The EU's China Policy in Chinese eyes

From the Center for China-Europe Relations of Fudan University and the Shanghai Institute for European Studies

The Center for China-Europe Relations of Fudan University and the Shanghai Institute for European Studies jointly released the 欧洲对华政策报告 2022 "Europe's China Policies in 2022" report in February 2023, which examined the content, background, intention, and future trend of the European Union(EU) and some European countries' China policies in 2022.

As French President Emmanuel Macron and European Commission President Ursula von der Leyen are visiting China as we speak, below are the preface and the EU chapter the report. I’ll send the French part later otherwise this would be too long.

I thank Dr. 简军波 Jian Junbao, Deputy Director of Center for China-Europe Relations of Fudan University, for allowing the translation and publication here. - Zichen

Preface  

by Jian Junbo, Deputy Director of Center for China-Europe Relations of Fudan University, and Yang Haifeng, Secretary General of Shanghai Institute for European Studies

In 2022, Europe's stance towards China remains largely unchanged from 2021, marked by hostility in ideology, vigilance in security, and co-opetition in economics. As a result, most European countries and the EU continue to maintain a “dual approach” towards China, pursuing economic cooperation while keeping a political distance, and at times, confrontation. Nevertheless, given the "great transformation" in the international situation, there have been some adjustments to Europe's China policies. These adjustments have been driven by three key factors: heightened geopolitical tensions, a prolonged energy crisis, and the deepening of global power games. 

Last February, the Russia-Ukraine Conflict erupted, marking the most severe geopolitical conflict on European soil in over 20 years, and the most significant event that directly threatens European defense security. While the Russia-Ukraine conflict did not just start in February of last year, the intense military actions posed the most immediate threat to the security of Europe, and even altered the process of European integration as a peace initiative. This profound challenge has compelled all European nations to focus their internal and regional multilateral agendas primarily on addressing the devastating effects of this geopolitical conflict. 

Moreover, a lasting energy crisis has been plaguing Europe since the latter half of 2021. The situation further deteriorated in 2022 due to the Russia-Ukraine conflict, exacerbating the energy crisis' severity and impact on the continent. Last year, the EU followed the US in imposing 9 rounds of multidimensional sanctions against Russia, including a ban on the export of fossil fuels such as natural gas and oil. Energy sanctions against Russia have directly worsened Europe's external energy supply, causing immeasurable damage to its economy. The fallout has included higher electricity and raw material prices in many countries, insufficient manufacturing output, rising unemployment rate, challenged livelihoods, decreased fiscal revenues, and increased fiscal deficits due to energy subsidies. 

Furthermore, the intensification and deepening of great power competition represents a significant challenge. , the tensions between China and the US did not subside after the conclusion of the US mid-term elections. On the contrary, due to factors such as the differences in their positions on the Taiwan Question and the Russia-Ukraine conflict, the accumulated contradictions between the two sides is still increasing. As the most powerful global power, the US tends to view the US-China rivalry as  the so-called competition between different international orders, which may lead to further deterioration in its relations with countries like China, Russia, and Iran, creating more complex inter-state dynamics. 

In this context , the EU and most European countries have largely remained to align with the US on security, political, and even economic issues. As a result, the transatlantic alliance has had a significant impact on Europe's policy towards China. In other words, Europe's stance towards China has increasingly become more similar to that of the US in 2022. This is reflected in Europe's emphasis on "decoupling" from China's market in critical areas of the supply chain, greater involvement in political affairs related to China's sovereignty such as the Taiwan Question, and a stronger ideological emphasis on the importance of incorporating human rights factors into its policy towards China. 

However, this does not imply that Europe and the US will adopt identical policies towards China. Due to the contradictions between Europe and the US and their differences in interests when dealing with China, the EU and many European countries still have the potential to continue to develop their relations with China.   

