New dynamic, not reset

Managing the China-Europe relationship requires establishing basic understandings to better manage their differences

On May 29, the European Commission held an orientation debate to take stock of its China policy. The outcome was telling: While Beijing is still a critical partner, the commission now views the bilateral trade and investment relationship as “not sustainable”. The debate unfolded just days after five European Union member states co-signed a joint paper urging more aggressive trade measures against China, while the EU Commissioner for Industrial Strategy Stephane Sejourne branded China’s conduct as “predatory”.

In recent years, the pandemic, mutual sanctions and the Ukraine crisis have all contributed to the deterioration of China-Europe ties. But more corrosive is the misperception that has taken hold: Brussels increasingly defines China policy through the prism of its ties with the United States. This makes managing the relationship far more complex.

Beneath these immediate triggers lies a deeper structural transformation. The relative positions of China and Europe — to one another and in the world — have changed in fundamental ways.

Several decades of breakneck growth have not only eradicated extreme poverty in China but built world-leading capacity in artificial intelligence, robotics and new energy. Chinese exports to Europe have climbed up the value chain, shifting from cheap consumer goods to machinery, high-end equipment and electric vehicles. As a response, European traditional industries have increasingly turned toward protectionism.

China’s positive influence through its win-win cooperation now radiates well beyond its neighborhood. Through the Belt and Road Initiative, China’s economic and cultural presence has reached deeply into the Global South. The EU’s Global Gateway initiative was meant as a counterweight, but it arrived too late and on too small a scale to bring real results in Global South countries.

Yet to paint Europe simply as a loser would be a mistake. European companies have earned vast profits in China, and cooperation on climate change has delivered real results. However, the uncomfortable fact remains: Europe’s relative influence is fading from the geopolitical and technological center stage. The near-absence of European companies among the world’s leading AI companies tells the larger story.

Europe’s anxiety runs deeper than market share or technological leadership. China engineered its rise not by copying Europe, but by exploring its own path to modernization with Chinese characteristics based on its national conditions. Today, when observers look at Europe and see economic stagnation, weak governance and visible urban decay, cultural admiration may linger — but for some, Europe no longer looks like a model worth emulating.

This is the deepest source of European unease. From the turn toward protective measures to the insistence on framing China as a “systemic rival” — all of it betrays a fear of growing irrelevance. The convergence narrative is dead. Both China and the EU now inhabit a new reality.

Acknowledging this new reality means accepting that the current trajectory of China-Europe relations may be hard to reverse. Rather than aiming for a full reset, Beijing and Brussels should focus on managing the relationship through the next period. This calls for a few basic understandings.

Europe needs to demonstrate both the will and the capacity to shape its own China policy, rather than taking its cues from Washington.

At the same time, the EU should understand that China does not seek to erode Europe’s industrial base and it is open to more dialogue and cooperation that help avoid such a misperception.

Deeper trade and investment ties serve the interests of both sides, but Europe increasingly sees the matter differently. When the EU introduces protective measures, it stresses that it is not pursuing decoupling. Yet it should remain alert to the real-world consequences. The idea that Europe can leverage China’s need for its market and certain technologies — pursuing a strategy of “escalate to de-escalate” — carries considerable risks. It is far easier to start a trade conflict than to end one. Europe should resist the temptation to copy the US playbook when engaging with China.

At a practical level, China and Europe should create more channels of dialogue and seize some early, low-hanging fruit.

On economic security, think tanks from both sides can map out where interests overlap and where each side misreads the other’s intentions. At the official level, China and the EU have established a rare-earth export-control dialogue. They can consider building on these efforts to establish a broader, higher-level economic security mechanism. Such a platform would allow both sides to seek institutional solutions before disputes escalate into crises.

On sanctions, the EU should demonstrate greater sincerity. The EU’s unilateral sanctions against Chinese companies over alleged support for Russia in the Ukraine crisis are eroding the broader relationship. After the EU sanctioned 27 Chinese entities in April, China responded by sanctioning seven EU companies. The EU should interpret this asymmetry not as a sign of weakness, but as a signal that Beijing remains mindful of the overall relationship. Both sides should go for dialogue before the logic of tit-for-tat becomes entrenched.

Low-hanging fruit does exist. Continued cooperation in small, technical areas can begin to rebuild a measure of trust. People-to-people exchanges are one such area. China has already introduced visa-free access for residents of 25 EU member states. The EU can respond with substantive steps to facilitate visas for Chinese residents. Third-party cooperation is another promising avenue: environmental protection, desertification control, biodiversity conservation and humanitarian assistance offer spaces where habits of cooperation can be rebuilt step by step.

China and Europe are not adversaries by design, but they could become so by default. The time has come to focus more deliberately on steering the relationship toward a brighter future. That requires revisiting the basic understandings that once provided stability, to find ways to coexist despite differences.

The author is an associate professor and the acting director of the Department of International Relations at the Institute of European Studies at the Chinese Academy of Social Sciences.

The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.