The War in Ukraine Turns the EU toward Rivalry with China

Back in December 2020, the EU – spurred on by Germany’s out-going Chancellor Merkel –  inked an investment agreement with China that some analysts predicted would “poison” transatlantic relations. That has not happened. Instead, the EU and the United States have moved closer on tougher policies toward Beijing, especially since the war in Ukraine. The EU’s lead on foreign policy, Josep Borrell, labelled recent high-level talks with the Chinese leadership a “dialogue of the deaf.” Systemic rivalry – a part of the EU’s official vocabulary on China since March 2019 but sparingly used initially – now seems the defining prism for the relationship.

The EU’s hardening is due to China’s tacit support for Russia. Though China purports to take a position of neutrality, its actions show support for Russia.

In early February, Xi Jinping inked a joint statement with Putin which can rightly be labelled an authoritarian manifesto. The two powers are as close now as they were last in the Communist camp back in the 1950s. The statement contained a joint critique of NATO-enlargement as a Cold War approach, a novel out-of-area step for the Middle Kingdom, which professes non-interference. This Chinese meddling in NATO affairs raised eyebrows in Brussels.

Furthermore, the Chinese government speaks of the Ukraine crisis, not acknowledging there is war of aggression going on. Its state-censored social media, after some initial wobbling in the first days, now favors Russian narratives. That includes spreading the unfounded claims that there are dangerous pathogens in US-led biological facilities in Ukraine.

China has also stated publicly that it continues normal trading relations with Russia. The biggest European and US worry is that China could continue to supply or increase military supplies to Russia. On this, China remains vague. The government is also remaining silent on whether their companies will backfill from European companies departing due to sanctions.

Against this backdrop, the EU’s leadership went into the EU-China Summit on April 1 with low expectations. In the preparation for the Summit, the Chinese leadership suggested a “focus on the positives” approach with an agenda based on economic cooperation, basically ignoring the war in Ukraine.

But Brussels has a new-found sense of leadership after using its economic muscles through unprecedented sanctions and stepping up – a novelty – with military aid for Ukraine. For the EU there is clear world of difference from before and after February 24, 2022. Accordingly, Brussels’ leadership refused the Chinese playbook and leveraged the Summit to signal their expectations for Chinese responsibility. The take-away was that it met unreceptive ears with successively Foreign Minister Wang Yi, Premier Li Keqiang, and Xi Jinping.

An EU-advisor involved in the meetings told me that it seemed the Chinese leadership’s two years of Covid-isolation had reinforced Beijing’s detachment from the views of the outside world.

It seemed the Chinese leadership’s two years of Covid-isolation had reinforced Beijing’s detachment from the views of the outside world.

These encounters with China prompted EU’s foreign policy czar, Borrell, to draft a scathing piece entitled  “On China’s choices and responsibilities.” For once, it is a diplomatic statement worth reading in full, also for its departure from classical diplomatic tonality.

As Borrell puts it “we condemn Russian aggression against Ukraine and support that country’s sovereignty and democracy, not because we ‘follow the US blindly,’ as China sometimes suggests, but because it is genuinely our own position. This was an important message for the Chinese leadership to hear.”

Reference to the United States was inserted in retort to a Chinese encouragement of an “independent European position.” The thinly veiled Chinese aim was to insert a wedge between the United States and the EU by playing on French ambitions for a more independent EU-role. However much that Borrell, on a normal day, is a proponent of increased European strategic autonomy, this does not entail disagreement with the United States on the defense of Ukraine’s liberty.   

The thinly veiled Chinese aim was to insert a wedge between the United States and the EU by playing on French ambitions for a more independent EU-role.

The EU’s foreign policy head also observed that “Russia and China have made clear that they believe that great powers are entitled to a zone of influence in their respective neighborhoods…The joint Russia-China statement of 4 February is, at heart, a revisionist manifesto.”

This is far cry from conventional EU-statements about making China a partner in the rules-based international order. Instead, such a reading of Russia and China rhymes better with the one President Biden laid out in his recent speech in Warsaw on autocracies led by Moscow and Beijing threating democracies. Such democracy vs. autocracy thinking has normally been eschewed as too black-and-white in Brussels, Paris, and Berlin.

Will the Tougher EU Line Translate to Policy?

Does the tougher EU line on China stick? It can get tricky when it comes to the backbone of EU’s policy: the member states. Often, what comes out of Brussels decisions is the lowest common denominator of the individual policies of the 27 member states. With the tough turn on China, the EU-institutions and its leadership seem to be moving out ahead, galvanized by the war in Ukraine.

In many member states, bilateral trade and investments still drive relations with China. The EU is considerably more dependent on economic relations with China than with Russia: EU-China trade is worth €2 billion a day.  

That means that the anguish in German business over the sanction packages on Russia, including the thorny oil and gas questions, would be amplified ten-fold in a possible scenario of sanctioning China.

Germany is going through the so-called Zeitenwende inching to a more muscular policy no longer focused on change through trade (Wandel durch Handel). In that vein, Foreign Minister Baerbock said recently, “one-sided economic alignments in fact make us vulnerable. Not just with regard to Russia.” And the German Chamber of Commerce in China conducted a flash survey where almost half  (46%) of the respondents saw China’s attractiveness decreased due to the war in Ukraine. Nevertheless, that doesn’t remove overnight the economic interdependence with China built over decades.

That means that the anguish in German business over the sanction packages on Russia, including the thorny oil and gas questions, would be amplified ten-fold in a possible scenario of sanctioning China.

This is similar in Paris. The French luxury industry is equally dependent on China and forms a powerful lobby. And there are the spoilers in EU’s China policy such as Hungary’s Viktor Orbán, emboldened by his re-election.

Yet even with such caveats, the EU’s shift is significant. It offers the United States an opportunity for stronger transatlantic cooperation on China that could involve novel steps. Washington could explore whether the EU would consider so-called secondary sanctions on China and its companies, if they scoop up the contracts left by European and US sanctions on Russia. In normal times, the EU has been against such secondary sanctions, particularly when they were levied by the US against European companies on Iran. But these are unprecedented times.

The EU is also open to exploring joint export screening; a way to secure against sensitive technology flowing into both Russia and China. In May there will be a next meeting of the EU-US Technology and Trade Council where such joint standard-setting is on the agenda. 

There is also joint work at home to protect our democratic systems. That includes new tools such as the EU’s anti-coercion instrument, which is working its way through the EU’s legislative procedures. That instrument can leverage the EU’s economic and trade power to counter economic coercion. Lithuania is currently being subjected to such economic bullying by China.

All these steps will be part of steeling us for the battle between democracy and autocracy as President Biden framed it. In that framework, the EU’s turn to systemic rivalry on China fits well.