Europe needs to be much clearer when it comes to China

The constant stream of European leaders visiting Beijing recently carries a risk. Europe’s eagerness must make it appear more and more in China’s eyes as a demanding — the party in diplomatic relations that cannot wait for the other to propose something, but has to come and ask. But what exactly is Europe asking for?

It is quite clear where China’s interests lie. Politically, he wants to divide a West united by Vladimir Putin’s assault on Ukraine. Economically, it wants to prevent any move by the EU to restrict its market access. In a combination of both, he wants to increase Europe’s economic dependence on China. It makes sense that Beijing fosters Europeans’ desire to distance themselves from Washington, their resentment at being threatened by US foreign policy choices and their business interests. Hence the famous Chinese charm offensive in Davos in January.

It is more difficult to describe Europe’s objectives. Of course, he wants Xi Jinping to convince Putin to give in to his obsession with wiping Ukraine off the map. But that is merely a hope, not a political goal, if European leaders cannot credibly commit to restricting economic reach while Beijing acts against its strategic interests. And his revolving door visits undermine that credibility.

The speech by the President of the European Commission, Ursula von der Leyen, before her own trip was a step in the right direction. She upheld the EU’s analysis that China is both a systemic rival, an economic competitor and a strategic partner. But she went much further by threatening to block China’s economic opportunities with Europe if Beijing sticks to its current course. She will now have an uphill battle to get the EU capitals to unite behind this more combative approach.

Meanwhile, in the US, Treasury Secretary Janet Yellen has just delivered a speech substantially aligning Washington with Brussels. She dismissed the “decoupling” from China as “disastrous.” Instead, the US will subordinate economic policy to national security and human rights, but only narrowly, while welcoming economic competition and seeking collaboration on global challenges like climate change and the debt. He might as well have used the Brussels triptych of rival, competitor and partner. Together, the two discourses suggest a welcome effort at a common transatlantic approach.

The problem is that, unlike the US, there are too many signs that Europe is unwilling to condition its economic ambitions on the nature of systemic threats from Beijing. Comments by French President Emmanuel Macron that Europe is not a “vassal” of the US is one such sign. Carving out an independent path is all very well, but acting differently from the US just for the sake of it is just contrarianism. It’s natural, for example, to resent that Washington actually decides what chipmaking equipment Dutch company ASML can export to China, but resentment is no substitute for a proper policy of export control and foreign investment. Von der Leyen promised one in his speech, but corporate Europe will hardly allow such restrictions without a fight.

Many European business leaders still salivate at the size of the Chinese market, and visits by most political leaders to Beijing are clearly selling points. Here we come to the crux of why the EU strives to pursue credible geo-economic policy. In Europe’s political economy, strategic goals are still no match for alignment between the mercantile interests of big corporations in the EU’s core states and the entrenched deepening trade instincts of the European Commission and many of the largest economies. small in Europe. Beijing has good reason to sit and wait.

But something is changing. “Access to China” for EU corporations increasingly means expanding production in China itself, not exporting European-made goods and services there. Before the pandemic, EU carmakers shipped around half a million cars to China, but built 10 times as many European-brand cars there. Some will even find it easier to build electric vehicles there to ship back to Europe than to expand production at home.

The gains from such trade will mainly benefit corporate shareholders in the EU and not the workers, small businesses and countries that are currently linked to Germany’s car supply chain. Eventually, politicians will catch on to the fact that the benefits are not widely dispersed. Only then are we likely to see economic considerations firmly conditioned by geostrategic interests in EU-China politics. Until then, Beijing need not take it seriously. It is time for Europe to learn that what is good for VW is not necessarily good for Europe.

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