This is manifested in both sides valuing each other's important role in bilateral relations and international affairs, including cooperation in areas such as promoting economic recovery and growth, addressing climate change, protecting biodiversity, respecting the function of the United Nations, and countering the proliferation of nuclear and other weapons of mass destruction. Major European powers, including Germany and France, maintain a pragmatic stance towards China, despite that  there are different views on China domestically in these countries, particularly within Germany. However, even with some problems in the Franco-German axis, the two countries still played an important role in maintaining relatively stable China-EU relations last year. Southern European countries generally maintain a relatively stable and friendly stance towards China, and the Western Balkan countries have generally maintained their past stance towards China, although some countries in this regard have faced pressure from Washington and Brussels. However, central and eastern European countries' attitudes toward China are not consistent, with the Visegrad Group members' perceptions of China becoming increasingly diverse, and the Baltic states and some Nordic countries' policies toward China becoming more challenging. After Brexit, the UK has not been able to distinguish its China policy from that of the US even after multiple Prime Minister changes in 2022. 

Although the EU's policy towards China will continue to be adjusted and become even more stringent and hostile in some areas, it is believed that the future development of the China-EU relationship will continue to progress despite various challenges. For China, maintaining stable and relatively healthy relations with Europe is crucial. China's economic development and technological progress depend on expanding high-quality opening-up to the outside world. As a comprehensive strategic partner of China, the EU, along with European countries, can jointly assume more responsibilities with China in bilateral and multilateral cooperation and strive to promote the construction of a more stable and prosperous international community. (Enditem)

EU’s China Policy

by 严少华 Shaohua YAN, a research associate professor at the Center for China-Europe Relations (CCER) at Fudan University

2022 was a historic year for the EU, and its policy towards China. Under the impact of the COVID-19 pandemic, the Russia-Ukraine conflict, and the energy and inflation crises, the EU struggled to adjust its policy towards China. In October 2022, the EU foreign ministers gathered in Luxembourg to discuss China-related issues in the new circumstances, among which economic competition and systemic rivalry was the main focus. The meeting discussed and analyzed the latest situation that the China-EU relations is facing, in the context of the Russia-Ukraine conflict, laying the foundation for the EU's new policy towards China.

Compared with previous years, the EU's policy towards China in 2022 was deeply influenced by the Russia-Ukraine conflict, even being hijacked by it to some extent. Based on the existing three-pronged approach that positions China as a partner, competitor, and systematic rival, the EU's policy in 2022 reflected some new perspectives and policy thinking, especially in the areas of political, economic, and security. These changes were influenced by internal factors within the EU and factors related to the United States and Russia. In the context of the Russia-Ukraine conflict, some of the thinking on EU policy towards Russia frequently appeared in discussions and practices related to EU policy towards China.

[The European Commission's 2019 Strategic Outlook stated the three-pronged approach and described China as a cooperation partner with whom the EU has closely aligned objectives, an economic competitor pursuing technological leadership, and a systemic rival promoting alternative governance models. ]

At the same time, the EU's policy on China in 2022 demonstrated a rare and precious sense of pragmatism and rationality. Represented by the visits of German Chancellor Scholz and European Council President Michel to China in November 2022, the EU attempted to improve relations with China through engagement, and its policies began to send some positive signals despite the shadow of the Russia-Ukraine conflict. This shows that the EU will not necessarily pick up the Cold War mentality when interacting with China. With sincere dialogue between China and the EU, the EU may still pursue a pragmatic policy towards China after rational consideration of European interests.

1. New Trends and Changes in the 2022 EU's China Policy

Following last year's Russia-Ukraine Conflict, discussions on the EU's policies towards China and Russia have been almost simutaneous. China is often involved in discussions about Russia and the Russia-Ukraine conflict. Therefore, the conflict has strengthened some established thinking in the EU's China policy and led to new trends and changes in areas such as politics, economy, and security.

Political Trends: EU's Political "Binding" of China and Russia

The Russia-Ukraine conflict has strengthened the EU's tendency to "bind" China and Russia politically and prompted the EU to rethink how to deal with countries with different political systems. Before the Russia-Ukraine conflict, the EU and the United States had already coordinated their strategies toward China in the political and ideological realms. Although under this coordination the EU took a tougher position, there was no fundamental change in its policy towards China. The EU still adhered to its three-pronged approach and prioritized cooperation. "Seeking balance in multiplicity" is the basis of the EU's China policy.

