Finding the right balance: EU-China relations after Covid-19

Niccolo Fantini // 8 October 2020

The virtual meeting between top-level EU and Chinese officials on 14 September appears to be an ironic metaphor of the increasing distance in the relationship. The online meeting replaced the much-anticipated Leipzig Summit, which aimed to further integrate two key economies in the world.  With coronavirus hitting hard and the heightening of US-China tensions, enthusiasm for additional integration with China is quickly waning in Europe as it has been elsewhere. In its dealings with China, we can trace a new course in EU foreign relations that steps up confrontation through a more united front and embraces scepticism and criticism of Chinese practices. The way ahead should be a unified Europe calling out China on specific topics of core EU interest, such as clear human right violations and security concerns, while at the same time avoiding costly barriers to valuable Chinese investment. The goal: to play China’s outward liberal rhetoric’ in Europe’s favour and use it to push Chinese domestic reform.

The coronavirus pandemic has fuelled anti-China sentiments, a trend that has only reinforced political scepticism towards the aims of the CCP. US Secretary of State Mike Pompeo recently toured Eastern Europe to find support in his crusade against ‘anti-democratic’ forces, fuelling ideas about a new Cold War and the risks of economic integration with China. President Macron expressed his frustration at China’s recent practices when, at the height of the health crisis in April, he rebuked a Chinese diplomat’s criticism of France’s response by claiming it was ‘naive’ to think China did a good job with Covid-19.  In Berlin, the tone was fraught when the German Foreign Minister challenged Chinese Foreign Minister Wang Yi on China’s ‘threat-strategy’.

These tensions clearly became visible during the recent summit, where the EU demanded a thorough revision of Chinese structural barriers to EU investment, with Commissioner von der Leyen asking whether the Chinese were actually looking for a worthy investment deal. More importantly, however, there was a blunt and frank mention of China’s recent human right abuses, starting from Hong Kong all the way to Tibet.  This is where tensions are most likely to erupt in the future, with President Xi once again criticising ‘foreign instructors’ who lecture China on human rights and apply ‘double standards’.

While Chinese leaders and diplomats used to come to  Europe expecting to find generous offers of cooperation and integration, they may now be leaving increasingly disappointed. Nevertheless, the picture is quite mixed. Greece, for instance, recently signed off a hallmark cooperation agreement with China to develop its Piraeus port, while only last year Italy decided to join Beijing’s ‘Belt and Road Initiative’ with a deal worth at least €7 billion. While Chinese FDI has hit low levels in the UK, Germany and France, they have taken off in other member-states.

EU foreign policy seems to be led by Germany, with Merkel invoking the slogan ‘making Europe strong together’ as a rally for the German EU Presidency. Indeed, one of the current Commission’s priorities is a stronger Europe in the world, which would be achieved by the unity of all members. Amidst increasingly turbid international waters, this seems a valid goal – albeit difficult to achieve –and may not be desirable from an economic standpoint. When it comes to China, steering towards more confrontational discourse may trigger hardened stances that could slow down progress on market integration and beneficial investment flows, especially in the wake of what some call a new ‘Cold War’. With several member-states still deeply enmeshed in Chinese economic networks, a more flexible strategy would be more beneficial than an EU policy stance dictated by qualified-majority voting. This approach would enable single states, and especially individual actors, to design their special economic relationship with China, while at the same time adhering to common European standards aimed at avoiding negative impacts on security and fundamental values.

In short, Europe may offer a viable, liberal alternative to Trump’s withdrawal-oriented approach in regards to China. Instead of pushing for a unified but ineffective and potentially economically harmful strategy, however, the EU should grant more flexibility to member states and civil society when building economic ties to China. At the same time, this decentralised strategy should be embedded in unified European standards and bottom lines on issues such as human rights and reform conditionalities.

EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).


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