Russia’s invasion of Ukraine has provoked a profound reassessment in European capitals of their individual and collective relations with China.
Faced with the need to quickly get rid of Russia‘s accumulated energy dependency over decades, government officials from Rome to Prague are reassessing the extent of their economic and political ties to China.
Senior lawmakers in Berlin, now acknowledging that closeness to Russia was a historical liability, are beginning to see the danger of repeating the mistake with another authoritarian regime, which raises alarm bells about Germany‘s status as Beijing’s largest European trading partner.
The countries of central and eastern Europe they are questioning the convenience of the so-called 16+1 forum with China. Italy has just strengthened its veto power against foreign acquisitions, a move aimed at China.
In the European Union, attitudes have soured over Beijing’s refusal to condemn the Russian invasion and his attempts to undermine the transatlantic unity that the war fostered. A virtual summit between the EU and China was held on April 1 against the backdrop of what a person familiar with the discussions described as an increasingly rocky relationship.
Against the backdrop of war in Europe, the EU went into the talks with the key priority of asking China to use its influence with Russia to stop the bloodshed, the source said, adding that there was great concern that China’s continued inaction would have a lasting negative impact on EU relations.
After the summit, a reading from the Ministry of Foreign Affairs in Beijing said that President Xi Jinping asked Europe to have an “autonomous” vision of China, and that the solution to the conflict lay in accommodating the “reasonable security concerns of all parties involved”.
“A dialogue of the deaf” was how the EU’s foreign policy chief, Josep Borrell, described the exchange with China.
After Xi met with Vladimir Putin in early February and declared an “association without limits”, Beijing has tried to remain neutral in the conflict, expressing its understanding of the Russian president’s position, even defending Ukraine’s sovereignty.
Beijing is unlikely to welcome the instability and economic turmoil that Putin’s war has caused. However, even if your ability to influence him is limited, the EU maintains that China has unique channels it can use to try.
The opinion of a European diplomat in Beijing is that the war is further alienating China and Europe, reinforcing their systemic rivalry. The pandemic and the realization that Europe was dependent on China for basic medical supplies was the wake-up call; Russia’s war against Ukraine reinforces the argument that Europe must reduce its dependence on Beijing, the diplomat added.
“This is really the awakening of the West,” said Lithuanian Foreign Minister Gabrielius Landsbergis, whose Baltic nation suffered a collapse in exports to China after arguing with Beijing over Taiwan, the democracy-island China considers its territory. . The EU filed a complaint with the World Trade Organization in March over China’s treatment of Lithuania.
“The main lesson to be learned from Russia’s war in Ukraine is that trade alone does not change the way authoritarian countries act,” Landsbergis said in an interview in Vilnius. “When we talk about China, we clearly see that new dependencies are developing.”
China overtook the United States as the EU’s biggest trading partner in 2020, with total trade of some $868 billion last year.
The war in Ukraine has hampered already fragile supply chains on trade routes between China and Europe, while driving up energy and raw material costs. But geopolitical considerations also influence companies operating in China.
Most German companies in that country declared in late March – before the Covid Zero lockdowns in Shanghai and elsewhere – that the crisis caused by the war in Europe was affecting their strategy in China, according to a survey carried out to 391 members of the chambers of commerce. A third of those surveyed said they expected to suspend business or planned investments, while 46% saw the Chinese market’s attractiveness diminishing. Some 10% said existing businesses could move out of China, and 27% said they expected diversification to accelerate in Asia.
Jens Hildebrandt, CEO of the German Chamber of Commerce in North China, says the trend is away from globalization and towards what he calls “localization,” where companies build localized supply chains to serve customers. specific markets. The trade conflict between the United States and China stimulated this evolution, “and the Ukraine war gives it another push,” he said by phone.
For Joerg Wuttke, who heads the EU Chamber of Commerce in China, “China’s kind of public image when it comes to Ukraine is really making a difference.” Coupled with its Covid Zero policy and associated business disruptions, “what really matters now is the perception that China is becoming unreliable,” he said, calling it a “new dimension.”
Relations between the EU and China have deteriorated greatly in the last year, marked by the imposition of reciprocal sanctions over the human rights situation in Xinjiang. China slammed members of the European Parliament, putting approval of an ambitious EU-China investment deal on hold. His deal with Lithuania increased tensions.
In March, two weeks after the Russian invasion, China warned the United States against trying to emulate NATO in the Pacific and rejected comparisons between security disputes over Ukraine and Taiwan.
“China-EU ties are already facing increasing difficulties on a number of issues, and bringing more sticking points based on nothing is in the interests of neither side,” the Chinese Communist Party newspaper Global Times said in an article. this week in which he called on the EU not to “fall into Lithuania’s trap”.
Ahead of the April summit, Brussels and member states hoped that Beijing would stop the “downward spiral” in EU-China ties by using its influence over Russia to help end the war, said Janka Oertel, director of the Asia Program of the European Council on Foreign Relations.
“That hope has been shattered,” he said in an online comment.
China always views relations with the EU from a “long-term and strategic perspective,” and is willing to work with Brussels, Foreign Ministry spokesman Zhao Lijian said at a regular news conference on Friday. “We hope that the European side will come to an independent perception of China and adopt an independent China policy.”
At the same time, Zhao said that China’s ties with Russia were a “new model” for the world.
In the EU, the feeling of dismay at China is arguably most acute among the Central and Eastern European countries that have the most belligerent views on Russia. Paradoxically, they are also among the EU nations with which China had the best relations through its 16+1 forum, which allowed smaller states an audience with leaders in Beijing.
Discontent with the forum has been evident for some time, and Lithuania left it last year. A Chinese diplomat was sent to the region last week, fueling speculation that other countries may be considering an exit. It was greeted by a warning from the Czech government that China’s support for Russia would harm its relations with the entire EU.
Still, few advocate dissociation.
The Dutch have woken up to the threat from China in recent years, but that doesn’t mean they will stop trading with or talking to Beijing, people familiar with the government’s thinking said.
Some European companies are increasing their attention to China. One of Volkswagen AG’s priorities for 2022 is “to boost our business in #China,” CEO Herbert Diess said in a post on Linkedin.
Europe needs China to stabilize the economy as it reels from the effects of war, according to Henry Wang Huiyao, founder of the Center for China and Globalization, a Beijing-based political research group set up as a bridge to explain China’s position to the world.
“The message is that if the EU is more tied to NATO militarily now, it will have to be more tied to China economically as time goes on,” he said.
The political environment in Europe’s largest economy appears to be changing in the opposite direction. German Finance Minister Christian Lindner told the Ludwig Erhard Summit last week that Berlin needed a completely new business model to reduce its economic dependence on China.
Lars Klingbeil, who co-leads Chancellor Olaf Scholz’s Social Democratic Party, spoke at the same conference of the need to learn the lessons of Russian policy from Germany and “end dependency on China.”
In Italy, Prime Minister Mario Draghi has hardened his stance on China following the Russian invasion. Italy this month strengthened its veto powers against foreign takeovers by creating a special division to oversee any potential merger.which allows you to block an operation if it affects a strategic sector.
“The war has already triggered intense debates about critical infrastructure and resilience in Europe,” Agatha Kratz, associate director of the Rhodium Group, and Max Zenglein, chief economist at the Mercator Institute for China Studies, said in a joint report this week.
The era of “massive Chinese investment” in Europe may be over, they said.
(c) 2022, Bloomberg – By Alan Crawford, Colum Murphy, Alberto Nardelli
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