The Russia-Ukraine Conflict began to tilt the balance among the three-pronged approach, and the policy has increasingly leaned towards treating China as a systemic rival, with competition becoming the core consensus. The Russia-Ukraine conflict has brought about two interrelated changes in the EU's policy towards China at the political level. On one hand, the EU's understanding of the nature of the China-Russia relations has changed, with the EU's tendency to "bind" China and Russia becoming more evident in official discourse. On the other hand, China's balanced position on the Russia-Ukraine conflict has been interpreted by the EU as so-called "pro-Russian neutrality," leading the EU to become more closely bound to the United States stratigically and on some key issues involving China-US strategic competition.

Economic Trends: the EU reassesses its economic and trade cooperation with China

The conflict between Russia and Ukraine has made the EU rethink two important issues related to economic and trade cooperation. 

Firstly is the "ballast stone" theory of economic and trade cooperation. For a long time, economic and trade cooperation has been seen as the most important pillar and the "ballast stone" of China-EU relations. Under Germany's "Wandel durch Handel (change through trade)" concept, the EU has been optimistic about deepening economic and trade cooperation with China. However, this concept has faced increasing challenges and questions after the conflict between Russia and Ukraine. Germany's Economy Minister Robert Habeck promised "no more naivety" in its trade policies with China. Currently, the government is working on a new trade policy with China, and the EU is also working on several bills that could affect China-EU's economic and trade relations. The commonality behind these new policies and bills is that economic and trade dependence on China is no longer viewed as a "ballast stone" but rather as a means of balancing the benefits and risks of dependence on China by decreasing the reliance of trading with China.

[Germany's strategy towards China has long been defined by the phrase "Wandel durch Handel," or change through trade. Germany convinced itself that increasing trade would influence China towards a more liberal and democratic political system.]

Secondly, there is the weaponization of economic and trade dependence. Sanctions and counter-sanctions between the EU and Russia using energy as tools have raised the EU's concerns about the weaponization of economic and trade dependence between China and the EU. Before the conflict between Russia and Ukraine, the EU defined China's trade sanctions against Lithuania for violating China’s “One China” principle as economic coercion and used this as an excuse to promote the anti-coercion instrument(ACI). The conflict between Russia and Ukraine has forced the EU to accelerate the legislative process of this instrument to adapt to the new geo-economic order. China is one of the EU's largest trading partners and vice versa, and implementing the ACI will inevitably impact China-EU economic and trade cooperation.

[The EU Commission proposed the Anti-Coercion Instrument in December 2021 to react to attempts of economic coercion by third countries.]

Security Trends: the EU has begun to include China in its security considerations

Traditionally, "high-level politics" such as geopolitics and security have not been prominent issues in China-EU relations, mainly because there is no fundamental geopolitical conflict between China and the EU in respective regions. This is also a significant feature that distinguishes China-EU relations from China-US relations. However, with the intensification of great power competition and geopolitical tensions, geopolitical conflicts and traditional security issues have gradually entered the EU's policy agenda toward China and have become increasingly important.

The Russia-Ukraine conflict has increased the weight of security considerations in the EU's policy towards China, mainly reflected in three aspects:

1. The EU has deepened its concern about China-Russia strategic coordination, especially the security cooperation. This is more apparent in Central and Eastern European countries, which view Russia as their primary threat. China-Russia security cooperation may change the EU's perception of China's role in European security.

2. The EU has heightened attention to the "Indo-Pacific" situation, especially at the Taiwan Question. Traditionally, the EU has adopted a low-key and pragmatic attitude towards the Taiwan Question, believing it is mainly the United States' strategic concern. After the conflict between Russia and Ukraine, the "pro-Taiwan" forces within the EU have taken the opportunity to exaggerate the risk of conflict in the Taiwan Strait, improving Taiwan's visibility in discussions.

3. China and Russia have been included in the EU's overall security strategy considerations. In March 2022, the EU released its first defense white paper, "Strategic Compass," which included assessments of China and Russia as security challenges for the EU. Although this does not mean the EU sees China as a security threat, it is still a noteworthy new trend.

2. Reasons for the Changes in EU's China Policy in 2022

The changes in the EU's policy towards China in 2022 are the result of multiple factors, including EU domestic factors, US factors, and the influence of Russia.

