Europe's Dual Objectives with China: Uncertainty Looms Over Progress

 

Europe seeks two main objectives from China: firstly, a shift in its relatively pro-Russia stance regarding the conflict in Ukraine, and secondly, a rectification of the trade disparity — last year, Chinese exports to the EU eclipsed imports from the bloc by 291 billion euros ($310 billion).

 

Progress on either front remains uncertain.

German Chancellor Olaf Scholz is the latest European leader to engage with China, returning with little more than promises for dialogue. Chinese statements following his meetings in Beijing this week showed no signs of compromise on the contentious issues between the EU and China.

 

Despite some optimism in Europe stemming from China's desire for foreign investment to invigorate its sluggish economy and efforts to mend relations with Europe, the United States, and Australia, strategic alliances with Russia and promoting its green energy sector as a technological frontrunner might outweigh these considerations.

 

EUROPEAN DISCORD ON TARIFFS

Both the EU and the U.S. voice grievances over China's green energy policies, which have led to excessive manufacturing capacity in electric cars, solar panels, and related products.

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The flood of low-priced exports has negatively impacted solar companies in Europe and the U.S., posing a potential threat to other sectors. The EU initiated an inquiry last autumn into Chinese subsidies and is contemplating tariffs on electric vehicles imported from China.

 

While China has agreed to discussions on production capacity with the U.S., it remains resolute in defending its exports of green energy products. Chinese leader Xi Jinping informed Scholz that these exports have not only enriched the global supply chain and alleviated inflationary pressures but also contributed significantly to global climate change mitigation efforts.

 

Overcapacity presents a challenge for China as well, prompting calls for better policy coordination among its provinces. However, while such coordination may prevent future overcapacity issues, it won't resolve the existing ones.

 

Not all European voices advocate for tariffs, as China stands as a vital market for many European companies. Some fear that tariffs could incite a trade war.

 

The German Chamber of Commerce emphasizes the importance of opening Chinese markets further to German companies. Consequently, Scholz has called for a dependable legal framework, intellectual property protection, and equitable market access for foreign enterprises in China.

 

As Chinese firms emerge as innovation leaders in crucial technologies, these issues gain heightened significance. A recent survey by the Chamber found that a minority of German companies view Chinese competitors as innovation leaders, particularly in the automotive sector.

 

A FUNDAMENTAL DIVIDE ON UKRAINE

If there's one issue where most of Europe finds common ground, it's the expectation that China would exert pressure on Russian President Vladimir Putin to halt the invasion of Ukraine, now in its third year with no sign of abating.

 

Dutch Prime Minister Mark Rutte conveyed this sentiment in Beijing three weeks ago, urging Chinese leaders to influence Russia's actions. Similarly, French Foreign Minister Stéphane Séjourné emphasized France's anticipation of China relaying clear messages to Russia regarding Ukraine during his meeting with his Chinese counterpart.

 

This week, Scholz reiterated this plea, recognizing China's influence on Russia and urging President Xi to leverage it to end the conflict.

 

However, a fundamental disparity exists between Europe and China's perspectives. While Europe, aligned with the U.S., condemns Russia's actions and demands its withdrawal from Ukraine, China refrains from assigning blame solely to Russia and insists on addressing Russia's concerns alongside those of Ukraine and the West in any peace settlement.

 

China's continued trade with Russia undermines Western sanctions, raising concerns about Chinese companies supplying "dual-use" items aiding Russian military capabilities. Ding Chun, director of the Center for European Studies at Fudan University, asserts China's right to maintain normal economic ties with Russia and denies supplying weapons to either side.

 

While China shares the desire for an end to the conflict, it seems unlikely to pressure Russia into withdrawal. The Chinese statement on the Xi-Scholz talks did not address the German leader's request for intervention.