Nata GARAKANIDZE^*

Abstract. The article analyzes the recent events related to the EU – China relations and discusses the prospects and challenges to their development. It is highlighted that there is mutual interest in continued cooperation between China and the EU states. Both sides recognize the importance of having each other as one of the main trade partners guaranteeing the access to large markets. However, there are number of events which create obstacles to the EU – China successful cooperation including the Chinese government’s economic policy aimed at closing the local markets for the Western companies while subsidizing the Chinese industries and creating unfair competition to the Western businesses, as well as the ongoing Ukrainian war and China’s position towards it (being officially neutral but greatly supporting the Russian economy). Moreover, there is a growing pressure on the EU from its closest ally – US, who has already acknowledged China as its main geopolitical and economic rival. Nevertheless, China would like to move the EU countries towards a more constructive position and less dependence on Washington. For this reason, Beijing prefers to deal with the Europeans at the level of nation states hoping that the US can impose less pressure on individual countries rather than the union of 27 states.

Keywords: EU, China, foreign policy, Russia – Ukraine war, trade

INTRODUCTION

In 2021, the EU signed the Comprehensive Agreement on Investment (CAI) with China hoping to deepen its economic ties with the Asian superpower. However, the Chinese problems with democracy, as well as Xi Jinping’s position towards the Russian-Ukrainian war has made it difficult for the EU to move forward with the Chinese investments in Europe. The CAI was eventually blocked by the European Parliament, and China became Russia’s unofficial ally in the Russia – Ukraine war. Despite these events, some of the European countries, including France and Germany, are still trying to keep the good relations with China hoping for the future improvements in politics and trade. This, in turn, goes in contrast with the interests of the EU’s closest Western ally – the US, who has already heated up its trade war with Beijing, acknowledging China as the main geopolitical rival.

This article discusses the recent events related to the EU – Chinese relations and tries to answer the main question: what are the prospects and challenges to the development of the EU – China cooperation? It is outlined that the EU states and China recognize the importance of having one another as one of the main trade partners guaranteeing access to large markets. However, there are number of factors that make the successful cooperation hard to achieve, including China’s internal economic policies, Beijing’s position towards the Russia – Ukraine war and growing US – pressure on the EU.

THE EU AND CHINA – FRIENDS OR FOES?

The spring of 2024 has been marked by the intensification of contacts between China and the European countries. At the end of March 2024, Prime Minister of the Netherlands Mark Rutte was hosted in Beijing. In mid-April, German Chancellor Olaf Scholz visited China and met with the Chinese leader Xi Jinping. And in early May, Xi Jinping himself visited Europe. He met with the French President and the Head of the European Commission in France. After that Xi Jinping visited Serbia and Hungary – two of the few allies of Russia in Europe.

 The mutual visits between Chinese and the European leaders are not just a coincidence. In recent years, China’s relations with the EU and individual European states have continued to deteriorate, which was partly caused by the growing pressure on Europe from Washington. The latter recognizes China as its most important geopolitical and economic rival. The “trade war” against China was initiated by the former US President – Donald Trump and was continued by his successor. The current President Joe Biden has recently launched a new round of restrictions against China raising tariffs on electric vehicles (worth of $18 billion) and other Chinese imports. Beijing threatened to respond in the similar manner (Kalmykov, 2024).

The US has been trying to persuade the Europeans to take the similar line towards China. In Europe, some states have tried to take a softer position, but they did not dare to completely contradict their major ally – the US. Instead of the American term “decoupling”, the EU has been using much softer expression – “de-risking” towards China since last year. However, its meaning is the same – moving away from depen-dence on China in sensitive areas while maintaining cooperation where it can be beneficial for Europe. As a result, today relations between most European countries and China are in a cooling phase.

Among the main economic accusations that EU leaders make against Beijing are the trade imbalance of over 290 billion euros (Eurostat, 2024), which they claim is caused by the exclusion of European goods from the Chinese market, and the Chinese government’s subsidization of the production of electric vehicles and other goods flooding European markets. In January 2024, the EU unveiled an updated Economic Security Strategy that officially emphasizes protecting critical European industries from investment control by China. In response to the EU’s threats to introduce even more restrictive rules against Chinese goods, the Chinese leader promised to take the similar measures. Xi Jinping always links China’s success in the manufacturing sector not with the state subsidies, but with the efficiency and competitiveness of Chinese products.

Worth noting that none of the EU documents has yet included any legally binding norms against China due to the reluctance of some of the EU member states to transfer even more powers to Brussels and to officially open the front of a trade war with China. Moreover, despite the existing problems, trade and economic ties remain extremely important for both sides. For example, in 2023, the EU remained one of the most important partners of Beijing. The EU ranked second in trade with China (13.5%) following the states of the Association of Southeast Asian Nations (ASEAN).

 China was also among the main trade partners of the EU in 2023:

The EU, as an united supranational actor, is the main economic partner of China. However, Beijing prefers to deal with the Europeans at the level of nation states hoping that the US can impose less pressure on individual countries rather than the union of 27 states (including the most pro-American Poland and the Baltic countries). Some of the European states still believe that the well-being of European voters at some extent depends on cooperation with China, which has already been shaken due to the EU’s tough policy towards the Russia – Ukraine war, as well as the China’s internal policies.

