Why China is cozying up to Europe
Mar 22, 2019
Photo: Kaliz Lee
Keegan Elmer

As China finds itself locked in a trade war with the world’s No 1 economy, there are perhaps few partners more important than the No 2.

As a bloc of 28 countries, the European Union is the world’s second-biggest economy, sitting between the United States and China.

The significance of staying close with the EU will not be lost on China’s president Xi Jinping.

Having landed in Rome on Thursday, Xi will use his next three days in Europe to try to ease fears that Beijing has become a threat to the EU.

Xi Jinping and his wife Peng Liyuan arrived in Italy on Thursday. Photo: AP

Major members of the bloc have expressed concern that China is trying to sway central and eastern European nations with promises of investment so that they will cut Beijing some slack on issues such as China’s trade practices and human rights.

“China is in need of partners,” said Lucrezia Poggetti, a research associate at the Berlin-based Mercator Institute for China Studies.

But she said that China would be hard pressed to allay European concerns on a range of issues, including the alleged risks posed by Chinese telecoms companies.

Those concerns about China were spelled out last week in a paper that for the first time labeled the country a “strategic rival” of the European Union.

It outlined 10 points of action for the EU in its relations with Beijing: including expanding cooperation on issues such as North Korea, ramping up pressure to end market-distorting state subsidies for domestic industries and curtailing possible threats to 5G telecommunications security.

The document also sets an ambitious deadline of 2020 for the completion of a long-awaited EU-China joint investment agreement.

Chinese and Italian officials attend a seminar on Xi Jinping's book in Rome on Thursday. Photo: Xinhua

Frans-Paul van der Putten, senior research fellow at the Clingendael Institute in The Hague, said the paper was aimed at helping EU member states deal with a more “powerful China.”

“While the [European] Commission is getting tougher on China, at least for now it does not seem to be aiming for a confrontation with China,” he said.

That bodes well for China, which is already embroiled in a lengthy trade conflict with the US.

Beijing fears that Western economies could align against it in their demands for greater market access and an end to industrial subsidies, among other things.

Shortly before the US imposed tariffs on Chinese imports on July 6, Chinese Foreign Minister Wang Yi called on Europe to work with China to protect the global trade regime and not “stab China in the back” – suggesting that Beijing was worried that Brussels might side with Washington.

In recent weeks, senior Chinese diplomats have launched a charm offensive, calling on Europe to stay “independent.”

Analysts say the European Union is increasingly feeling the need to voice its concerns over China's economic policies. Photo: Reuters/Jason Lee

But even if the EU doesn’t fully align itself with the increasingly hawkish Trump administration, a shift in China-EU relations seems inevitable.

Joerg Wuttke, a former president of the EU Chamber of Commerce in China, said the EU wanted to maintain its relations with China, but increasingly felt the need to take stronger action to voice its concern.

“The EU has no interest in cooling its China relationship, but if it does not act now to protect its economy from unfair state-owned enterprise competition in the EU market, then the citizens of Europe might ask for more protection,” Wuttke said.

“[There is] growing realism in Europe and the end of naivety when it comes to China.”

Keegan is a contributor to Inkstone. He is a reporter at the South China Morning Post covering China in world affairs.