Why is China betting on Europe?

Iran really had no choice. Neither did North Korea. But China did. In other words, did China make the right bet by backing Vladimir Putin and Russia’s invasion of Ukraine?

Technically, or rhetorically, China has not supported the invasion, but in practice China has developed into Russia’s most important trading partner and its most important military supplier.

Neither Iran nor North Korea really had a choice, since they had neither special economic ties nor prospects for development with Europe. Both were under a series of economic sanctions that limited their options, plus their own economic mismanagement made engagement with Europe of limited value. So why not offer all the help they could to Russia, one of the few countries that does business with them and shares their resentment towards the democratic West?

But China, with its booming (albeit slowing) economy and extensive trade and investment ties with Europe, is a very different story: the EU estimates EU-China trade at about 740 billion euros ($790 billion) in 2023, more than four times that of Russia-China. And Europe has long since lost its geopolitical ties with Asia, so Chinese assertiveness there, which irritates the U.S., has far less impact on Europe.

In short, Europe-China relations were valuable to both sides and worth nurturing, especially in the context of deteriorating US-China relations.

So why has China come to fully cooperate with Putin?

One theory is that China’s support for Putin developed through a series of gradual mistakes. China supported Putin before the war began, but did not expect Russia to launch a full-scale invasion. It also did not take into account the duration or damage of the war, but once the war began, it was not easy to get out of it. Even today, there is still a chance that Putin will win, or at least that he will avoid a complete defeat. So, this was more or less a miscalculation.

The second theory is that Europe has made this free. China has maintained and even strengthened its economic ties with Europe while supporting Putin’s aggression. The EU could start imposing economic costs on China’s gamble by joining the Trans-Pacific Partnership trade agreement (as the UK has already done) or pursuing a free trade agreement with Taiwan. How about a “mini-FTA” between the EU and the US, making all items with tariffs below, say, 2% immediately duty-free? Even adopting a simple US-EU agreement on cars and electric vehicles would improve Europe’s competitiveness. But Europe seems stuck and unaware of the need to impose costs on Chinese behavior.

So, ignoring the morality of this decision, ignoring the human cost of this war, and simply Real politics. China sees this as an opportunity to undermine the credibility of the United States and its allies.

Whether Putin wins or draws, the message will be: be careful of security agreements with the United States, because these commitments don’t mean much. The United States has little interest in long-term engagement, and American politics will be exhausted after a few years. Maybe it’s time to think about compromise with China.

I had the opportunity to meet with a senior EU delegation visiting San Francisco, who vehemently disputed China’s impunity. “Every time we meet with them, we complain about their behavior,” one official said.

This is a self-deprecating claim. If the EU’s response is limited to a series of complaints, then Chinese actions are certainly costless. Even more reassuring is that I had lunch afterwards with two visiting members of the German Bundestag, both of whom said that Russian aggression is a major concern for Germany and requires a policy response. So, if Brussels has no ideas or means on how to respond, Berlin apparently does. Because if formal complaints are the primary response to China, then from Germany’s point of view, China was right to bet on Europe. By not giving China a red light, the EU is effectively giving it a green light.