I. Internal Factors within the EU

Within the EU, the COVID-19 pandemic and the Russia-Ukraine conflict have strengthened the EU's negative perception of China. As anti-Russia became the politically correct discourse, China's image in Europe was affected. Misinterpretations of China's stance by European media further reinforced the negative perception among the European public and placed China in a disadvantaged position within the European discourse. In this unfriendly environment towards China in Europe, taking a tough line against China became a shortcut for some European politicians to gain political capital and bridge European political polarization. In addition, the conflict between Russia and Ukraine has raised the status and influence of Central and Eastern European countries in EU decision-making. The deterioration of China's relations with Lithuania and the closer ties with Russia have left many Central and Eastern European countries dissatisfied, adversely affecting EU’s China policy.

II. US Factors

The US has always been a structural factor influencing the EU's policy towards China. Since the Biden administration took office, the US has strengthened strategic coordination with the EU on policies toward China, making its policies on ideology, trade, investment, technology innovation, and geopolitics more consistent with those of the EU. This has made the US influence more prominent in China-EU relations. After the Russia-Ukraine conflict in 2022, the EU became more dependent on the US regarding security, strategy, and critical energy issues, suppressing its strategic autonomy and making it more susceptible to US influence. As a result, the US factor has become more prominent in the EU's policy towards China in 2022, particularly in areas such as security and defense, investment review, technology exports to China, and the Taiwan question.

III. Russian Factors

A critical characteristic is the increased linkage between the EU's China policy and Russia. The Russia-Ukraine conflict in 2022 further highlighted the importance of the Russian factor in the EU's policy towards China, as the President of European Commission, Ursula von der Leye, pointed out that this conflict can also determine EU’s relations with other countries outside of the European continenet.  With this statement, the EU linked its China policy to the Russia-Ukraine conflict,, making the Russian aspect having the potential to surpass the American factor to become the most important external element influencing the EU's policy towards China as the conflicts continues.

IV. China Factor

The Chinese factor itself is also an important reason influencing the EU's China policy. As German Chancellor Scholz said in an article before his visit to China, "As China changes, the way that we deal with China must change too." In the eyes of the EU, China's stance on its domestic policies, including pandemic prevention and control, the crackdown on unbridled capital expansion, and international issues, such as the Russia-Ukraine conflict, represent a substantial change, especially under the dual impact of the pandemic and the Ukraine crisis. The EU's confidence in the Chinese market and risk perception has changed. Therefore, the EU's policy towards China will also consider these changes and make corresponding adjustments.

3. Prospects for the EU's China Policy in 2023

Looking ahead to 2023, it can be expected that the EU will maintain the momentum of stabilization that appeared at the end of 2022 regarding policies towards China, and re-engagement may become a practical consideration. There may be a new window of opportunity for China-EU relations in 2023, but engagement does not mean that it will return to the state of "business as usual" in the past.

The EU's current policy towards China is contradictory and perplexing, emphasizing competition while hoping for cooperation. As the Ukraine conflict dragged on, the EU needs to stabilize its collaboration with China to alleviate its economic difficulties and energy crisis. On the other hand, it hopes China will make more diplomatic efforts to resolve the Russia-Ukraine conflict. In 2023, the EU may continue to enhance engagement to stabilize China-EU relations. In this sense, the future direction of the EU's policy towards China will also depend on China's policy choices to a certain extent.

There are three trends in the EU's policy towards China in 2023 that are worth noting. Firstly, as China reopens and prioritizes stabilizing its economic growth, it can be expected for the EUto enhance economic and trade cooperation with China to alleviate its economic difficulties and avoid a potential recession. At the same time, the EU will continue reducing its dependence on China and seek diversified partners in specific economic and trade areas. Secondly, as French President Emmanuel Macron, Italian Prime Minister Giorgia Meloni, and European Commission President Ursula von der Leyen expressed their intentions to visit China, there is a chance that the EU will resume political exchanges at various levels and strengthen political dialogue with China. However, factors such as ideological differences, human rights sanctions, the Russia-Ukraine conflict, the Taiwan Question, US pressure, and Sweden's rotating presidency will continue to influence the EU's stance towards China in the political field. Finally, security issues, such as the Russia-Ukraine conflict and the Taiwan Strait will remain prominent in the EU's policy toward China. The Russia-Ukraine situation may escalate again as some EU member states provided offensive weapons to Ukraine, bringing uncertainty to China-EU relations.

[China's 2022 Central Economic Work Conference put stabilizing growth, employment, and prices in a prominent position in economic policymaking for 2023.] 

(Enditem)

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