The EU redefines its policy towards China to reduce its economic dependence

The lessons learned from the relationship with Russia in light of the war in Ukraine, when the dependencies acquired in the energy field have become material for blackmail, added to the increasingly assertive attitude of Xi Jinping's China, have led to the European Union to redefine its relationship with the Asian giant.

Thomas Osborne
Thomas Osborne
21 October 2022 Friday 16:30
7 Reads
The EU redefines its policy towards China to reduce its economic dependence

The lessons learned from the relationship with Russia in light of the war in Ukraine, when the dependencies acquired in the energy field have become material for blackmail, added to the increasingly assertive attitude of Xi Jinping's China, have led to the European Union to redefine its relationship with the Asian giant.

“There is a will to avoid being naive, but also not to embark on a systematic confrontation. We have our own model to build the relationship with China”, said the President of the European Council, Charles Michel, as a summary of the three hours that the leaders of the Twenty-seven dedicated yesterday to discuss the common policy towards Beijing. The European recipe rests on the agreement to develop “authentic strategic autonomy” that avoids dependence on key economic sectors and, at the same time, “diversifies” alliances with the rest of the world.

“We must be vigilant with our dependencies. We have learned the lesson about Russia's excessive reliance on fuels and how difficult, but necessary, it is to get rid of it," European Commission President Ursula von der Leyen said. “At the party congress, it has been made very clear that President Xi is going to maintain his assertive and self-reliant course.”

The axis of the discussions of the European leaders was the document presented this week by the High Representative for Foreign Policy, Josep Borrell, which warns that Beijing's "increasing assertiveness" on the international scene forces the EU to reassess its relationship and assume that the competition between the European economic model and the Chinese alternative will be more aggressive in the future. Borrell has exposed it crudely recently: the EU was wrong to entrust its economic well-being to cheap gas from Russia and trade with China, and it must assume that "that world no longer exists" and prepare.

How to manage the relationship with a partner that is also a competitor and, increasingly, a strategic rival? If China invades Taiwan, how would the EU and Beijing respond? If it reacts with sanctions, is Europe willing to run out of chips, without solar batteries...? Trying to isolate China, as it is doing with Russia in the wake of the Ukraine invasion, "is not an option," says a senior European official. The European External Action Service proposes to limit risks by reducing dependence on sectors such as technology and raw materials. “We must convince governments and the private sector that what they earn today doing business with China can be paid dearly tomorrow,” these sources point out.

The argument resonated in the leaders' discussions. Finnish Prime Minister Sanna Marin called on the EU to learn from what happened with Russia. “This does not mean that there cannot be economic relations with China, but rather that we should not build those kinds of critical and strategic dependencies on an authoritarian country,” she said. With technology, "it may not be the problem today, but it certainly will be in the future."

In parallel, the EU intends to intensify its relations with other parts of the world, from the countries of the Asia-Pacific region to the so-called Great South, in order to build reliable alliances. Although coordination with the United States is essential, it is proposed to develop its own model that does not involve cutting ties with Beijing, as Washington is seeking, and not changing the Chinese dependency for a North American one.

“There is no relevant voice in Europe that is committed to deglobalization. Nobody is saying that we should not export, that we should not invest, that we should not import from China”, clarified the German Chancellor, Olaf Scholz, who will shortly have to decide on the entry of the Chinese giant Cosco in the port of Hamburg, an issue that motivates of tensions within the coalition.

The topic was not explicitly raised during the summit, but it was on everyone's mind. "In the past we have made strategic mistakes with the sale of infrastructure to China," said President Emmanuel Macron, referring to the 2008 financial crisis, which forced countries like Greece to accept the inflow of Chinese capital in critical sectors. With China, Estonian Prime Minister Kaja Kallas pointed out, it is the same with Russia: “They are interested in us being divided. To us, what interests us is to be united”.

However, yesterday it was seen that although the positions have converged, there are nuances, explain diplomatic sources. While some countries have a vision similar to that of Washington and are committed to seeing the relationship only as a rivalry, others do not believe that the challenge is as strong as with Russia. Although in the short term there is some divergence, affirm diplomatic sources, now in the great orientations the agreement is total.