How China sees the EU's changing leadership + EV subsidies + China-Russia

In this issue of Europe China 360°, we cover the following topics:

• How China sees the European Union’s changing leadership
• EU report reveals pervasive Chinese EV subsidies 
• Europeans turn up the heat on Chinese support of Russia’s war

How China sees the European Union’s changing leadership

By Abigaël Vasselier

Political volatility and change have usurped Europe’s traditional summer lull, and China sees this as evidence of a weak and anxious EU. The topic of competitiveness is dividing European publics and policymakers. China will closely watch how this plays out during the six-month Presidency of the Council of the European Union led by the right-wing government of Hungary. 

The new European political landscape seen from China

The rise of the extreme right in June’s European Parliament elections won’t necessarily be beneficial for China, but a second mandate for Ursula von der Leyen as President of the European Commission and the arrival of Kaja Kallas as the new High Representative and Vice President is not good news either. This leaves Beijing looking to the former socialist Portuguese Prime Minister Antonio Costa for support, as he will take over as President of the European Council, chairing the quarterly meetings of the 27 member-state leaders. 

China expects consistency in the Commission-driven China policy with economic security and de-risking as key pillars, but it also foresees some marginal changes. President von der Leyen will not enjoy automatic support of her China agenda from French President Emmanuel Macron and German Chancellor Olaf Scholz who are in weak positions at home. Beijing also expects von der Leyen to adjust her China policy should Trump return to power – also after criticism of her pro-US stance during the European elections. A tougher approach may be expected. Kallas will support von der Leyen in standing up to China, notably in the context of the war in Ukraine. Beijing believes her tough stance on Russia will make solutions even more difficult. Kallas is expected to double down on curtailing China’s support to Russia’s war efforts. 

Antonio Costa is Beijing’s only card. The China Chamber of Commerce to the EU has depicted Costa as the man who welcomed Chinese investment in Portugal when it was greatly needed, and he has a very good track record in Portugal-China relations. Beijing remembers Costa’s opposition at the June 2017 European Council to a European Foreign Direct Investment screening mechanism. 

The rise of the extreme right reveals a European disconnect

The unprecedented far-right shift across Europe shaped the new European Parliament, resulting from several crises. China is not displeased to see fragmentation and division across Europe, especially over values and ideology, which fuels its narrative of the West in decline. However, a Europe that turns inward will certainly be more difficult to navigate.  

As China sees it, European elites have become disconnected from the public. Liu Lirong, associate professor at the Institute of International Studies, Fudan University, says the EU policy-making system is no longer transparent and lacks legitimacy. In short, “the European public lacks trust in EU politics.” Confrontation in European society is intensifying and, with it, the level of violence. For Liu, this is also driven by fake news and manipulation on social media. Reporting on migration fuels populism and creates the impression of intense political division. 

China sees European divisions over values and ideology as evidence of weakness. In describing Hungary’s Presidency, Chinese media often refers to the government as “non-mainstream” due to its different views on Russia and divergence from common European values. By taking very similar stances on Russia’s war in Ukraine and the Israeli-Palestinian conflict, traditional European political parties have narrowed voters’ choices and ceded space to the far right. 

European countries also differ in their responses to the rise of extremism. Liu says Germany, for example, does not listen to public opinion and rising calls for change. He has a similar critique of France, which, despite parliamentary elections, will see no change in government. Still, the Chinese leadership and think-tankers now acknowledge that the rise of right-wing populism is bad news for Europe’s trade and economic agenda. 

For China, the change in EU leadership, in several member states, the UK, and NATO are increasing anxiety and will likely make Europe even warier of China. The topic of  “anxiety” in the Chinese press and think tank reports on Europe reflects the fragmented political landscape, the disconnect between the people and the elite, and the failure of Europe’s leadership to deliver on digitalization, climate and decarbonization goals, and competitiveness. Beijing has closely followed the EU’s work on competitiveness. What is at stake is of course whether Beijing will continue to enjoy a very open European market, how Europe and the US can work together, and how competitive European companies can become.