority of the world's economies, China is a market that is too large to miss, which, in the eyes of Brussels technocrats and skeptics in the EU, translates to a market too large to not hedge against.

It is precisely this yearning for restoring domestic production, alongside the politically driven desire to establish domestic champions in "strategic industries," that has given rise to the talk of de-risking. Whilst no one quite understands what this term means – indeed, I have previously argued that the greater risk consists of an isolationist and capricious American trade regime under a second-term Donald Trump – it is evident that European politicians and companies are making a palpable, albeit haphazard, push toward reducing their dependence upon Chinese imports.  Given that China's "new three" – lithium batteries, electric vehicles, and solar panels – would benefit immensely from the opening up and access to international markets abroad, it behooves Chinese policymakers to provide affirmative incentives and reasons for other states to refrain from further decoupling.

The third, and perhaps most critical, challenge concerns domestic European politics. Macron has just called for a new election in the aftermath of an abysmal showing in the European parliamentary elections. The far-right made gains across Germany and France, while the centrist blocs largely held in many other states. Euro-skepticism, resentment toward the perceived aloofness of Brussels technocrats, and general antipathy toward "international capital" have captured the imagination of a significant portion of the European public.  What remains less clear, however, is what this means for Sino-European ties. While many of the leading far-right politicians, including Marine Le Pen in France, have expressed clear pro-Russian sympathies, few amongst them share the same level of exuberance and keenness toward China. Indeed, Le Pen had even advocated working closely with Russia to prevent Moscow from forming an "alliance" with Beijing.

Three Suggestions for a More Constructive Way Forward

With such headwinds, uncertainty, and overarching disillusionment, it is not incomprehensible that we would feel pessimistic about the future of Sino-European relations. Yet not all hope is lost, and it behooves pragmatists in Beijing and Brussels, as well as the individual European capitals, to try harder for a more constructive way forward. The following are merely tentative suggestions.

Firstly, Chinese and European firms can forge common ground through setting up robust joint ventures, partnerships, and knowledge co-development arrangements. The BMW Brilliance Automotive Limited, a joint venture between BMW and Brilliance Auto Groups, attests to the fruits of combining China's manufacturing prowess and hardware edge with the long-standing software and aesthetic advantages of the German automobile industry.  The same logic can be applied to electric vehicles and solar panels. If "Made in China" is indeed rendered politically unpalatable by inflammatory opportunists, Chinese and European firms could consider pursuing operations in third parties, such as Indonesia and Malaysia – burgeoning ASEAN economies, with an eye on becoming EV powerhouses in their own right.
Take Malaysia as a particular example: with concerns over stagnating sales,  Kuala Lumpur would benefit from inviting both European and Chinese firms to work hand in hand in tapping into its cheap labor as a new site for collaborative EV production. Not only would this approach lower costs across the board for Malaysian consumers, but it could also prove pivotal in increasing governmental tax revenue while bringing Chinese and European firms closer. In an increasingly multipolar world, we must think multi-regionally.

Secondly, Beijing should emphasize, with sincerity, its commitment to European security. Building on the momentum and dividends of Special Envoy Li Hui's trip to the Middle East and Eastern Europe in May,  China should work closely with select European partners, including states with more explicit reservations about and opposition to Russia's actions, in devising a conciliatory framework paving the way toward meaningful peace talks. While the recently concluded Summit on Peace in Ukraine may have featured an excessive concentration of NATO-aligned elements, it falls upon China, as a responsible global power, to provide a tenable alternative for peace to the Ukrainian population.

This does not require China to forego its valuable ties with Russia, across the food, energy, water, and economic fronts. Instead, it is effectively akin to drawing a leaf or two out of India's playbook – stressing the room for collaboration between the two countries while actively maintaining relations with Western partners in trade, finance, and technology. As President Xi Jinping has repeatedly affirmed, China is not interested in "decoupling," and does not want "decoupling" to occur. The best antidote to decoupling is what I term "multiple recoupling" – building and shoring up relations with a multitude of partners, even ones with competing or conflicting interests.

Thirdly, the Ministries of Foreign Affairs and Education, as well as the International Liaison Department of the Central Committee of the Communist Party of China, can play a pivotal role in strengthening China's outreach efforts to students, scholars, youth, and other interested stakeholders in Europe. To paraphrase the Chinese leadership, the hope in Sino-European relations rests with their people. The bedrock of the relationship's future lies with the youth. In times when international relations are as fraught and adversarial as they are today, it is extra important that ordinary citizens from all sides get to talk to and hear from one another.

The Chinese state has already taken active steps in offering visa-free access to select European citizens. This is an excellent and much-welcome move. Going forward, the priorities should be to rekindle and expand exchange programs between universities, other higher education institutions, think tanks, and even secondary schools. Leveraging existing sister city partnerships and arrangements between China and various European states can serve as conduits for dialogues and conversations on regional collaboration. Indeed, a low-hanging fruit may be for the coastal, tech-heavy Chinese provinces like Jiangsu and Zhejiang to work with European cities such as Dublin in Ireland and Paris in France to establish more joint incubators and partnerships for start-up entrepreneurship. No step forward is ever too small. Untying the Gordian Knot of Sino-European suspicion and skepticism requires pragmatic, comprehensive efforts.
We should remain hopeful and committed to a better future for Sino-European relations. It is never too late to act. 

 

1. "China, France to Push Bilateral Comprehensive Strategic Partnership to a Higher Level," CGTN, April 8, 2023, https://news.cgtn.com/news/2023-04-07/Xi-holds-informal-talks-with-French-President-Macron-in-Guangzhou-1iOtsnmKaSQ/index.html.

2. "China, Serbia Decide to Build Community with Shared Future," Xinhua, May 9, 2024, https://english.news.cn/20240509/edb1c4eb8d5a406fafa145bbc779c5c8/c.html.

3.   "How Will the Russian Oil Price Cap Affect the European Economy?," CGTN, February 5, 2023, https://news.cgtn.com/news/2023-02-05/How-will-the-Russian-oil-price-cap-affect-the-European-economy--1hbkDQMIMi4/index.html.

 

 

 

 

 

Please note: The above contents only represent the views of the author, and do not necessarily represent the views or positions of Taihe Institute.

 

This article is from the June issue of TI Observer (TIO), which explores China-Europe relations during a time of international upheaval, focusing on issues like green development, regional conflicts, and trade barriers as well as the opportunities and challenges ahead. If you are interested in knowing more about the June issue, please click here:

http://en.taiheinstitute.org/UpLoadFile/files/2024/6/28/152632490d3194c2-0.pdf

 

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