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China Seeks to Cement Ties in Europe

Chinese President Xi Jinping, European Council President Charles Michel, European Commission President Ursula von der Leyen, French President Emmanuel Macron, and German Chancellor Angela Merkel during an EU-China Leaders' video conference in Brussels, Belgium, Dec. 30, 2020.
Chinese President Xi Jinping, European Council President Charles Michel, European Commission President Ursula von der Leyen, French President Emmanuel Macron, and German Chancellor Angela Merkel during an EU-China Leaders' video conference in Brussels, Belgium, Dec. 30, 2020.

Chinese President Xi Jinping aims to bolster relations in Europe, a traditional stronghold of support for the United States, as a buffer against shaky Sino-U.S. ties, analysts believe.

Xi spoke with German Chancellor Angela Merkel last Wednesday and with European Council President Charles Michel on Friday. The council is a policymaking body for the European Union, an economic bloc of 27 nations including Europe’s largest countries.

China hopes to build trade and investment ties with individual European countries as it seeks partnerships that can counter a half-decade of acrimony with its superpower rival the United States, said Stephen Nagy, senior associate professor of politics and international studies at International Christian University in Tokyo.

Western Europe has been staunchly U.S.-leaning since World War II, though differences do surface -- for example, France's anger over a U.S.-UK-Australia military technology sharing deal (AUKUS) of nuclear-powered submarines reached last month.

“We’re seeing the European Union and Germany converge with the U.S., and that convergence is something that China would like to stop, as soon as possible,” Nagy said.

Convergence could isolate China in the developed world, complicating its global political and economic goals.

Series of sore spots in China-U.S., China-EU relations

Beijing and Washington have disagreed strongly since 2018 on the use of internet technology, the rules of international trade and China’s expansion in Asia including the South China Sea. Washington is especially watching to see whether China attacks Taiwan, a self-ruled island that Chinese leaders call their own.

EU-China relations have deteriorated as well for the past year over Beijing’s treatment of its Muslim Uyghur minority and support for Taiwan’s autonomy among leaders in Lithuania and the Czech Republic.

On the economic front, movement and discussion toward ratification of the EU-China Comprehensive Agreement on Investment (CAI) has been “justifiably been frozen” in May because of China imposing sanctions “on several European individuals and entities,” according to the European Parliament.

France, Germany and the UK further irked China this year by sending military vessels into the South China Sea where they joined Washington in keeping an eye on Beijing’s movements. Four Southeast Asian states and Taiwan call parts of the resource-rich sea their own, but China claims 90% of it.

Multiple countries in Europe now “recoil at the PRC's illiberal policies at home and overreach abroad”, said Sean King, vice president of the Park Strategies political consultancy in New York.

Up trend in China’s ties with individual European countries

While China-EU relations have been tense, China is still the EU’s No. 1 trading partner and the source of billions of dollars per year in direct investment, particularly in energy. Its relations vary from one member country to the next, with east-central European peers such as Hungary and Serbia eager to engage while Western European peers more skeptical – though seldom as harshly as the United States.

“Xi Jinping has presumably, and rightly, long seen the European Union as an easy mark and would doubtless be pursuing deeper relations there, whatever the state of Beijing's ties with Washington,” King said. Beyond politics, he said, “the Communist Party of China surely craves access to European technology, markets, universities and think tanks.

In his video meeting with Merkel, head of Europe’s largest economy, Xi said both sides support trade and "believe that the common interests of China and the EU far outweigh contradictions and differences", according to the official Xinhua News Agency.

Beijing has been locked in a trade dispute with the United States since 2018, affecting $550 billion in two-way trade with an especially hard impact on Chinese exports.

China and the EU, "as two important forces in the world, have a responsibility to strengthen cooperation and work together to deal with global problems in the face of increasing global challenges and rising instability and uncertainty," Xi said.

Xi said to the European Council President, it was “not surprising that competition and differences have emerged” between China and the EU, according to China’s CGTN news website. He suggested that the two sides work together more in technology and that China extend its multi-trillion-dollar, pan-Eurasia Belt and Road infrastructure building initiative.

Chinese leaders could attract European countries with open access to the Chinese market, where middle-class consumers still buy luxury brands from France and Italy, Nagy said. Trade “inducements” would appeal to the EU as it recovers economically from COVID-19, he said.

European nations want more investment in energy and clean technology, while both sides are looking for intellectual property protections, said James Berkeley, managing director of the advisory firm Ellice Consulting in London.

His 8-year-old consultancy does most of its business today with a U.S. focus, but it anticipates new interest in China if Sino-UK ties improve, Berkeley said. Chinese automotive companies, for example, may be able to refine intellectual property in Europe and reapply those rights in their home market, Berkeley said.

“There are Chinese investors that have an international perspective and they’re looking to deploy capital into businesses internationally in which they can build out the intellectual property and then reverse that intellectual property,” he said.

Brisker trade and investment ties won’t sway pro-U.S. European nations toward China politically, experts say. However, China may be able to improve ties with central and Eastern European countries and “split” the EU, Nagy said.

He likened that approach to Southeast Asia. Chinese aid on the Asian subcontinent has won the loyalty of Cambodia and Laos but missed that mark in Vietnam and the Philippines, where citizens have long distrusted China.