Manoj Kewalramani
Joe Biden’s election as the United States (US) president has led to talk of greater coordination between Washington and Brussels over China. In early November, European Union (EU) foreign affairs chief Josep Borrell was quick to call for “a coherent and robust China stance” between the transatlantic allies. Biden, meanwhile, has promised to consult traditional allies to “develop a coherent strategy” on China.
In late November, Financial Times reported that a draft EU Commission paper had called for working with the US to deal with the “strategic challenge presented by China’s growing international assertiveness” with the technology domain being the “the backbone of a wider coalition of like-minded democracies”. This was followed by reports of the EU proposing a new Transatlantic Trade and Technology Council to jointly set standards on new technologies, strengthen technological and industrial leadership and expand trade and investment. None of these reports have been confirmed. But the EU Council highlighted “shared priorities” for Brussels and Washington.
At the same time, however, Borrell was keen to point out the need to strengthen European autonomy. This desire lies at the heart of EU-US tensions, particularly after the tumult of the Trump era. Autonomy has emerged as a strategic objective for the EU. Not surprising then that it is one of the spaces around which Beijing has focused its efforts. For instance, Chinese officials have repeatedly emphasised the threat of US unilateralism and a new Cold War undermining EU’s interests. Chinese media and analysts have been dismissing the possibility of a coordinated EU-US action.
At the same time, Chinese officials have emphasised the economic opportunities that Beijing has to offer. In an article last week, Zhang Ming, China’s ambassador to the EU, said that “China’s domestic demand is the EU’s external demand, which means a source of growth for the EU”. He added that the two sides had signed an agreement allowing greater market access for European agricultural goods and highlighted that the investment treaty was just around the corner.
This has some merit. China pipped the US to become the EU’s largest trading partner through the first half of this year. The trade remains skewed, with European imports outstripping its exports. This does lead to some consternation. However, as a recent study by the Mercator Institute for China Studies argued, cheap Chinese imports free up greater disposable income of European citizens. The researchers found that there were 103 product categories in electronics, minerals, pharmaceuticals, etc, in which the EU “has a critical strategic dependence on imports from China”. The study also informs that on average, China accounted for over 11% of the profits European companies in 2019. That’s not a huge amount, but it is still significant, considering that despite the calls for building supply chain resilience and decoupling, only around 11% of European companies in China say they are thinking about shifting investments to other markets.
Irrespective of this economic engagement, there is friction between Beijing and Brussels, which is independent of Washington. This is evident in frustrations over market access and State subsidies, as it was in the European discourse over China’s mask diplomacy. On values, Foreign Minister Wang Yi’s threat to Czech Senate President Milos Vystrcil from the podium in Berlin in September highlighted the challenge. A few weeks after that fiasco, during the China-EU summit, Xi dismissed concerns over Hong Kong and Xinjiang, saying that China didn’t need an “instructor” on human rights.
The adoption of the European Magnitsky Act is a manifestation of Europe’s desire to lend teeth to its proposition on human rights. It remains to be seen, however, if the bloc will be using this against Beijing. Borrell has said that he doesn’t want the designation of China as a “systemic rival” to lead to a “systematic rivalry”. Gaining from economic engagement despite the political and strategic gap remains the EU’s challenge in dealing with China. In this, Biden’s victory lends it leverage.
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