As Europe’s energy crisis bites, is there potential for deepening collaboration with China?

Some analysts say Europe’s energy crisis and a grimmer economic outlook may leave it with no choice but to rely more on China

But Beijing’s zero-Covid policy and over-politicisation of economic affairs are pulling the continent in the opposite direction, others say

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An energy crisis in Europe may push it closer to China, which is the world leader in renewables development. Illustration: Perry Tse

Published: 12:00am, 27 Oct 2022Updated: 12:51am, 27 Oct 2022

As fears of a worsening energy crisis spread in Europe with the approach of winter, voices in China suggesting the country could become the continent’s “white knight” are growing louder.

Such talk has its roots in China’s long-time role as the world’s factory, with manufacturers in east coast provinces ramping up production of electric blankets, heaters and solar panels following an influx of orders from Europe.

Rarer moves from Chinese energy companies have since underscored the argument, with many reselling excess liquefied natural gas that they acquired under long-term contracts to European countries that are scrambling for fuel after Russia cut off supplies.

And while many energy-intensive firms in Europe have reduced or even halted production due to skyrocketing energy prices – since cheap Russian gas was key to their competitiveness – the high-profile inauguration of a landmark plant for German chemical giant BASF in Zhanjiang, Guangdong province, has further fuelled the discussion.

Although anti-China sentiment has been on the rise in Europe following Russia’s invasion of Ukraine and European politicians have been calling for the reduction of economic dependence on China, some analysts said the energy crisis and a grimmer economic outlook may leave European countries with no choice but to increase reliance on the world’s second-largest economy.

Zhang Zhiwei, chief economist at Pinpoint Asset Management, said increased investment by European companies seemed inevitable “as the costs of domestic production have been pushed up”.