The Ukrainian Lesson:

The Ukrainian war dealt a strategic blow to Western countries, especially Europe. It has shown Europe what it means to be under pressure from Russia and China, which have tried to exploit European weaknesses for geopolitical gain, especially with regards to energy and the future of the global economy. There is a near-total consensus in Europe regarding the need become more independent from China across the board. In October 2022, a paper produced by the European External Action Service urged EU member states to pursue "realistic and robust engagement" with China. It also called for cooperation with the US in order to bolster the EU’s security situation and advocated for diversifying supply chains beyond China. In doing so, Europe hopes to avoid repeating the same mistakes as with its overreliance on Russia in the energy sector.

Ongoing Tensions

Although Chinese-European relations remain strong, there have been tensions in various areas of joint interest, which has made it necessary for Brussels to rethink its current policy towards Beijing. The most important factors contributing to this situation are as follows:

1. Chinese support for Russia in the Ukrainian war: Since the earliest days of the war in Ukraine, Beijing provided unlimited support for Moscow. It did not criticize the Russian military operation and blamed NATO’s eastern expansion for provoking the war. China later helped circumvent Western sanctions imposed on Russia through carrying out bilateral trade in order to make up for Russian economic losses. China has become the biggest purchaser of Russian oil and gas, and Europe consequently views Beijing as being on the wrong side of the war and as a "tough competitor."

2. Indo-Pacific rivalries: In 2021, the European Union revealed a new strategy for increasing its presence in the Indian and Pacific Oceans in order to bolster cooperation with countries in this region in light of the strategic importance of the area. This brought the EU head-to-head with China’s growing influence in the region, particularly as AUKUS has pursued its own activities in the region without involving the EU. Brussels could face various other challenges in the region due to its desire to avoid expanding cooperation with China.

Chinese policy has also been widely criticized in Europe due to ongoing Chinese pressure on Taiwan. China has insisted that Taiwan constitutes part of its territory, while the EU sees the latter as an independent sovereign nation with a democratic government that the EU should support. In September 2022, the European Parliament voted by overwhelming majority to adopt a resolution condemning China’s "aggressive" behavior towards Taiwan. It indicated that China’s actions could have grave consequences for Chinese-European relations.

3. European criticism of the human rights situation in China: The EU has often warned the Chinese government about human rights issues, especially in the Xinjian region. In September, the European Commission proposed an EU ban on products made using forced labor following intensive pressure from human rights activists and lawmakers who were concerned about the situation in the Xinjian region. At the end of last year, the US took similar measures following Western reports of persecution of Uyghur Muslims. Brussels also imposed sanctions on some Chinese officials in March 2021 over the Xinjian issue. In response, Beijing imposed similar sanctions on members of the European Parliament, among others.

4. Exodus from China’s bloc with central and eastern Europe: In 2012, Beijing launched the 17+1 group to further cooperation with central and eastern European countries, most of which were EU members. China aimed to strengthen ties with these countries and bolster its campaign for the ambitious Belt and Road Initiative to build bridges, railroads, power plants, and other infrastructure linking the Asian and European continents. However, the group is now down to only 14 European members after Estonia, Latvia, and Lithuania left the bloc because the group’s objectives did not align with the strategic aims of those three countries.

While 14 countries remain part of this cooperative framework, these countries are increasingly uncertain about the viability of continuing with the group. There are calls within national institutions in the remaining countries to withdraw in order to avoid economic dependence on China, especially since Beijing failed to fully deliver on the promises of investment it had made when the group was first founded.

5. Halting resale of liquified natural gas to Europe: Chinese authorities have recently asked its huge state-owned energy companies to stop reselling shipments of liquified natural gas (LNG) to Europe, which is hungry for gas. This could deal a blow to European hopes for continued flows of large quantities of LNG; China claims it needs to protect its own gas supply as winter approaches. Importers of LNG in China had sold their excess supply to Europe for huge profits given the limited local demand in China, while the country has suffered from sudden and ongoing COVID-19 lockdowns and slowing economic growth. These sales provided relief to European markets during the past year and helped compensate for the lack of Russian gas supplies.

