The past few years have seen European powers pursuing seemingly competing policies. It could be characterized as a combination of “interest-driven diplomacy” and “morality-based diplomacy,” seeking to expand cooperation with China on economic, trade and climate change issues while pushing back collectively against China on so called “human rights” issues and adherence to global rules.
As China grows in market influence and global weight, both sets of policies are gaining traction, pulling Europe in two directions. And the constraints of the policies are mounting: The administration of U.S. President Joe Biden has taken values as a key standard in steering its foreign policy, reaching out to allies in Europe and the Asia-Pacific enthusiastically with the central objective of dealing with China. Unlike Japan and Australia, which have actively responded to U.S. calls, European countries are ambivalent, underscoring the constraints inherent in the parallel policies Europe is pursuing.
China-EU trade cooperation has continuously improved, making China ever more important as a market destination and rendering decoupling a tall order. According to the EU, two-way trade between China and the EU has expanded, reaching 586 billion euros to make China the EU's top trading partner. What is noteworthy is that China is the only top 10 trading partner that registered positive trade growth with the EU.Meanwhile, European businesses have broad interests in China. Volkswagen, BMW, Infineon and Adidas derive at least 20 percent of their profits from the Chinese market. Audi's auto delivery volume declined by 8 percent worldwide in 2020, but gained 5.4 percent in China. China has become the stabilizer for Audi in the midst of the global downturn, and the EU should walk out of the woods soon, aided by a stable external market.China, an increasingly open market and the only major economy to register positive growth in 2020, is a critical market for EU economic recovery. An EU in its right mind will not want to decouple from China. Far from it: The EU wants to elevate bilateral economic cooperation further.
What stands in stark contrast is that some European countries go to extremes in human rights and ideological affairs and even grow hostile toward China. In March, the EU announced it would sanction some individuals and entities from China over so-called Xinjiang and Hong Kong issues. This is the first time the EU has imposed sanctions on China in the past three decades, a new landmark in its so-called “morality-based diplomacy.”The rationale behind this is complex. It involves social and political changes, as well as Europe's global standing. Europe has gone through a sea of changes politically. In particular, the rise of the Green Party and other populist parties sent shock waves across the traditional political structure. The European party structure has evolved from being one dominated by the center-left and center-right, to one featuring left, center and right, with votes consequentially more spread out.To win over middle-class swing voters, these political parties converge on issues related to human rights and climate change. Yet the middle-class in Europe is not familiar with China and is swayed by extreme media reports. The traditional political parties believe they are compelled to either pressure China or risk losing support from their voters and their governing status.Some European countries believe that while they are no longer economically superior to China, they are still in a position of strength in moral and normative terms and are not ready to depart from their condescending position toward China. Their pride and prejudice are palpable.
Europe is in a predicament when it comes to China-EU-U.S. relations. On one hand, it does not see eye to eye with the U.S., which works against its strategic autonomy. Europe does not want to become embroiled in the U.S.-China trade war, nor the values-based diplomacy of the Biden administration.Meanwhile, many in Europe see great uncertainty in the U.S. and feel frustrated by its foreign policy swings in the wake of the change of administration, not to mention the intermittent natural friction that can arise between the EU and the U.S.Another matter that divides the EU is security. It needs security protection from the U.S., and the investment and market access the U.S. offers. Leaving the fold of the U.S. means the EU will face a security threat from Russia alone, and hence would need to expand its own defense capacity.
Heated debated is currently unfolding in the EU concerning its China policy. Be it strengthening business ties to induce change through trade ties or interest driven diplomacy or morality-based diplomacy, which is gaining traction in Europe, each comes under fire from opposing parties. This demonstrates that European countries have not arrived at a consensus on China policy, and the EU has not come to terms with the shifting global landscape. It faces a dilemma.As the Chinese saying goes, “Sugar cane can only taste sweet on one end” — meaning you cannot eat the cake and have it, too. What's more, the so called interest-driven diplomacy and morality-based diplomacy are not right in their own terms. It's easy to get bogged down in values-based debates.Instead, European countries should shift gears, dispense with condescending attitudes and seek dialogue on equal footing. China should not be the end game in European foreign policy so that Europe can reach consensus internally. The international landscape is shifting fast, and Europe should hone and adjust its China policy. Otherwise, it may risk losing the cake altogether.
