Partners and Rivals

But accompanying these events was an increase in tension between China and the EU, as EU officials hardened their criticisms of China. With the signing of a joint statement during the China-EU summit, it appears that the bilateral relationship has stabilized.　　

In the statement, the two sides reaffirmed their strategic partnership and agreed on a timetable to address trade practices, bringing hopes for future cooperation between China and the EU.　

However, to better understand what the future may bring for the China-EU relationship, one needs to examine some of the factors that have brought bilateral relations to their current state.

The US Factor　

Since the current US administration started to push its America First agenda around the globe, severing trans-Atlantic trade ties and leading to a trade war with China, US-China relations appear to be playing an increasingly important role in interactions between China and the EU.　

With a combined trade in goods that accounts for about 34 percent of the world’s total, China, the EU and the US are the world’s top three trade players. With equal weight in terms of total merchandise trade volume, the dynamics of any bilateral trade relationship could have a major impact on the other party.　　

In the early stages of the trade war launched by the US, China and the EU seemed to move closer. At the World Economic Forum in Davos in January 2018, leaders from the EU and China echoed each other on the need to uphold multilateralism against the rising tide of global protectionism.　　

In the annual China-EU summit held in July 2018, China and the EU signed a joint statement, the first in three years, reiterating their commitment to an open world economy and voicing their resistance to protectionism and unilateralism, although they did not sign any trade deals.　

Yet a united front with the EU against the Trump administration’s agenda seemed unlikely given the traditional political and security ties across the Atlantic, especially as the trade friction between the EU and the US eased when the Trump administration excluded the EU from its new tariffs on iron and steel in March.　　

The EU reportedly rejected China’s proposal raised prior to the summit to launch a joint action against the US and the World Trade Organization. Asked about the report, Chinese Foreign Minister Wang Yi said in Brussels that as China is at the frontline of the world’s anti-protectionism efforts, China hoped that Europe would not “stab China in the back.”　　

In July, the US-China trade friction intensified as the US slapped 25 percent tariffs on US$34 billion of Chinese goods. China retaliated with similar tariffs.　　

In the same month, the EU signed a free trade deal with Japan to eliminate all tariffs. In September, the EU, the US and Japan signed a trilateral statement on “non-market-oriented politics and practices of third countries” including industrial subsidies and forced technological transfers, although it does not mention any particular country. Also in September, the EU released a strategy paper on “Connecting Europe with Asia,” which was widely seen as an effort to counter the influence of China’s Belt and Road Initiative (BRI). These developments led to increasing concerns that the EU has joined the US in its efforts to establish a united front to isolate China.　　

Policy Papers　

In December, China launched its latest policy paper on the EU, which surprised some analysts as China’s last EU policy paper was released four years earlier in 2014. Julian Chan, a founding member of the Institute of China-Europe Affairs, a Hong Kong-based think tank, said that China’s new policy paper on the EU stems from a sense of urgency to renew its stance and relationship given the dynamics of the trilateral relationship between the EU, the US and China.

“China is more determined than ever before to show itself to the EU as a real, dedicated and committed player in the game of globalization and multilateral trading order. Therefore, China wants to be taken seriously by the EU at an eye-to-eye level,” Chan said in an article in The Diplomat in February.　　

In doing so, China called on the EU to “avoid politicizing economic and trade issues,” and for the first time indicated its wish to launch a joint feasibility study on a China-EU Free Trade Area. In the meantime, the policy paper reiterated China’s stance on political and security issues considered China’s core interests, including the South China Sea, Taiwan, Hong Kong, Tibet and Xinjiang. Compared to China’s previous EU policy paper, it adopted stronger wording regarding these issues. According to Chan, the new rhetoric, which stems from China’s desire to be dealt with “on an equal footing,” proved too harsh for the EU.　　

“China is essentially calling for the EU to understand its systems and structures, which many in the EU may find difficult to swallow, given how China is currently perceived in the EU,” said Chan.　　

