Feng Zhongping

This year marks the 20th anniversary of the establishment of the China-EU comprehensive strategic partnership.
 
After China and the EU announced the establishment of a comprehensive strategic partnership in 2003, the comprehensive cooperation between China and the EU and its member states entered the fast track. China and the EU established an annual leaders’ meeting mechanism, which continues to this day. In the 15 years from 2004 to 2019, the EU was China’s largest trading partner, while China was the EU’s second largest one. During his visit to China in 2004, Romano Prodi, then President of the European Commission and former Italian Prime Minister, commented on China-EU relations to the effect that the establishment of a comprehensive strategic partnership between China and the EU was at least a solemn engagement, if not a marriage.
 
20 years on, great changes have taken place in the world, and China-EU relations have entered a new era. On one hand, the accelerated changes in the world have lent importance to China-EU relations. On the other hand, China-EU relations are facing more challenges, and China-EU exchanges and interactions are becoming increasingly complicated.
 
First, the EU’s perception of China has changed. In its China policy report entitled “EU-China: a Strategic Outlook” published in 2019, the European Commission characterized China by a triple definition for the first time. The EU holds that the relationship between China and the EU varies in different fields. Specifically, China is a “partner” in dealing with issues such as climate change, a “competitor” in the technical and economic fields, and a “rival” in systems and governance models. In the past few years, more and more EU member states have accepted the EU’s triple definition of China. After the German general election in September 2021, a coalition government was formed by the Social Democratic Party, the Green Party and the Free Democratic Party. The new government stated in the coalition agreement that it hopes to and must develop relations with China as a partner, competitor and systemic rival. In its China policy report entitled “Strategy on China” published in July this year, Germany reaffirmed that Germany simultaneously regards China as a partner, competitor and systemic rival and that “our strategy on China is firmly rooted in the common policy on China of the EU”.
 
Second, while China-EU economic and trade cooperation keeps expanding and deepening, frictions have inevitably increased. The conflict in the investment fields has been particularly prominent in recent years. The EU has complained about China mainly in two respects. One is market access. The EU demands China adopt the principle of reciprocity to allow European enterprises to enter China’s services market. Second, fair competition. Centering on this issue, disputes are building up with regard to China’s state-owned enterprises, government subsidies and technology transfer. In December 2017, the European Commission issued a 465-page working paper, saying that there was a “major economic distortion” in China. On April 11, 2019, the EU Framework for the Screening of Foreign Direct Investments came into effect, which not only lists the main areas of investment review, but also significantly lowers the threshold of relevant reviews. Although member states still retain the final say, it expands the power of EU institutions. On July 12, 2023, the EU Foreign Subsidies Regulation came into effect. These laws and regulations are mainly directed at China.
 
Third, the US and Europe have enhanced their coordination on China policy since Biden took office, with the US applying more leverage on the EU’s China policy. During the Cold War, European countries depended on the US for security and had little independence in diplomacy. After the end of the Cold War, Europe no longer followed the US in foreign policy. After Trump took office in 2017, he adopted the “America First” policy, causing tensions in the transatlantic relations. After becoming President in 2021, in order to unite with Europe to contain China, Biden made vigorous efforts to repair transatlantic relations and coordinated his China policy with Europe through platforms such as NATO and the EU-US summit. Moreover, since Biden took office, the coordination between Europe and the US has been institutionalized. On the basis of the regular high-level dialogue on China, the US-EU Trade and Technology Council (TTC) aimed at China was established. The Ukraine crisis that broke out in 2022 brought Europe and America closer and further alienated China and Europe.
 
In addition, the outbreak of COVID-19 Pandemic severely disrupted exchanges and communication between China and Europe, and increased the trust deficit between the two sides. In short, the EU’s China policy in recent years has put more emphasis on economic and technological competition and ideological confrontation, and the challenges facing China-EU relations have increased.
 
