EU Leadership Faces Urgent Need to Reassess China Strategy

On July 18, Ursula von der Leyen was re-elected as president of the European Commission, following the re-election of Roberta Metsola as president of the European Parliament. While these two top leaders have retained their positions for the second time, former Portuguese Prime Minister António Costa is set to replace Charles Michel as the European Council president. 

A staunch critic of Russia and a vocal supporter of Ukraine, Estonian Prime Minister Kaja Kallas will take over as the high representative of the European Union for Foreign Affairs and Security Policy, replacing Josep Borrell. This denotes both continuity and change in the European Union leadership. 

As the EU leadership gears up for a new term underscored by transitions at the Council and Foreign office, they are likely to show exactly these trends – continuity and change – in their engagement with the world, particularly the Indo-Pacific region.

The EU’s steadfast and long-standing commitment to the liberal international order, and adherence to multilateralism, democracy, and human rights, have established it as a major normative force in the Indo-Pacific region. This has been manifested in the EU’s Indo-Pacific strategy, the Global Gateway initiative, support for climate change initiatives, and a range of developmental initiatives taken in the region including Cambodia, Laos, Timor-Leste, and Vietnam. Elsewhere, in major Global South regions, particularly Africa, the EU has made significant strides in working with partners to foster development, progress, and peace.

While this continuity in the EU approach is commendable, expeditious course correction in some of its policies is also needed.

First and foremost is the EU’s China dilemma. EU has famously termed China as “a partner for cooperation, an economic competitor and a systemic rival.” However, since the iteration of the term, substantive changes have occurred in global politics. From the COVID-19 pandemic and Russian invasion of Ukraine to China’s increasingly assertive postures in the South China Sea and Taiwan Straits, and its economic coercion of European countries, China has showcased itself as more of a systemic rival and a fierce competitor of the EU than a collaborator. China’s diplomatic and economic support to Russia in withstanding the EU sanctions indicates its stand on the issue and puts the EU strategy on China in question. These developments prove beyond doubt that China stands on the opposite side on a diverse range of issues that form the core of EU norms and values and has benefitted from a West-espoused rules-based liberal international order without offering much in return.

Conflicting norms and values between the EU and China have only been exacerbated with the ongoing war in Ukraine and the looming South China Sea and Taiwan crises, bringing the EU to a crossroads where it must balance its diplomatic and economic engagements with China with its founding principles and international role. 

Recent developments in China-Europe ties have not been encouraging. Chinese President Xi Jinping’s state visit to France, Serbia and Hungary – his first trip to Europe in five years – demonstrated the EU’s (particularly France’s) inability to put pressure on China concerning trade imbalances with the EU (with a $291 billion deficit in favor of China in 2023) or influencing Russia to end the war in Ukraine.  

Meanwhile, German Chancellor Olaf Scholz’s May 2024 trip to China indicated his willingness to disregard Beijing’s human rights record and strong military postures in favor of economic gains, drawing flak from the international community. Scholz was expected to raise issues about human rights with China as the Chinese government’s human rights approach has become dramatically more repressive since Xi Jinping assumed leadership in 2013. 

Berlin-Beijing relations have been complicated. Germany acknowledges China as a security concern and geopolitical competitor it should de-risk from. Instead of promoting China-German relations in line with the EU’s policy by championing respect for human rights and internationally recognized rules and norms, Scholz has opted for a don’t-rock-the-boat approach that would neither benefit Germany’s long-term interests nor help protect the basic human rights of Chinese citizens. 

The ambivalent attitudes of both France and Germany concerning China only indicates their short-sightedness in dealing with China – a flaw that must be intercepted and rectified by the EU.

China is also mindful of the internal divisions within the EU with regard to Russia. China’s focus on countries such as Serbia, Hungary, and others is a part of an attempt to strengthen ties with pro-Russia countries that are also recipients of major Chinese investments. Xi aspires to demonstrate China’s continued influence in Central and Eastern Europe, despite the growing number of countries leaving the Beijing-led cooperation initiative between China and Central and Eastern Europe. Beijing is trying to revitalize its infrastructure ambitions in Europe, with the Belgrade-Budapest Railway poised to become an important part of China’s Europe outreach.