As if to respond to China’s policy paper on the EU, the EU launched its latest EU-China Strategic Outlook report in March, substantially sharpening its political stance and labeling China a “systematic” rival for the first time. Departing from its typical soft approach of the past, the EU also called China “an economic competitor in pursuit of technological leadership and a systemic rival promoting alternative models of governance.”　　

It was against this backdrop that Chinese President Xi Jinping embarked on a trip to France, Italy and Monaco in March 2019. Despite signing a US$45 billion deal with France, China’s success in getting Italy, the first G7 country, to officially endorse its BRI project triggered more protests, as many in Europe regard China’s EU policy as a strategy of divide and conquer.　　

Misperception or Tactic?　

But for many analysts, the source of internal division within the EU is not caused by China. Xiong Wei, a professor of international relations at China Foreign Affairs University, argued that the EU’s hardened position against China stems from increased anxiety over China’s rise. “Not only has the EU’s international competitiveness been declining in the past years, it also faces challenges from within, such as the impact of Brexit and the rise of far-right parties in some member states,” Wang said. “Therefore, it is very convenient to use China as a scapegoat.”　　

“By highlighting the threat posed by a common external enemy like China, the EU can inject a sense of urgency in calling for unity between its member states,” Xiong told NewsChina. 　　

Xiong’s view is shared by Wang Yiwei, a professor of international relations at the Renmin University of China. Wang argued that the reasons behind the different positions held by EU member states toward China do not lie in China, but in the different historical and current situations of its member states.　　

For example, Wang pointed out that France’s resistance to China’s Belt and Road Initiative stems from its concerns over China’s increasing influence in the Francophone former colonies in Africa. By contrast, for Italy, which does not have a large colonial legacy and is now facing financial difficulties, cooperation with China is welcomed.　　

David Dodwell, executive director of the Hong Kong-APEC Trade Policy Study Group, put it more bluntly. In an opinion piece published in the South China Morning Post on March 24, Dodwell argued that the problem with the EU strategy toward China lies in its insistence on dismissing China along with other developing countries merely as technology-dependent sources of simple goods and cheap commodities.　　

“For the past five decades in the EU’s history, Europe’s leaders have been self-obsessed, far more concerned with building stronger, closer links between themselves than with adjusting to the fast-changing realities of the global economy, in particular across Asia,” Dodwell wrote.　　

For other analysts, the EU’s hardened position against China at a time when Beijing is entangled in a trade war and tough negotiations with the US is tactical. Kong Fan, a columnist with guancha.cn, warned that the EU is adopting a strategy of “having a foot in both camps” in its trilateral interactions with the US and China.　　

On one hand, the EU appears to be ready to adopt a common stance with China to speak against the US administration’s protectionism and unilateralism. On the other hand, it did not mind joining the US-led attacks on China’s trade practices.　　

Balancing between the US and China allowed the EU to fend off pressure from the US, and with a tougher position, it could exploit the weakened position of China, as Beijing may have to face assaults from multiple fronts.　　

Moreover, reports in the past couple of months claim that major progress in the US-China trade talks may also have the EU worried that the eventual deal could put EU companies in a disadvantaged position regarding access to the Chinese market.　　

Jyrki Katainen, vice-president of the European Commission, in January warned the US and China that any trade deal reached between the two should avoid discriminating against European companies.　　

With the signing of the keynote joint statement with China, in which the two sides reaffirmed their strategic partnership and agreed on various thorny issues, the EU and China seem to have achieved their respective goals. While the EU managed to have China address its trade grievances, and is now more assured about its access to the Chinese market, China emerged with a consolidated position in its trade talks with the US.　　

But challenges remain for both sides. For China, the months of trade talks with the US have not resulted in a final deal. For the EU, trade tensions with the US appeared to have resurfaced. On April 9, the same day the EU signed the joint statement with China, US President Donald Trump threatened the US would impose tariffs on US$11 billion of products from the EU. In response, the EU threatened to retaliate with tariffs on US$20 billion worth of US products.　　

Obviously the US will continue to be a crucial factor in shaping the direction of EU-China ties.