Despite the above challenges, China-EU relations are of great significance to not only the development of China but also Europe and the stability and prosperity of the world.
 
As the two large economies in the world, the importance of China-EU relations to both sides is self-evident. As mentioned earlier, from 2004 to 2019, the EU had been China’s largest trading partner. Due to “Brexit” and other reasons, the EU has no longer been China’s largest trading partner since 2020, but the trade in goods between the two sides still reached US$847.3 billion in 2022. As China and the EU become each other’s second largest trading partners, two-way investment continues to expand. By the end of 2022, the stock of two-way investment between China and the EU had exceeded US$230 billion. In 2022, the EU’s new investment in China was US$10.03 billion, up by 96.6% year-on-year. China’s new investment in the EU was US$6.99 billion, up by 23.7% year-on-year. The new investments of both sides are mainly in the fields of new energy, automobiles, machinery and equipment.
 
It is worth mentioning that China-EU relations are important not only in terms of economy and trade, but also in the dimension of global strategy. First of all, China and the EU are decisive forces affecting the future world structure, and have great influence on the future trend of the international system and landscape. The world is at a crossroads. The strategic competition among major countries has intensified, and economic globalization has encountered headwinds. The world is facing the risk of “re-camping” and “decoupling and supply chains disruption”. Both China and the EU oppose the return to bipolar confrontation in the Cold War era and support a multipolar world. China and the EU are important forces for multilateralism. Second, as the world is facing a serious governance deficit, China-EU cooperation to deal with global challenges such as climate change, nuclear proliferation and artificial intelligence will have a major positive impact on global governance. Without China-EU cooperation, global challenges would not be effectively resolved.
 
Looking to the future, Europe will not change its triple definition of China, the effective cooperation between China and the EU on issues of common interests will nevertheless make their relations more results-oriented. At a time of the evolving Ukrainian crisis, high inflation and soaring costs of production and living, which have triggered protests among the angry public in European countries, the EU has begun to reflect on its China policy. Under mounting economic and social pressure, the EU’s attitude towards China began to turn pragmatic, and the sentiment of “anti-decoupling” prevailed. This can be clearly seen in the statements made by the German, French and EU leaders during their visits to China. When German Chancellor Olaf Scholz visited China in November 2022, he made it clear that “decoupling” was not in the interests of Germany and Europe. After his visit to China in early April 2023, French President Emmanuel Macron emphasized that Europe should build strategic autonomy at a faster pace and reduce its dependence on the US, and called on the EU not to be led by the US on the Taiwan question. Ursula von der Leyen, President of the European Commission, said that “decoupling with China is clearly not viable, desirable or even practical for the EU”. She stressed that China-EU relations are too important, so the EU must carve out “our own distinct” European approach and formulate its own strategy and norms concerning China. It can be seen that Europe has begun to subtly re-calibrate its triple definition of China (“partner”, “competitor” and “rival”).
 
At the same time, contradictions continue to stand out in the EU’s China policy. Although EU countries are opposed to decoupling from China economically, many member states have proposed to “de-risk”. The debate on “de-risk” continues in Europe. Although there are different understandings on the extent of “de-risk” among member states and between member states and the European Commission, “de-risk” has been established as a principle. On June 20, 2023, the European Commission presented a new economic security strategy, which outlines “de-risk” measures, including screening foreign investment and implementing export control. The document acknowledges the conflict between bolstering economic security and ensuring that the EU continues to benefit from an open economy, but emphasizes that the EU needs to maintain a balance between economic interests and security interests. In July 2023, Germany states in its first China policy document entitled “Strategy on China”, that the German government does not seek to engage in any decoupling with China, but hopes to preserve close economic ties with China. However, Germany hopes become less dependent on China in critical sectors in order to reduce risks they entail.  
 
