EU’s China policy needs a revamp, but there’s no one-size-fits all solution

Policy divisions among EU institutions as well as member states, and intensifying US-China rivalry, complicate the bloc’s China policy
The EU must get agreement on a unified China strategy among its member states, focusing on economics and trade, but avoid systemic decoupling and steer clear of politics

James F. Downes

Published: 10:30pm, 17 Aug 2023

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The European Union’s current China strategy is not working well. The main bumps in the road arguably lie at the EU’s own door. The EU has 27 member states, with many of them holding different positions towards China.

The EU’s complex multilevel governance structure often makes it difficult for the bloc’s institutions and member states to achieve a policy consensus on key issues, alongside being effective in areas related to global governance on the international stage. These same structural problems shed light on why the EU’s China policy is not currently working.

The first main bump in the road for the EU’s China policy is the fact that the EU has often had to issue multiple directives and new policies. One effect of this has been to cause confusion among different EU member states.

Most troubling is the EU’s Global Gateway programme. This flagship policy was launched in late 2021 and has been seen as a direct policy response of the EU to the economic threat posed by China’s Belt and Road Initiative. However, it is not clear how economically significant the EU’s programme is, particularly as there has been little mention of it over the last year in official EU policy speeches.

Furthermore, the economic funding of the plan is uncertain. It is also still not clear where the full funding will come from and to what extent the Global Gateway can rival the economic dominance of the Belt and Road Initiative.

There have also been policy divisions within the EU. There are clear differences between the different parties on the EU’s China policy, such as over the Comprehensive Agreement on Investment, stalled since 2021.

The EU Council President Charles Michel reportedly wants to revive the deal, but the EU Commission headed by Ursula von der Leyen has adopted a more “hawkish” approach towards China recently. Meanwhile, French President Emmanuel Macron has taken a more “dovish” stance on China. These differences of opinion have led to institutional chaos inside the EU.

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The second main bump for the EU’s China policy lies at the member state level, with many of the EU’s member states holding contrasting attitudes towards the EU’s economic relationship with China. The EU’s two biggest economies, Germany and France have sought to adopt more positive economic relations with China, particularly with a focus on the commercial side. Countries such as Lithuania, the Czech Republic and Poland have pushed for a more confrontational EU policy, due to political reasons.

In recent times, Italy has performed a complete flip-flop on its membership of the Belt and Road Initiative, with the right-wing coalition government under Prime Minister Giorgia Meloni seeking to end her country’s participation in the initiative. Other countries, such as Hungary and Greece, have sought to maintain economic cooperation with Beijing.

Due to the EU’s complex multi-governance structure, Beijing has often struggled to know which actors and individual member states it should strategically deal with.

Should Beijing deal with the EU Commission, the bloc’s executive arm, the EU Council comprising representatives of the 27 member states, the high representative of the European Union for foreign affairs and security, or individual EU member states? This has been unclear. Often, it has been strategic for Beijing to deal with individual EU member states, such as on fostering closer economic ties, with countries such as Hungary of late.

China’s top diplomat Wang Yi meets Hungarian Minister of Foreign Affairs and Trade Peter Szijjarto in Beijing on May 15. Photo: Xinhua

Another key bump in the road is the growing strategic competition between the United States and China, which is shaping the EU’s own geopolitical calculations. The EU sees the emergence of a bipolar global order and wants to avoid taking sides in the context of the intensifying global rivalry. This all makes it very difficult for the EU to navigate relations with China and the US.

How can the EU formulate a clearer China policy? Simply put, there is no simple one-size-fits-all policy solution. What the EU can do going forward is to formulate a more unified China strategy among its member states. The EU should seek to focus solely on economics and trade, and to focus less on politically based issues inside China that are likely to increase the divide between both sides.

The EU needs to spell out more clearly how the Global Gateway programme will be financed. At the same time, it needs to tread carefully and avoid any systematic decoupling from China as this would be economically disastrous for the economies of many EU member states, especially in the aftermath of the Covid-19 pandemic.

The EU leadership team must be nimble and carefully navigate political risks around issues such as de-risking over the next year, alongside political uncertainties in the United States.

Unless there are policy changes inside the EU, there is likely to be a decline in its relations with China in the future. This means that it is even more important now for the EU to revise its current China strategy and focus more on economic partnerships with China, on areas such as combating climate change together, alongside trade.

Dr James F. Downes is head of the Politics and Public Administration Programme at Hong Kong Metropolitan University