How Xi’s visit exposed the split in Europe over China

For the EU, divisions between countries in western Europe and central and eastern nations present a strategic dilemma and a threat to the economic union
For China, it’s now clear which states it can draw upon in its grand strategy to reassert global power

Abishur Prakash

Published: 8:30pm, 15 May 2024

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On the first day of President Xi Jinping’s state visit to France, European Commission President Ursula von der Leyen made a bold statement after meeting Xi and French President Emmanuel Macron. She warned that unless China changed its stance on trade – that is, by becoming fairer and keeping its economy open – the European Union would begin using a full spectrum of “trade defence instruments”.

Put differently, she was warning of trade retaliation unless China adopted a new approach to its exports and imports. It was a curveball for France and China, and a sign of how different Europe had become, as Xi returned after five years.

In western Europe, the optimism that once surrounded a state visit by a Chinese leader has all but faded. Conversations about cooperation or development have turned into whispers amid a growing sense of friction, distrust and unshakeable divergence.

But in central and eastern Europe, China is experiencing something quite different. Hungary and Serbia are standing closer with China, creating a new dynamic in Europe where the west and east are moving in opposite directions, reminiscent of the Cold War.

One of the clearest signs was the new partnership between Serbia and China for a “shared future”. From July, their trade deal will take effect with about 95 per cent of Serbian exports to China becoming tariff-free in a decade. The impact of the alliance is clear from Serbian President Aleksandar Vucic’s remarks that the trade deal would “guarantee a future” for Serbia.

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Serbia’s future now hinges on a closer, deeper relationship with China, not the West.

In the eyes of Serbia, the road to growth and prosperity goes through Beijing, not Washington or Brussels. This is a huge boost for China. A new cohort of countries is aligning around the world’s second largest economy.

But for the European Union, Serbia’s reorientation presents a strategic dilemma. Von der Leyen has been pushing for EU enlargement, focusing on drawing in the Balkans, which include Serbia. Is this still possible as Belgrade moves closer to the east?

In France, the new dynamic was also on display, but in a different way.

In his meeting with Macron, Xi urged support in avoiding a “new cold war”. After two days of pleasantries, including a trip to the mountains, the outcome of Xi’s visit to France was more gridlock. This was unexpected, considering France has been banging the drum for European sovereignty, and not being a vassal of the United States, for some time.

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From the outset, it seemed the door was wide open for China to make huge gains. However, with western Europe, Xi is seeing hesitation and paralysis in how far nations want to go with China. German Chancellor Olaf Scholz’s visit to China last month has largely been seen as a geopolitical stalemate.

The elephant in the room is the US. The US-led order, built on the transatlantic alliance, while being squeezed, remains intact.

This means that, when Xi returned to China, there would have been two Europes in his mind: one aligned with the US, the other with China. This is a massive change from five years ago, when there was one Europe.

For China, this represents a huge opportunity but with a limited runway. The gems in Europe are the large economies. But if these are off-limits to China and its investments are confined to the smaller economies in Eastern Europe, its strategy would have to be quite different.

Is Beijing aware of this? Perhaps. That is why Hungary, the last stop on Xi’s tour, is pivotal. The massive investments by Chinese battery giant Contemporary Amperex Technology (CATL) and carmaker BYD represent a Chinese green strategy. Through green exports, China can tap both sides of Europe, using one for manufacturing and the other for sales. Soon, the EU could be dominated by a Chinese green industry from within the bloc.

For the EU, and the collective West, the new sources of divergence are not just immigration or Ukraine, but also China. The China question will play a far greater role than any other issue, affecting the very stability and future of nations. The EU is being forced to keep members in check regarding China, or risk the economic union breaking into pro-US and pro-China tribes.

Almost five years ago, when Xi visited Europe, it was all smiles and roses. Italy became the first developed nation to join the Belt and Road Initiative, Greece positioned itself as a logistical hub between Asia and Europe, and France inked a deal to sell 300 Airbus planes to China. All of Europe was open to China, even amid pressure from the US.

But fast-forward five years, and in the post-pandemic world, with wars raging in Europe and the Middle East, the Chinese are witnessing a fracturing in the European landscape. The openness towards China, once championed by Brussels, is shifting eastward. As countries like Serbia and Hungary look forward to greater cooperation with China, others like France and Germany are setting limits.

For China, the stakes could not be higher. In Serbia, Xi said: “We shall jointly confront hegemony and the politics of power.” For China, its new alliances will be instrumental in taking on the United States.

Xi’s trip to Europe, with visits to France, Serbia and Hungary, was about two aspects. First, seeing which doors are open and which are locked shut, something only a head of state can accurately gauge. And second, it was about drawing in nations, and using them as part of a grand strategy, as China seeks to reassert its power on the world stage.

Abishur Prakash is the founder of The Geopolitical Business, an advisory firm in Toronto