There still exist uncertainties whether the EU’s future relations with China will be independent of the US. Since the end of the Cold War, a trend of loosening has emerged in the EU-US alliance. First, the global strategic focus of the EU and the US has diverged. The eastward pivot of the US has led to its increasing emphasis on the so-called “Indo-Pacific region”, but the EU still keeps its eye on Europe and its surrounding areas. This undercuts the cohesion of the transatlantic alliance. Second, on one hand, Trump’s “America First” policy escalated the conflict of economic interests between the US and the EU. On the other hand, Trump constantly threatened not to provide security protection for European countries, undermining the foundation of the EU-US alliance. It is against this background that Macron made the famously statement on NATO’s “brain death”. Macron is championing the EU’s strategic autonomy and calls for the EU’s own China policy. On his way back from China in April this year, he repeatedly stressed that France and the EU must reduce their dependence on the US and strive to be an independent force on the world stage. Charles Michel, President of the European Council, said after his visit to China in December 2022 that although Europe can no longer have naive ideas about China, the EU must consider its own interests and the status quo of industrial development. “If others decide for us how to interact with China, we cannot defend our own interests.” But not all countries support Europe’s effort to strengthen strategic autonomy. Countries that advocate an independent China policy mainly consider the differences in economic interests between the EU and the US, while countries that call for the same China policy between the EU and the US mainly look at Europe’s re-dependence on the US for security because of the escalation of the Ukraine crisis. Going forward, China-EU relations will be influenced by, among others, the results of the US general election in 2024, the development prospects of China-EU cooperation and the Ukraine crisis.
 
As two major forces, mega markets and great civilizations, China and Europe share extensive common interests in safeguarding world peace and stability, promoting global development and prosperity, and advancing the progress of human civilization. China-EU relations have global influence and significance. Due to the uniqueness of Europe, the relations between China and Europe and the EU are also very unique. The relations are all-dimensional, including bilateral relations between China and European countries, relations between China and sub-regions of Europe, such as China and Central and Eastern Europe, and relations with supranational institutions such as the European Commission, the European Parliament and the European Central Bank. As the relations are complex and multi-dimensional, it is important to make a comprehensive analysis, rather than over-generalizations when observing China-EU relations. The comprehensiveness and complexity must be taken into full account when making efforts to promote China-EU cooperation or cope with conflicts between China and Europe.
 
China and Europe have much to offer each other economically. In the years ahead, they should take into consideration their long-term development, uphold shared economic and trade interests, and strengthen cooperation in green and digital transitions. At the same time, they should face up to the reality of increasing competition between the two sides. Energy transition is not only the natural requirement for China’s high-quality economic development, but also a priority for the development of EU countries. In 2020, China and the EU established a high-level dialogue mechanism on green development, and close cooperation is in the fundamental interests of both sides. In the work plan for the next five years announced by the EU in 2020, the top priority is to promote green and digital economic and social transition. In the same year, the 750 billion euro recovery fund established by the EU also focused on promoting Europe’s “twin transitions”, aiming to help Europe get out of the economic recession caused by COVID-19 and enhance its international competitiveness. The “twin transitions” in Europe and the ecological conservation vigorously promoted by China provide great opportunities for China-EU cooperation. At present, the world is calling for global governance, especially on the issue of climate change. However, due to the competition and confrontation between major countries, global governance is facing increasing pressure. Strengthening China-EU cooperation in environmental protection will help to promote global governance under the multilateral framework and jointly address global challenges such as climate change.
 
It is necessary to increase exchanges and dialogues between China and the EU. As mentioned earlier, COVID-19 restricted the dialogue between China and the EU, and aggravated prejudices and misunderstandings about China in Europe. The EU’s perception of so-called “risks” in EU’s economic relations with China is directly related to Europe’s misunderstanding of China. Restarting intergovernmental, non-governmental, enterprise, people-to-people, think tank and media exchanges will help China and Europe view each other’s development and intentions from an objective perspective, reduce mutual misunderstanding and enhance mutual trust.