The European Union’s Intricate Relationship with China

The United States is the European Union's (EU) closest defense ally and partner, and relations between the two have been further cemented through their united support for Ukraine against the Russian invasion. At the same time, economic ties between the EU and China have continued to grow, even during the pandemic years. In 2022, the trade volume between the EU and China reached a whooping €856.3 billion. Discussions within the EU continue to be rife as the bloc and its key member states revaluate their relations with China amidst the rising tensions and strategic rivalry between the United States and China. How should the EU position itself, and does the EU have a grand strategy to determine its role in an increasingly complex and contested world?

Introduction

De-risking and not decoupling—this is how the President of the European Commission, Ursula von der Leyen, sees the EU's economic relations with China. While on the strategic front, French President Emmanuel Macron has been a steadfast advocate for the EU's strategic autonomy and the idea of a unified defense system in an increasingly complex and contested world, Macron was at the same time feted by President Xi Jinping and received enthusiastic welcome from the students at Sun Yat-Sen University on his first official visit to China following the pandemic.

Since China lifted its COVID-19 restrictions at the end of 2022, there has been a flurry of visits from various other European leaders as well. Most importantly, German Chancellor Olaf Scholz led the pack with his 24-hour trip to China in November. Scholz's visit came at a time when Europe was witnessing a strong call for a fundamental rethinking of its engagement with China amidst the war in Ukraine and the increasing autocratic turn and assertiveness in Chinese foreign policy. For example, German Foreign Minister Annalena Baerbock and Economic Minister Robert Habeck, both from the Green Party, were in the midst of drafting a new China strategy paper arguing for a "tougher" stance towards China.

Critics also objected to Scholz's visit on economic grounds. They saw his visit to China, accompanied by a business delegation of German CEOs, as a continuation of what they consider the questionable "Wende durch Handel" (change through trade) policy. This policy, pursued during Angela Merkel's chancellery, was based on the belief that close economic ties with China could influence the latter to become more liberal and democratic. Others, however, viewed Scholz's visit as a pragmatic move to signal the importance of China as an economic partner to Europe. China is Germany's largest trading partner, and it is not in Germany's interest to follow the US intention to decouple from China. Decoupling would result in significant economic disruptions, as Germany is also heavily invested in China. The strategy that the EU and Germany favored is de-risking, which involves reducing dependence on China in critical sectors and consciously diversifying production to other economic partners.

The flurry of visits from European leaders, which also included Spanish leader Pedro Sanchez, reflected the EU's anxieties over its own economic future and the importance of China in shaping the EU's economic fortunes. Another recurring theme throughout these visits is determining the extent of China's support for Russia. Couched in the diplomatic language of encouraging China to use its P5 status to play a more constructive role in resolving the war in Ukraine, the European leaders with varying degrees of directness wanted the Chinese to understand how Chinese support for Russia could complicate EU-China relations.

From the outside, we get a glimpse of the EU's thinking and outlook on its relationship with Beijing. But what is the EU's grand strategy, and how will it navigate the increasingly tense and all-out strategic competition between the United States and China?

The EU's Grand Strategy, or is There One?

The 2003 European Security Strategy (ESS) marked the first attempt by the EU to think strategically about its role as an international actor contributing to global security. Europe saw itself in an ideal position: "prosperous, secure and free" and "ready to share in the responsibility for global security and in building a better world." One of the key tenets of the EU's grand strategy in the ESS was to work with partners towards "effective multilateralism" to address threats from failed states, proliferation of weapons for mass destruction, and international terrorism. EU actions were directed towards shaping norms and rules on the international stage. Twenty years on, the European strategic landscape is vastly different. The EU is now facing a grinding brutal war on the European continent and has to contend with an increasingly belligerent Russia. Globally, the strategic rivalry between the United S and China is creating unprecedented challenges. The United States remains the EU's most important strategic ally and partner, while China is the EU's most consequential economic partner. To navigate all these challenges effectively, the EU must rethink its priorities and approach towards the outside world.

In 2019, the EU came to the assessment that China is not just a partner but also a competitor—especially in the areas of technologies—, and increasingly a systemic rival. China's close relations with Russia in the aftermath of the invasion of Ukraine and the US framing of the war as one between democracies and autocracies has led many EU member states to envision China primarily as a systemic rival. The EU's overreliance on the United States and the US-led NATO to confront the Russian threat has led some to question if the EU has completely lost its own strategic autonomy and come dangerously close to become an American vassal.

Yet, the recent visits to China by key EU leaders points to the EU's ongoing struggle to come to its own middle path in navigating the intensifying great power competition. As the world moved from a short period of unipolarity to a new era of multipolarity, the EU has continued to struggle to consolidate its position as a pole amidst this emerging global landscape.

Macron stressed the importance of the EU forging its own strategic independence and distancing itself from brewing tensions between the United States and China over Taiwan. His remarks may have sparked controversy, but they are a starting point for the EU to seriously re-examine its role as a global actor, what it stands for, and how it can work with partners to rebuild trust, promote stability and development, and cooperatively address common challenges.

From Unipolarity to Multipolarity to Multilateralism

In approaching its relations with China and the United States in the context of the strategic rivalry between the two, the EU needs to decide for itself whether it is in its strategic interest to stand resolutely with the United States and help maintain American primacy (and in the minds of some Europeans, Western primacy) or whether it is time for the Europeans to truly embrace a diverse, complex world in which rules and principles can be made, understandably with great difficulties and need for compromises, to support the idea of peaceful coexistence wherein no one actor is clearly supreme and should be bound to the rules that have been made.

The EU has always emphasized "effective multilateralism" as its approach to global relations. If the Union is indeed genuine to the maxim that multilateralism is in its DNA, it should clearly be in its interest to opt for the latter path. And it is only in placing itself squarely in the pursuit of multilateral peaceful coexistence that the EU can work with a range of diverse partners in the Indo-Pacific, from ASEAN to Japan and India, and other key actors in the Global South. Such collaboration could help decrease tensions between the United States and China and find a path to sustainable peace. Given the EU's strength as one of the largest trading and economic blocs (accounting for almost 16 percent of global trade and 15 percent of global GDP), it is in the strategic interest of the Union to continue its pursuit of open, free, and fair trade as a path of global development and a conduit for greater collaboration on various challenges. With this in mind, the EU should embark on a calibrated engagement with both China and the United States—ready to push back on China's unfair and unsustainable trade practices and unwanted US securitization of anything and everything with China. The EU should use its market power to thoughtful strategic effect and intensify engagement with other middle powers to ensure that the fate of the world is not determined by an over-the-top rivalry between the United States and China.

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Dr. Yeo Lay Hwee is the director of the European Union Centre in Singapore, senior fellow at the Singapore Institute of International Affairs and adjunct senior fellow at the S Rajaratnam School of International Studies.

Image Credits: Flickr | Friends of Europe