Thursday

22nd Feb 2024

Analysis

EU's China 'de-risking' strategy: a roadmap without directions

  • China is the largest partner for EU imports of goods, but in return only the third-largest for EU exports. By the end of 2022, the trade deficit amounted to €27.4bn (Photo: Europan Commission)
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With Ukraine at the top of the EU's agenda and its dependence on China growing, European leaders tried to present a united front at their summit this week in Brussels on where to take the relationship.

Paradoxically, the news is that nothing particularly new came out of the two-day summit. The final published conclusions of the EU leaders' meeting have not changed from the draft version seen by EUobserver and dated Wednesday.

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Although billed as a new strategic discussion, there was not much discussion — as migration overshadowed the rest of the agenda.

But also because matters related to relations with Beijing were concluded before the summit even started, EU diplomats told EUobserver — so details on boundaries, clear definitions, economic security concerns, and possible export controls were not on the table on Thursday and Friday (29-30 June).

Member states again called on China to put pressure on Russia to end the war and withdraw its troops immediately, and expressed their worries about Taiwan and respect for human rights.

Yet the main consensus was once again: 'de-risking yes, decoupling no'.

"We need to de-risk, economically as well as diplomatically," EU Commission president Ursula von der Leyen told reporters at a press conference after the summit, meaning the EU wants to tackle its deep economic ties with China while keeping transparent issues where they agree and disagree.

The understanding was reached "quickly", showing "unity" towards China, EU Council president Charles Michel added. "We know what we want, and we are all on the same page".

Reducing the bloc's dependence on China, especially for critical raw materials, does not mean "decoupling or turning inwards", the conclusions document states.

For Josep Borrell, the EU's foreign affairs chief, de-risking is the EU's "duty" and "mission". One that will take a long time. "The sooner we start, the better," he said on the sidelines of the EU summit on Thursday (June 29).

Borrell added: "We don't need to negotiate with China about de-risking. We need to identify the risks and put a solution to them".

That was the extent of the EU leaders' discussion, which did not last long enough to expose any disunity among member states.

After Russia's invasion of Ukraine, diplomatic relations with China have become more complex than ever, and economic concerns have heightened — as the EU does not benefit as much as Beijing from this relationship.

"The European Union will seek to ensure a level playing field so that the trade and economic relationship is balanced, reciprocal and mutually beneficial," the conclusions read.

China is the largest partner for EU imports of goods, but in return only the third-largest for EU exports. By 2022, the EU's goods trade deficit reached €396bn.

Some voices, such as Estonian prime minister Kaja Kallas, are proposing bolder measures to rebalance the playing field, such as relocating European supply chains from China.

"We also see what happens when you're connected to partners who don't share the same values. Given the security situation we're in, [...] make sure you're connected to friends," Kallas said on arriving at the summit.

Since the launch of the EU's Green Deal plans, the situation has become more worrying, due to the huge increase in imports, such as the lithium needed for the batteries of electric vehicles, or the solar photovoltaic panels that will enable the energy transition to renewables.

Beijing's own industrial policy has also shifted towards self-sufficiency and local production, reducing imports from European countries such as Germany.

Currently, the EU plan is to keep looking at China as a partner, competitor and systemic rival, but how to maintain the EU's relationship with its largest partner while reducing the diplomatic and economic risks remains a roadmap lacking directions.

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