The EU’s foreign economic relations are to a large extent governed at the union level. As a result, its approach to China requires the approval of disparate countries with different economic interests, threat perceptions and assessments of the urgency of the issue. That the differing national perceptions of the economic threat posed by China have changed only relatively recently has probably contributed to the fact that there is still no comprehensive EU China strategy. Despite the sizeable and increasing number of complaints about China, no coalition or member state has pushed for a more confrontational line. In 2019, the European Commission published a strategic outlook document, describing China as a partner, an economic competitor and a systemic rival. The latter term grabbed the headlines, but member states have been slow to use this more confrontational definition. They have to some extent left this to the European Commission, in part because it allows them to disavow any stronger language coming from Brussels when necessary. In that regard it was telling that the European Council did not specifically endorse the strategic outlook document in its subsequent meeting. Basically all member states are pursuing what they consider a pragmatic policy towards China, considering it both a competitor and a partner.
There is little hope among EU policymakers of being able to significantly shift Chinese economic practices, which provides further impetus for a strategy focused on internal change instead. Some, most significantly in the current German government, still hold out hope that further economic engagement will lead to changes, the Wandel durch Handel (change through trade) approach, though attitudes are even shifting in Germany. Although a sentiment seemingly driving much German policy in recent years, it is not necessarily shared across the entirety of the political spectrum or even the business community. A change in political leadership following the German election in September 2021 might thus also lead to something of a rethink of the German government position. Similarly, most member states do not believe this to be realistic anymore, particularly in the Xi Jinping era with China doubling down on its authoritarian capitalist model, and this approach now widely characterized as naïve. Some of this approach nevertheless remains; for instance, in the CAI, through which European firms hope to gain additional market access with less interference in their operations in China and a dispute-settlement mechanism to deal with any breaches of Chinese promises. However, in part due to previous experiences, EU governments and business representatives remain doubtful that the eventual market opening will conform fully to these hopes and they do not expect full reciprocity within any realistic time frame. As a result, the implicit EU strategy is one of gaining small concessions from China and protecting its internal market.
There is little hope among EU policymakers of being able to significantly shift Chinese economic practices, which provides further impetus for a strategy focused on internal change instead.
The pace of strategizing when it comes to China is slow, particularly at the level of member states. They have generally shown no urgency to do so or have aimed lower in terms of defining the strategic challenge and the response to it, compared to the attempts to do so at the EU level. National China strategies are rare. The Netherlands and Sweden are two prominent exceptions, but both have focused on maintaining economic relations in the face of a changing appreciation of the geopolitical and economic threat posed by a more assertive China. Fundamentally, many member states are too small to expend much energy on China policy, which tends to be dealt with by the EU institutions and the larger member states. In line with the traditional balance of power within the EU and its economic interests, Germany in particular has set the agenda on China policy.
Member states wield a veto on EU foreign policy actions and this has been used particularly in regard to proposed EU actions against China related to human rights and international law, sparking concerns over a Chinese divide-and-rule strategy. However, this is best understood in light of differences and disagreements within the EU. Member states have at times instrumentalized actual or potential economic and political relations with China – particularly concerning investments – in EU debates. The 17+1 Framework, through which China cooperates with 17 countries in Central and Eastern Europe, is an example of this. This is a way for these countries to access investment and trade opportunities from China, although the results have often been disappointing. By providing these countries with a potential alternative source of funding, this arrangement gave China a possible lever in negotiations within the EU on other topics. While some feared China was using the initiative to split the EU, participating countries were mainly using it as leverage in the pursuit of their own objectives within the EU. Over time, members were less interested in the format as it became less useful, leading to limited participation in the summits and Lithuania even withdrawing altogether. Other cases, including countries like Greece and Portugal turning to Chinese investment when privatizing critical infrastructure, are better understood in the context of internal EU disputes than as a successful strategy on the part of China. EU countries, like Italy, that signed up to the Belt and Road Initiative similarly did so in part with an eye on internal EU debates. Thus, while China has regularly featured in EU debates, it was not always as the primary concern.
In part this reflects the limited amount of policymaking within the EU context that is explicitly aimed at China, but this does not mean that nothing has been done to counter some of the unwanted Chinese economic practices. In some areas, these have led to direct responses by the EU through regular trade defence instruments. For instance, in recent years, the EU has applied anti-dumping tariffs on some Chinese imports, including steel and bicycles. In general, however, China was not a challenge that policymakers cared that much about until recently, unless it was directly linked to specific policy objectives such as increasing incoming FDI. China policy also mostly resided with national and EU civil servants, with relatively little involvement by politicians, possibly due to the lack of public and political interest. This approach will be increasingly unsustainable given the geopolitical environment of increasing competition between the US and China.