6. Escalating rhetoric regarding Beijing’s economic activities: European rhetoric regarding Beijing’s economic activities has recently escalated. For example, Charles Michel, the president of the European Council, stated on 21 October 2022 that the council hoped to "work towards ensuring greater reciprocity and rebalancing, especially in the economic relations between China and the European Union." Meanwhile, debate has erupted in Germany over China’s plans to buy a stake in the container terminal in the Hamburg port. Some German officials, including Robert Habeck, the federal minister for economic affairs, called for rejecting China’s bid.

Decoupling Challenges

The recent geopolitical shifts in Eurasia have led the EU to think about reducing its dependence on China in order to avoid a repeat of the Russia-Ukraine crisis scenario. However, there are many factors that could pose an obstacle to European plans, including the following:

1. EU concerns on scaling back relations with China: Almost all EU countries are concerned about economic dependence on China, especially since they see China as the EU’s main competitor in several fields. These countries will need to move towards strengthening cooperation with democratic nations. Nevertheless, some European leaders are concerned about proceeding in that direction and want to pursue US policies in this regard. Others would like the EU to develop its own policy towards China without ending up completely dependent on the US instead. This was what happened when Greece blocked the EU’s efforts to condemn Chinese human rights violations at the UN in 2017.

Germany exemplifies this predicament regarding developing a European consensus towards relations with China. The German intelligence agency has warned of potential Chinese attempts to access German economic information and scientific knowledge through cyberattacks as part of China’s efforts to become the most powerful economy in the world by 2049. However, major German car companies are not ready to give up this huge market. According to an Asharq news reports, on 17 October 2022, Volkswagen announced that it would invest 2.4 billion euros in a joint venture with Chinese AI intelligence company Horizon Robotics in order to develop autonomous vehicles in China.

2. Strong trade partnerships between Europe and Beijing: Since 2011, China has been a major trade partner for the EU and a key source of imports. The two sides have enjoyed a strong trade partnership that would be difficult to extricate themselves from. Despite the impact of COVID-19 closures on global trade in 2020, trade between Europe and China was not affected. Bilateral trade between the two countries reached 587.9 billion euros in 2020 compared to 562 billion euros in 2019. Trade has continued to gather momentum in 2021 as economic activities returned to normal and grew to 695.5 billion euros.

Bilateral trade between Europe and China is expected to reach almost a trillion dollars in the coming year as a result of European reliance on Chinese exports and rising global prices. This is especially true since EU countries rely primarily on China to supply more than 20 products including semi-conductors and rare metal, which puts Europe in a weak strategic position regarding its ability to distance itself from China.

3. Likely gains from the Belt and Road Initiative: China has developed strong economic and trade relations with many European countries, some of which have joined its Belt and Road Initiative. Although some European countries had tried to slow down the implementation of projects connected to the initiative, the EU revealed during the past two years that it is making efforts to work with Chinese investments as part of this project. China is projected to invest 300 billion euros by 2027 in projects linked to physical, climate, and digital infrastructure in order to strengthen supply chains and trade flows in the EU and to help combat climate change.

In conclusion, it will be difficult for European efforts to reduce dependence on China to succeed in the near future. This is especially true in light of uncertainty regarding how the global economic crisis caused by the war in Ukraine will unfold. The EU remains in serious need of all possible economic alternatives that can help it weather the current crisis. Furthermore, looking for quick alternatives to an economy the size of China’s is no easy task, given the robust bilateral trade relations between China and the EU.

Europe is concerned about the extent to which it can instead rely on the US, which exploited the crisis to achieve the greatest possible gains regarding selling natural gas to Europe. There is also no indication that Beijing is thinking about changing the course of its relations with Brussels. If Europe gets through the current crisis, it could develop a medium- or long-term strategy to reduce its dependence on Beijing. However, it is unlikely that this would happen to the same extent that Europe is currently pursuing with Russia, with regard to fully ending dependence on all Russian products, especially energy.