As for China, its economy continues to be highly dependent on export. The model of China’s economic breakthrough, starting in the late 1970s, was built on the creation of an efficient export economy, hence, the connections with the outside world became one of the conditions for the future development. A significant decline in exports could lead to a slowdown in China’s economic growth, which in recent years has not reached the planned levels. It might also cause business shutdowns, unemployment and social problems. Given these risks, maintaining cooperation with Europe should be the most important task for the Chinese government.

 There are no significant prospects of political or security coordination between the European countries and China. Therefore, the main subject of their communication is always the economic cooperation. Olaf Scholz recently visited Beijing to complain about China’s alleged policy of state support for certain industries (the production of electric vehicles, which are beginning to dominate the European markets), as well as the problems of German car manufacturers in China. It is characteristic that Scholz criticized the EU’s position calling for the introduction of duties on Chinese cars in Europe, since retaliatory measures could be introduced by China against German cars. As for France, the country is the third largest EU partners for China (following Germany and the Netherlands). President Emmanuel Macron, has often expressed his concerns about the US imposition of decoupling on Europe.

During the Xi Jinping’s May 2024 visit to France, Emmanuel Macron gifted the Chinese leader two bottles of French cognac. This act carried some diplomatic weight too given the fact that Beijing has recently initiated an anti-dumping investigation into imports of brandy from the EU, which directly affects the French cognac-producing companies. The Chinese decision on imposing the additional restrictions on the Western companies was the answer to the similar step taken by the US.

Worth noting that, during his May 2024 European tour, Xi Jinping did not visit any other EU state but France. President Macron has always voiced his more or less independent position towards the foreign policy issues and has tried to portray France as a sovereign player in the international arena. This could be the reason for Xi Jinping to choose to visit France out of all EU states. However, the Chinese leader must have been disappointed when President Macron, joined by the Head of the European Commission, tried again to persuade Xi Jinping to use his influence over the Russian President Putin to cease the fire in Ukraine.

One of the most important differences between China and the EU countries is related to the ongoing Russia – Ukraine war. The EU tries to tear China away from Russia, force it to reduce cooperation with Moscow and make Xi Jinping put pressure on President Putin in order to induce a settlement on European and Ukrainian terms. On the other hand, China has its own ideas about the end of the war, expressed in the 12-point peace plan presented in 2023. The plan envisages the restoration of peace based on respect for territorial integrity and taking into account the security concerns of all parties, including Russia. Although this plan is different from the Russian idea of the future peace, it is still unacceptable for the EU since the Ukrainian requirements are not reflected there. There is an alternative Ukrainian peace formula which includes not only the restoration of the territorial integrity of Ukraine but also Russia’s obligation to pay the reparation for the damages caused during the war, as well as the fair investigation (at the national or international level) of all war crimes committed by Russian military (Rishko, 2024). The Ukrainian peace plan is to be discussed in the upcoming international conference in Switzerland in June 2024. The Swiss government announced that it had invited more than 160 delegations to the conference, including the members of the G7, G20, the BRICS, as well as the representatives of the EU, UN, OSCE and Council Europe (Swissinfo, 2024).

Beijing has always admitted that it is not going to cease the cooperation with Russia. In fact, since the outbreak of the 2022 Ukrainian war, Beijing has become the biggest importer of the Russian oil and gas purchasing them at the discounted price. The Chinese government believes that the final peace in Ukraine must be reached through the mutual agreement between all sides of the war. In addition, China, like Russia, views the expansion of NATO and the EU as a threat to its own security and, therefore, supports Moscow in its opposition to the Euro-Atlantic enlargement. During the meeting with German chancellor Olaf Scholz, the Chinese leader stated that his country would support only such an international peace conference on Ukraine, which would be recognized by both Moscow and Kiev with equal participation of all parties and a fair discussion of all peace plans. Xi Jinping put forward the following main steps towards the peaceful settlement: maintain peace and stability and refrain from seeking selfish gain; “not to add fuel to the fire” (that is, not to supply the parties with weapons); create conditions for the restoration of peace and refrain from further aggravation of tensions; reduce the negative impact on the global economy and refrain from undermining the stability of global industrial and supply chains (i.e. sanctions) (Rinke, 2024). This plan is different from the European idea of the future peace, which mostly aligns with the Kiev’s vision. China’s approach, nevertheless, seems to be more beneficial for the Russian side given the fact that it aims at the abolishment of all international sanctions, as well as at ceasing the foreign military aid to the sides of this war – the EU together with the US is the main provider of the military support to Ukraine. Thus, it is evident that the EU and China turn out to be standing on the different sides within the Russia – Ukraine war.

CONCLUSION

The article analyzed the recent events related to the EU – China relations and discussed the prospects and challenges to their development. It was demonstrated that there is mutual interest in continued cooperation between China and the EU states. However, there are number of factors which create obstacles to this cooperation, including the ongoing Ukrainian war and China’s position towards it, as well as the Chinese government’s restrictive economic policy creating unfair competition to the Western companies. Moreover, there is a growing pressure on the EU from its closest ally – US, who acknowledges China as its main geopolitical and economic rival. Nevertheless, China tries to move the EU countries towards a more constructive position and less dependence on Washington. For this reason, Beijing deals with the Europeans at the level of nation states hoping to influence single countries more successfully rather than the whole union.

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