China’s European charm offensive faces hurdles of domestic politics, trade issues

China is starting its latest effort to drive a wedge between the US and Europe, but it is unlikely to change fundamental differences that impede warmer ties
Europe wants greater access to China’s markets, but domestic political concerns could keep European leaders from appearing too friendly with Beijing

James David Spellman

Published: 1:00am, 5 Apr 2023

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The trip to Europe in April by China’s trade emissary is the latest in a frenzy of overtures by high-level Chinese officials to drive a wedge between the United States and European Union while leveraging divisions within Europe over an engagement strategy – “de-risk” but not “decouple” – with China that promotes economic growth as recession looms.

Commerce Minister Wang Wentao will follow the week-long tour in February by China’s top diplomat, Wang Yi, whose major speech then was an attempt to deepen the Washington-Brussels divide developing over semiconductor trade and investment policies. Wang called Europeans “friends” while mocking Washington’s “hysterical” reaction to Chinese balloons over US airspace.

Less US influence over its allies would be a geopolitical victory in China’s eyes. Towards this end, China’s new ambassador to the European Union, Fu Cong, has been actively courting European governments since his appointment in December. Low-profile discussions are also under way on numerous issues.

Meanwhile, Europe’s leaders have been busy shuttling to China. German Chancellor Olaf Scholz reopened high-level exchanges with China by visiting Beijing in November to meet President Xi Jinping. Before his trip, Scholz cleared a Chinese shipping company’s stake in Germany’s busiest port at Hamburg.

Berlin cannot afford to cut ties with its third-largest export market. China has also been a back-door supplier of gas to Europe since Russia sharply cut supplies, and Germany was heavily dependent on the Nord Stream pipeline.

Ursula von der Leyen, president of the European Commission, is travelling to China this week with French President Emmanuel Macron. Her speech before departing was scathing in suggesting that the EU-China Comprehensive Agreement on Investment – which was agreed in 2020 but has stalled in the European Parliament – could implode.

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Russia-Ukraine war discussed in Chinese and EU leaders’ meeting amid rising tensions

However, her tone eased quickly with her parting words, praising China as “a fascinating and complex mix of history, progress and challenges” and emphasising that the EU’s posture “need not be a defensive one”. She demonstrates the contradictions in Europe’s recalibration.

These charm offensives will not change fundamental differences between the two sides, though. Europe has linked any progress on trade with China’s stance towards Russian President Vladimir Putin in ending the war in Ukraine and ensuring Ukraine’s sovereignty. There is little belief that Xi is a credible peacemaker between Moscow and Kyiv. The recent summit between China and Russia highlighted their deepening commercial ties and underscored Putin’s uncomfortable dependence on Xi.

There cannot be a third way. While Europe can change its relations with China around the edges to suit its needs, weakening its alliance with the US on core issues is non-negotiable. The war in Ukraine has reinvigorated US-Europe defence ties, especially in protecting countries west of Ukraine from Russian incursions. The US might give Europe some leeway on technology deals with China, but US President Joe Biden has drawn a clear line. Europe doesn’t want to risk the consequences if it strays too far.

Realism and pragmatism are common threads in prevailing European views of foreign policy. Europe does want to expand access to China’s markets, especially now as aggressive increases in interest rates by central banks weaken economic outlooks and domestic political challenges force some leaders to prevent job losses from being another cause of unrest. Europe has critical dependencies with China, such as importing 98 per cent of its rare earth metals.

A visitor takes photos of a live stream showing a train departing from Yiwu West Railway Station in China, in Madrid on March 9. A train loaded with 70 containers of Spanish goods also departed from Madrid and headed for Yiwu, marking the 50th anniversary of diplomatic relations between China and Spain. Photo: Xinhua

But few still think China will “change through trade”, with some, such as Dutch foreign minister Wopke Hoekstra, deriding the idea as naive. Europeans appear to want a recalibration of their ties with China, but there isn’t agreement among the 27 EU members on the parameters of what a new EU-China policy would be.

Part of the challenge comes from internal struggles within EU countries. Last year was a good one for the far right in Europe, having secured power in Italy, Sweden, Poland and Hungary. The continued rise of the far right will influence Europe-China relations as Europeans’ views of China are generally poor. Leaders have to be cautious of political backlash if they are perceived as too recalcitrant, with Scholz suffering a hailstorm of criticism after clearing the port deal.

Another complication is, as Scholz demonstrated, Europe’s leaders want bilateral ties with Beijing. They are under tremendous pressure from domestic companies to sell more goods and services to China.

Marginal deals could come since China’s anxiousness to jump-start its economy is evident. Signs suggest the recovery might not be as robust as initially believed, which would mean the inevitable slowdown after the jump-start could be worse and longer-lasting than initially thought after the zero-Covid policy was lifted last December.

Why did Beijing set a moderate target for China’s GDP in 2023?

Apple and other manufacturers have rushed to diversify production outside China. Foreign direct investment in China has dropped sharply in the past decade, according to the Rhodium Group. What investment there is from Europe is highly concentrated among just four German manufacturers.

Above all, both China and Europe want to be perceived as tough against their adversaries. Von der Leyen says Europe must be vigilant because Beijing is becoming “more repressive at home and more assertive abroad”. Xi wants to make China great again. It is hard for titans to negotiate around these motivations.

Ahead is an elaborate choreography of diplomatic manoeuvres and rhetoric. It is likely that the words will be less like those common on a battlefield and more like those of lawyers, with limited progress to grow both economies and weather a volatile global economy on the brink of contraction if monetary policies tighten further.

James David Spellman is principal of Strategic Communications LLC, a consulting firm based in Washington, DC