In a recent telling example, China tried to exert undue pressure on lawmakers from Bosnia and Herzegovina, North Macedonia, and Slovakia (along with countries in South America and Asia) to keep them from attending the Inter-Parliamentary Alliance on China (IPAC) Summit, which was held in Taiwan in July. The EU leadership must find ways and means to ensure that diverse views on China and international affairs within Europe are not used to its disadvantage.

Tensions are high between China and Europe in the economic domain, as the EU is now scrutinizing Chinese investment in the continent, and the European Commission has been launching a series of trade investigations that could eventually lead to sanctions on China’s clean tech exports. 

On July 4, the European Commission imposed provisional countervailing duties on imports of battery electric vehicles (BEVs) from China, concluding that the “BEV value chain in China benefits from unfair subsidization, which is causing a threat of economic injury to EU BEV producers.” The EU has also escalated its inspection of many Chinese enterprises, reinforcing safety regulations against Chinese apparel retailer Shein and initiating formal investigations against TikTok under the Digital Services Act. The EU is also investigating alleged barriers to access in China’s medical device market. 

Amid these developments, China has started scrutinizing whether the EU uses “unfair” non-tariff barriers to control Chinese exports to the region, warning that the EU’s actions over electric vehicle tariffs would lead to a “trade war” between China and the EU.

Despite trade frictions, Russia’s invasion of Ukraine in February 2022 is arguably one of the primary factors responsible for EU’s straining ties with China. China has repeatedly declared itself a neutral party in the ongoing conflict. Despite EU protests, China’s regular high-profile diplomatic engagements with Russia demonstrate Beijing’s interests and affinity toward Russia. While China’s support to Russia is tactical and driven by economic and military self-interest, the war’s long-term impact and China’s temptation to replicate the Ukraine episode in its neighborhood cannot be overlooked.

The EU’s current China policy has had definite short-term gains, but engaging deeply with China for trade and investment might lead the EU into what may be termed a “Russia 2.0” situation. The EU’s resources are draining in supporting Ukraine’s fight against Russia, leading to increased reliance on China – a precarious situation. De-risking not only with Russia but also with China, thus, is the best approach. 

To be fair to the EU, it is cognizant of these issues. In her March 30 China policy speech in Brussels, von der Leyen termed China-EU relations “unbalanced” and “increasingly affected by distortions created by China’s state capitalist system.” She also called for the relations to be “rebalanced based on transparency, predictability, and reciprocity.” The EU approach to the economic security proposal announced in June 2024 also aims to review the challenges the EU faces at the hands of unfair Chinese practices. It remains to be seen how the EU deals with internal and external challenges that China has been posing.

The EU is also wary of the swiftly unfolding geopolitical developments in the Taiwan Straits. For instance, in her electoral manifesto, von der Leyen took a firm stand on China’s assertive and provocative actions toward Taiwan, calling for “collective efforts to deploy the full range of combined statecraft to deter China from unilaterally changing the status quo by military means, particularly over Taiwan.” 

Indeed, Taiwan is in a difficult situation in dealing with a belligerent China and needs unequivocal support from the EU, the United States, and other major stakeholders in the region. To prevent a Ukraine-like situation in the Taiwan Straits, timely, credible, multi-stakeholder, and long-term diplomatic and military deterrence must be built to support Taiwan. The new leadership of the EU could contribute a lot in that regard.

The EU must preserve its role as a champion of global norms, preserving and protecting a rules-based liberal international order based on principles of democracy, justice, human rights, and rule of law. The prevailing circumstances demand a more coherent, perceptive, systemic, long-term, and rules-based EU approach to China that can effectively handle the looming China challenge before it’s too late.