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Of all the possible questions surrounding President Xi Jinping’s first trip to Europe since the pandemic, the most important one is: Are China-EU relations better now than they were a week ago? For a sensible definition of what improvement is, the answer is no. But to understand what opportunities were missed, it also makes sense to ask what improvements could have been made in principle.
It is easy enough to understand President Xi’s main objective. His trip, which followed France to Serbia and Hungary, signals a desire to drive a wedge between European countries to block any agreement supporting a tougher stance on China. The reason why Belgrade and Budapest welcome President Xi is also simple and clear. China’s interest provides a new diplomatic foothold in the face of EU pressure for friendly relations with Russia. Hungary, in particular, has benefited from Chinese investments in the production of batteries and other green technologies for the EU market.
But what did Emmanuel Macron want to achieve? At Xi’s meeting in France, he appealed to protect car manufacturers from China’s “overcapacity” in electric cars. Apparently, the EU anti-subsidy investigation launched at France’s behest is not considered sufficient. Paris has so far managed to avoid tariffs on cognac that the Chinese government threatened in response. However, despite the war with Ukraine, there has been no noticeable change in the dichotomy of the Chinese government’s support for Russia.
This is a thin porridge.France is Requester, seeks “balance” in trade relations a little too persistently. Chancellor Olaf Scholz’s recent visit to Beijing came too close for comfort, as he was on a similar commercial errand for German companies.
But France wants more than Germany. Just a few weeks ago, President Macron called for Europe to be a force in shaping the world around it, perhaps beyond cognac tariffs. Great strategic moves are those that take the world in a different direction. The missed opportunity this week was not seeking a big deal to accomplish this.
Most fundamentally, what do Europe and China want from each other? Europe rightly views Russia’s attack on Ukraine as an existential threat to its security and liberal democratic way of life. China stood on the other side. Europeans also worry that China is sabotaging Europe’s green technology self-sufficiency by flooding it with cheap products.
Beijing wants a multipolar world order, which requires preventing Europe from aligning too closely with U.S. policies of technological containment and supply chain “friendshoring.” This is coupled with domestic growth plans predicated on exporting large amounts of green technology, which will require rich countries’ markets to remain open.
Finally, both sides want to prevent EU-China relations from turning into a situation where the US dog is wagging its tail.
This combination makes for a great deal. Both sides will need to move forward from solid positions to gain greater advantages elsewhere. The key is to specify the nature of the options. For China, it has to choose between Russia and Europe. The EU will have to choose between whether China will support Russia’s war effort or whether it will play a role in supplying Europe with supplies. If President Macron is serious, he will try to induce China to move away from Russia in exchange for a secure commercial presence in Europe.
Mr. Xi is unlikely to disavow Vladimir Putin in public. But can the Chinese government effectively end material support and sanctions evasion, and tacitly end opposition to the confiscation of Russian state assets? Europe will not sign a death warrant for its green manufacturing sector and will not ignore hybrid security threats. But can the green transition be recalibrated to accommodate China’s commercial plans and give enough room for both EU-made and Chinese products?
France is ideally placed to pursue such a geopolitical shift. Paris is currently the strongest supporter of barring imports from China. Conversely, it is in the best position to make concessions that will allow China to enter further. As the European power most susceptible to threats of divestment from euro bonds if the EU confiscates Russian state assets, China stands to gain the most from reducing its ties with Russia.
Europe cannot welcome the idea of its industry being wiped out. But we need all the green technology we can get. For example, even if we add the most frightening estimates of China’s EV exports to the EU’s own capacity, Europe’s annual registration of around 10 million new cars will still fall far short of the amount needed to become emissions-free by 2030.
France has shown how public procurement initiatives can secure order pipelines to local manufacturers. The city of Paris has made subsidies based on carbon emissions from car production and transport, including a leasing scheme that allows low-income commuters to rent electric cars for 100 euros a month. As a result, most EVs outside of Europe were eliminated.
Many people will deny that a big deal between China and the EU is unrealistic. But it was not realistic to expect that until Richard Nixon normalized relations with Mao’s China. He could not hope for that until Mikhail Gorbachev dismantled communism in Europe. That is the point of geopolitical strategy. It is about changing reality so that you are not paralyzed by the reality of the world.
martin.sandbu@ft.com
