China and the EU-US rift + Economic security + Car imports from China

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

• China sees EU-US rift as an opening for EU re-engagement – on its own terms
• Commission gets bold on economic security
• Soapbox-MERICS Data Highlight: EV and hybrid car imports to the EU from China

China sees EU-US rift as an opening for EU re-engagement – on its own terms

By Grzegorz Stec

Chinese think tanks and policy commentators have described tensions over Greenland as a radical stress test of the transatlantic security bargain and a pivotal moment for the EU’s strategic autonomy in both security and economic terms – one that may augur an opening of EU-China relations. But some would like the EU to pay a price for the privilege: the abandonment or scaling down of its de-risking policy. 

In many ways, their assessment is a logical extension of a long-held Chinese view: Washington is increasingly pursuing “predatory hegemony” and routinely pressures Europe to do its bidding. This is seen as a key factor shaping Europe’s China policy. As transatlantic relations crumble, many experts believe, Europe will be more inclined to diversify away from the US and reinvigorate economic ties with China.

Europe’s predicament from China’s perspective

The EU’s reluctant but apparent readiness to stand up to Washington on Greenland and potentially deploy the Anti-Coercion Instrument seems to have caught the Chinese experts partially by surprise, prompting comments about European countries “repositioning their role in the competition of great powers.”

But the overall dependence argument will likely continue to shape Chinese expectations that Europe’s room for geopolitical maneuver will remain narrow and malleable. Many point out that the EU’s ambition for strategic autonomy – which continues to be discussed in China almost exclusively as autonomy from the US -and geopolitical agency continues to be constrained by overdependence on the US in the areas of security, tech and the economy. For instance, Zhang Jian (Vice-President of CICIR) assessed that so far the EU “dares not to speak up,” even in the face of “the US’ highly rough and humiliating treatment.”

But some, like He Zhigao (Researcher at the Institute of European Studies, Chinese Academy of Social Sciences) argue that the EU should know by now that it is useless to try to “curry favor with the Trump administration by sacrificing interests in relations with China,” a likely reference to Brussels’ attempts to cooperate with Washington for instance on rare-earths dependencies throughout last year. Because US pressures on Europe have continued unabated despite its continued outreach to the US President, there is then supposedly little to lose in engaging Beijing (though this may later be reassessed in view of Washington’s pressure on Canada over its re-engagement with China).

Consequently, they believe the EU may now be open to intensifying engagement with China. As Cui Hongjian (Professor at Beijing Foreign Studies University and long time Europe observer) puts it, transatlantic fracture and American “resource imperialism” that was visible over the Greenland question means that the EU and China could cooperate on rebuking the US by “jointly advancing the green transition and achieving resource independence, and jointly resisting hegemony in the resource domain.” Similar proposals tend to overlook the significant trust gap that persists in EU-China relations.

Re-engagement and abandoning de-risking

Several Chinese experts point to the economy-focused re-engagement between China and Canada and China and South Korea in recent weeks as an example of how Trump’s volatility could facilitate a shift in EU-China relations.

French President Emmanuel Macron’s statement at the World Economic Forum in January in Davos are another case in point: “China is welcome, but what we need is more Chinese foreign direct investments in Europe, in some key sectors, to contribute to our growth, to transfer some technologies, and not just to export towards Europe.” This came on top of his calls to rebalance trade relations during his visit to China in December, one of several high-profile China trips by European leaders in the recent weeks.

However, implied in the analyses, op-eds and media interviews of most of the Chinese experts is that such a re-engagement should have a price tag. The prescription in the Chinese debate is that a reset requires Europe to loosen or abandon de-risking.

China has routinely criticized the policy, which aims to make the EU less vulnerable to economic dependencies and national security risks stemming from China. The Chinese experts tend to portray de-risking as an illogical over-securitization that harms Europe’s competitiveness, raises costs, and slows the green and digital transitions by forcing the replacement of cost-effective Chinese products in European supply chains. Chinese nationalistic media’s English-language Global Times concluded in an editorial that “what European policymakers call ‘de-risk’ has devolved into ‘de-development’” and that is a policy that “Brussels is gradually tightening under pressure from the US”.