China reduces Europe’s ability to compete economically

European leaders appear to be admirably frank in diagnosing their political and economic problems, if unfortunately not adept at solving them, but if they travel to China, they will find many of their self-criticisms directed at them, but in a louder and harsher tone.

Europeans endlessly discuss how to avoid falling into the trap between America and China. For many in China, this seems unnecessary, because they already view Europe as an American “pawn.”

In this context, a researcher from Fudan University said in a recent article that “Europe is unable to truly liberate itself from America and become independent.”

mockery

Europeans are obsessed with their competitiveness, and in China, many see this as ridiculous. Europe simply lacks the strength to meet challenges in many technological fields, according to the Chinese newspaper Economic Daily. As for the challenges facing European unity, Europeans like to look at themselves, and in China critics go even further.

“The survival of the European Union until 2035 is questionable,” National Academician Zhang Weiwei said in a television interview last September. These are just public comments. In private, according to sources citing a group of Chinese scholars, opinions are mostly sharper. One advisor says that Europe is somewhat like an “old concubine” who cannot accept that she has been abandoned by her American “emperor,” while another says that “Europe hates innovation.” This disdain sometimes seeps into official affairs, with a European trade representative reporting that during a recent visit to the Chinese Foreign Ministry, he was greeted with a stern rebuke, which he thought was just for fun.

Wrong AnalysisThe analysis that says that Europe is weak and divided is not completely wrong, but the Chinese view tends to portray Europe’s challenges in an extreme “caricature” manner, and this leads to two errors in China’s approach towards Europe. The first is the assumption that Europe is largely following America’s leadership. Over the past few years, many Chinese analysts, although not all, have applied this view to the war in Ukraine, as they see the conflict at its core between America and Russia. From this perspective, Europe seeks peace and stability, but America seeks peace and stability. It is the one that wants to prolong the war at the lowest cost in order to weaken Russia, and there is hardly any thought as to why most European leaders consider the war in Ukraine a direct threat.

Another example is the Dutch government’s decision to control Nexperia, a Chinese company based in the Netherlands that specializes in manufacturing electronic chips. The Dutch can claim that they acted of their own free will, to confront the risks that threaten their economic security, but Chinese observers do not believe this, and it is certain that a small country that acts so boldly must be carrying out America’s orders.

balance

The second mistake is to believe that China somehow offers Europe a way out of its problems. Chinese researchers are well aware of Europe’s long quest to achieve “strategic independence,” and they believe that Europe, like any rational middle power, wants to find a balance between China and America.

In recent weeks, the Chinese Ministry of Commerce has talked about resuming trade negotiations, and it appears that it has not abandoned the investment agreement that was halted in 2021 amid a dispute over China’s actions in Xinjiang, a region located in the northwest of the country.

To some extent, the Chinese are justified in this thinking, as they can always find some European interlocutors who will flatter them by raising the possibility of “win-win” cooperation.

Economic model

However, this desire to make deals reveals a lack of awareness of how important the Chinese economic model is to Europe. In the past few years alone, trade relations between Germany and China have gone from being balanced to a huge deficit that is expected to exceed $100 billion this year, and European companies that have long benefited from the Chinese market now see it as their strongest competitor.

Although China’s system to control rare earth exports was a response to US President Donald Trump’s trade war, it was as harmful to European companies as it was to American companies. It was a lesson to Europe about the dangers of relying on China.

Things are getting more intense on the diplomatic front. Last June, the European Union canceled an economic dialogue with Beijing, citing a lack of progress in trade disputes, and in October, German Foreign Minister Johan Vadevahol postponed a visit to Beijing when he was not offered the usual high-level meetings. For their part, the Chinese were upset that Vadivahol used a speech in Japan to criticize China’s “increasingly aggressive” behavior in Asian waters, and European officials in Beijing reported that the Chinese Foreign Ministry had taken a step… It is unusual for it to reject diplomatic initiatives or requests for formal diplomatic meetings.

One European representative says that China is tired of Europe’s threats and feels able to ignore them.

Great experience

In fact, China sees no reason to be concerned about the deterioration of its relations with Europe, and political officials in Beijing appear confident that they have already outmaneuvered Trump in the trade war, and believe that beating Europe will be easier.

Moreover, China has great experience in strengthening relations with European countries individually in order to weaken their cohesion as a bloc.

Currently, China has identified Hungary, and increasingly Spain, as two countries particularly ready for Chinese investment. In addition, even when Europe takes action, as with tariffs on Chinese electric cars, it remains constrained by its deep adherence to the rules, and bureaucrats in Brussels do not strike fear into the hearts of decision-makers in Beijing. About “The Economist”

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Limited possibilities

Is China at risk of miscalculation? As long as the war in Ukraine continues and China remains supportive of Russia, the prospects for an improvement in Europe’s relationship with China are limited. At the same time, Europe’s views on trade are rapidly evolving, and a continued rise in Chinese exports may eventually prompt Europe to take further measures – some of which may be aggressive – to ward off this threat. If that happens, it will be evidence of the solidity of Europe’s position. But Beijing, convinced that America is calling the shots, may still miss the important thing: This time when Europe gets angry, it will be of its own accord.

. Chinese researchers believe that Europe, like any rational middle power, wants to find a balance between China and America.

. Beijing considers that it has already outmaneuvered Trump in the trade war, so it believes that overcoming Europe will be easier.