By Manish Dabhade & Subhrangshu Pratim Sarmah
Amidst the dynamic landscape of global affairs, the upcoming European Union (EU)-China Summit on December 7-8 holds significant implications for the trajectory of their bilateral relations and the broader international arena. David Dunn has characterized international summitry as diplomacy at the highest levels, and this Summit too holds a global spotlight as it’s widely expected to encompass a wide range of issues, from trade and investment to climate change and human rights, reflecting the multifaceted nature of the EU-China partnership.
The previous EU-China Summit occurred through a video conference in April 2022. This event unfolded amidst China’s responses to EU sanctions related to human rights issues, as well as economic coercion and trade measures affecting the single market. Notably, the Summit took place against the backdrop of Russia’s military aggression against Ukraine, with Beijing demonstrating reluctance to condemn the invasion. Earlier this year, the European Council reiterated the EU’s nuanced policy stance towards China, recognizing it as both a partner, a competitor, and a systemic rival. Nevertheless, maintaining this delicate equilibrium is becoming increasingly challenging.
The bilateral relationship between the two was established in 1975 and by 2020 both emerged as the largest trading partners of each other. In 2021, the EU exported to China €223 billion and imported €472 billion in goods. In 2020, the EU exported €47 billion of services to China, while China exported €31 billion to the EU. On November 16, the President of the European Commission, Ursula von der Leyen, emphasized a crucial objective of the EU summit with China- to establish “a level playing field in trade in light of market distortions.”
The trade deficit of the EU has surged to €396 billion, marking a substantial 58% increase compared to the figures recorded in 2021. European investors in China are facing a lot of hurdles. Comprehensive Agreement of Investment (CIA), signed in 2020 is currently frozen due to sanctions and counter sanctions. Reciprocity in trade and investment is a contentious issue. On the other hand, Beijing has been accusing the EU of its unfair defence tools against China such as a series of anti-dumping measures, an inbound Foreign Direct Investment (FDI) screening framework, and an anti-coercion instrument which came as a response to China’s pressure on Lithuania over Taiwan. The Carbon Border Adjustment Mechanism too has irritated China a lot.
In October 2022, Brussels initiated an anti-subsidy investigation into China’s electric vehicle sector, a move criticized by Beijing as “protectionist” and deemed to “jeopardize the country’s rights.” This issue is anticipated to be a focal point of contention during the upcoming Summit. On the political front, China’s technological support to Russia for the Ukraine war has created huge discomfort in the EU. Last June, three Chinese entities were included in the EU sanctions list. The primary concern of the EU at this point seems to be their dependency on China. But this dependency cuts both ways which makes the EU diplomacy assertive. Emphasizing cooperation’s essence over competition, the Chinese Foreign Minister, Wang Yi recently called for overcoming political uncertainties and resisting protectionist tendencies between the EU and China. China has already announced unilateral visa-free entry for a year to citizens of five European countries, namely, France, Germany, Italy, the Netherlands, and Spain.
The Indo-Pacific Strategy of the EU focuses on upholding the rules-based global order with seven key pillars such as connectivity, ocean governance, sustainable and inclusive prosperity, green transition, human security, security and defence, and digital governance. The pillar on security and defence includes areas like joint naval exercises, coordinated maritime presence, cyber security, and capacity building among others. Although this has a significant overhang of countering Chinese belligerence in the region, overall, the EU’s approach is more inclusive and conflict-averse. Moreover, the onslaught of the Ukraine-Russia war has diverted the EU’s attention from pressing issues in the Indo-Pacific.
However, as a collective entity, the European Union is unmistakably shifting towards a more defensive stance, characterized by a somewhat protectionist approach under the overarching objective of “de-risking” its association with China. Beijing’s failure to address the existential uneasiness that the EU faces over China’s support to Russia in the Ukraine war has aided this shift. Beijing’s stance on the Ukraine war seems to have papered over the differences among the EU nations on its China strategy and united them all. The divide-and-rule policy by China on the EU seems to be not working anymore. European ‘sympathizers’ of China, have not received any help from Chinese lobbyists or business groups due to Xi Jinping’s turn away from market-friendly reforms. As the European Commission President von der Leyen has stated, the central focus of Europe’s strategy in the forthcoming years is to “de-risk, not decouple” from its relationship with China. This aims to mitigate dependencies and vulnerabilities that pose threats to Europe’s national security and economy. However, despite Washington having significant influence over the EU policies, it is impractical to think that a hardening stance against China by the US would be replicated by Brussels.
Prominent European leaders, including France President Macron advocate for strategies that embrace China’s ascent as a global power rather than isolating it. Within the 27 member states, opinions on how to address the China matter, however, vary significantly- influenced by their distinct economic, trade, and industrial interests. The Czech Republic and Lithuania have experienced a shift away from China, whereas France, Germany, and Hungary are actively promoting heightened engagement with Beijing. Chinese media has tried to create a wedge among European nations over their response to human rights issues in Xinjiang.
President Macron, during his visit to China, talked about Europe facing the great risk of being caught up in crises that are not theirs. This is interpreted as a hint at the Taiwan crisis. Berlin, however, does not share Macron’s arguments and German ministers have talked about an escalation in Taiwan being the worst-case scenario globally. But at the same time, the German Chancellor had a delegation comprising approximately twelve CEOs from prominent German companies, including Siemens, Volkswagen, and Merck, during his visit to China. The recent Biden-Xi summit in California has also been carefully followed by the EU and its meagre outcome could mean a similar trajectory in the EU-China diplomacy.
The lack of cohesion and nuance among the EU member states regarding China could benefit the latter in the long run. Rather than choosing a middle path between the US and China, the EU could zero in on a strategy to become indispensable to both. The cognitive dissonance between pursuing interests with a powerful China and a divided Europe with insistence on European values and norms needs to be addressed. EU leaders can’t operate separate mercantilist policies with China without paying heed to the security aspects anymore.
This Summit has significant ramifications for India. The recently announced India-Middle East-Europe Economic Corridor (IMEC) was touted as an alternative to China’s Belt and Road Initiative (BRI) and Italy’s walkout of the BRI, parallel to the unveiling of the corridor was quite significant. However, the Israel-Hamas conflict has slowed down the work on the IMEC. The EU-China summit’s outcome might have a bearing on IMEC. Moreover, the EU’s measures to de-risk and find a strategy on China independent of the US strategy on the same could have a substantial impact on India not just on the trade front, but also in the Indo-Pacific. But a non-cohesive approach by Europe would require nimble diplomacy by India to navigate the evolving zigzag of international politics.
About the authors: Manish Dabhade teaches Diplomacy at the School of International Studies, JNU & is the Founder of The Indian Futures, an independent think tank.
Subhrangshu Pratim Sarmah is the Director of The Indian Futures-Guwahati
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