In March, the European Commission issued a statement that China is an “economic competitor” and a “systematic rival.” This announcement came with China’s growing economic involvements in Europe, as demonstrated by Italy’s accession into the Belt and Road Initiative (BRI).
Despite the commission’s statement, the European Union remains susceptible to Chinese influence. Considering the nature of China’s Europe policy, the EU should devise a realistic, unified strategy that can prudently address Beijing’s ambitions.
Chinese policy objectives and tactics in Europe warrant grave concerns. Despite publicly respecting the EU’s role as the continent’s representative, Beijing approaches individual member states to play them off against one another. The 16+1 forum, which facilitates China’s partnership with 16 countries in Central and Eastern Europe, includes 11 EU members. These countries are often treated as “junior partners” in the EU because of their relative weakness, and China has been exploiting their vulnerability to bend and manipulate market regulations.
Furthermore, Chinese companies penetrating the European market often undermine the EU’s values. State subsidies, state-owned corporations, imposed technology transfers and a lack of protection of intellectual property erode the EU’s free-market principles.
However, the EU’s internal problems render its members myopic and divided. Despite China’s increasing footprint, it is not the EU’s priority agenda. Issues such as Brexit and the refugee crisis dominate the bloc.
National governments hit by economic crisis accept lucrative investment offers from China to garner domestic support without careful assessments. It is no coincidence that the countries that unconditionally welcome Chinese investments often have populist governments, such as Hungary and Greece. Italy only sees advantages of Chinese investments in its ports, despite the apparent danger of Beijing exercising influence over key trade transportation modes. While more powerful members such as France and Germany are exercising increased vigilance vis-a-vis China, countries experiencing recession and political crises lack shrewd, long-term geopolitical mindsets.
What could the EU do to address these problems? First and foremost, it should take a firm stance on China based on realism and reciprocity. EU leaders should point out China’s unfair practices such as subsidies and forced technology transfers. The EU should hold discussions on implementing regulations on screening of Chinese foreign direct investment, with a particular focus on technology.
If European companies face discriminatory practices in the Chinese procurement markets, the European Commission should start an investigation that could potentially restrict Chinese firms’ access to the European market. To ensure that most EU members are on the same page on China, bloc leaders should organize resources from both within and outside the EU to provide potential alternatives to the most suspicious investments from Beijing. While accepting Chinese investments, the EU should remain vigilant.
More broadly, the EU should take a more proactive role in preserving the liberal order. China’s aggrandizing clout in Europe is part of its expansive global strategy: the Belt and Road Initiative. The BRI and connectivity strategy are infamous for their debt traps, whereby Chinese companies, sponsored by their government, deliberately embark on financially unsustainable infrastructure projects. Once the host nation fails to pay back its debt, it has to concede influence over the resulting product.
Even those built without financial strains have strings attached; Chinese vessels, including those controlled by various government branches, get free access to the ports. It is not surprising that Chinese investments in European infrastructure focus on ports, such as the ones in Piraeus, Greece, and Trieste, Italy.
The last couple years witnessed a global pushback against the BRI after charges of corruption, environmental damage and political meddling. Nonetheless, 15 of the 28 EU members have signed up to the initiative.
The BRI is a direct challenge to key pillars of the post-Cold War liberal order such as the rule of law; the Chinese government is allegedly preparing an institution – which will model Beijing’s legal system – to settle commercial disputes along its “belt and road,” defying the existing international tribunals for such matters. The EU should discourage its members from joining the BRI without a fundamental shift in focus of the initiative.
Such concern is shared in Washington. The US administration’s National Security Strategy labels China a “strategic competitor,” and the ongoing trade war is seen as a challenge to China’s state-driven economy. The EU should tie US efforts to counterbalance China with the preservation of the liberal system. Washington needs to come to an understanding that “America First” is incompatible with the fight for the liberal order; the US needs its democratic friends in Europe to counterbalance China. Washington and Brussels should facilitate high-level engagements specifically for coordination on China’s increasing influence in Europe and beyond.
The EU should recognize that this a competition of values beyond pragmatic geopolitics. British and French warships are patrolling the South China Sea – where China is involved in territorial disputes with Southeast Asian nations – to ensure smooth shipping of cargoes. However, the EU has been reticent on more fundamental issues; in 2016, the European Union refused to support a firm legal position on the South China Sea when China ignored an international tribunal’s ruling that defied Beijing’s claims over disputed waterways – an affront to the principle of rule of law and freedom of navigation. In March and June 2017, Hungary and Greece respectively blocked an EU statement criticizing Beijing’s human-rights abuses.
As French President Emmanuel Macron has declared, the EU should put an end to the period of European naiveté and see China as it is.