CHINA-EU RELATIONS: WHAT’S NEXT AFTER THE G7?

In the past year there have often been talks about EU-China’s growing tensions. The complicated nature of the relations between the two blocs is due to several factors. First of all, European countries have different interests and attitudes when it comes to China.

The most recent example was Hungary blocking the European Union’s statement criticising Beijing’s actions in Hong Kong. The struggles to find unanimity tend to undermine the EU’s stance and credibility in the eyes of China. The alliance between China and Central and Eastern European countries has been quite solid so far.

The China-CEE format (also called ‘17+1’) was launched in 2012 as a way to expand cooperation between Beijing and 17 Eastern European and Balkan countries. In the beginning of June, however, Lithuania announced its departure from the initiative. This could  be read as a first sign that the wind is changing.

Exports from China to these countries are much higher than the other way round, contributing to dissatisfaction and a widening trade deficit. The Lithuanian prime minister argued that “it is high time for the EU to move from a dividing 16+1 format to a more uniting and therefore much more efficient 27+1”.

Hungary, who has been nurturing its bilateral relation with China, is now facing growing discontent. Protests in the capital over the opening of a Chinese university (Fudan) show that Hungarians are becoming increasingly suspicious over this relation and worry that Xi’s influence will grow out of proportion.

A ‘27+1’ deal with China was reached last year with the Comprehensive Agreement on Investment (CAI). China already had access to EU financial markets, but for the EU it was a significant step into Beijing’s tightly controlled markets. The advantages for the EU are clear, but what was in it for China?

Xi Jinping with this agreement was able to establish a rapprochement with the EU on the international arena. In fact, another layer of difficulty lies in the dichotomy between economic interests and human rights. In 2020 China became the EU’s largest trading partner, surpassing the US.

Economic cooperation is clearly an essential element of the relationship, but some of China’s behaviours, which are perceived as human rights violations by the EU, further complicate matters. After the EU imposed sanctions as a response to abuses in Xinjiang, which have often been addressed as genocidal, China’s foreign minister Wang Yi made the sarcastic comment that “our European friends know what genocide is”.

The EU has continued on this line of action with the endorsement of the ‘Dual-Use Regulation’, which tightens controls on exports of technologies, such as microchips and facial recognition, that could be used for human rights abuses. 

With all these recent happenings in mind, the G7 summit just held in Cornwall offers some interesting insights on the future of EU-China relations. In fact, Biden was pushing for providing an alternative to the Belt and Road Initiative (BRI), a large scale lending and investment scheme across Africa, Latin America and Europe to some extent. The Build Back Better for the World (B3W) program is yet to be properly defined.

Coordinating action on the topic among wealthy democracies is also easier said than done. As we’ve seen, Europe is keen on maintaining serene economic relations with Beijing. Germany in particular was the country that fought the hardest for CAI to happen. Italy has also shown interest in maintaining strong economic cooperation with China. 

Europe finds itself at a crossroad. With the arrival of Biden, the transatlantic relationship has definitely made up for lost time during Trump’s presidency. But although Biden’s tones are different from those of his predecessor, the line of behaviour towards China has some similarities.

The B3W and BRI competition might remind some of the Cold War space race. If Europe decides to commit to the B3W, the divide between developed and developing countries will become increasingly marked. China has been cultivating alliances with BRICS countries as well as close ties with African and Latin American countries.

At this point, a polarisation between the so called ‘Global North’ and ‘Global South’ might be inevitable. So far Europe has been on the fence trying to remain as neutral as possible in Sino-American disputes. In the future, however, it seems it will become increasingly difficult to do so.  

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