During President Xi Jinping’s trip to Europe this week, he must have discovered some parts of Europe have become an entirely different place since his visit five years ago.
Gone are the heydays of economic globalization, when China was viewed as an indispensable investment destination. Instead, the mood among European leaders is to ‘de-risk’ – moving investments and supply chains away from the world’s second largest economy.
Judging from his statements in Paris, Beijing’s assessment of Europe has also shifted. This is certainly a renewed charm offensive, hoping to tempt Europeans to continue to invest in China.
But equally Xi gave the EU tough warnings on Europe’s trade protectionism and its current diplomatic stance. In his own words, he expects ‘ EU institutions to have a correct view on China’ which is an unprecedented line for China to take on the EU.
Despite a sense of bonhomie from all three countries he is visiting, it will be far from straightforward to effect a reconciliation on either the economic or diplomatic fronts. This is largely due to the development of China and Europe’s domestic politics and economies – and the ongoing war in Ukraine.
The main purpose for Xi’s European tour is therefore damage limitation, preventing ties with Europe worsening even more, as they have with Washington. He is also seeking to exploit divisions within Europe on Ukraine and US relations, working towards China’s vision of a more multipolar world.
Economics
On economic matters, China has decisively pursued industrial policies that will enable Beijing to move up the export value chain and establish itself as a high-end manufacturing powerhouse: instead of producing cheap toys, Beijing wants to lead exports of electric vehicles, lithium batteries and solar panels.
This is also the moment where the Chinese economy is at a painful, if necessary, transition, changing its growth model from an over-reliance on the property sector into counting on high value-added manufacturing exports. Europe will be a critical market for those goods.
But Chinese companies are also in brutal competition with European peers, both in Europe and developing countries, partly boosted by state subsidies.
In Paris, President Xi offered little concession on the EU’s complaint on ‘overcapacity’ of electric vehicles and other sectors where Beijing is keen to nurture commercial success. These products are parts of the so-called ‘new productive force’ which China intends to drive its economy.
Europe, reeling from Russia’s invasion of Ukraine and the economic disruption brought by COVID-19, is seriously reconsidering its economic over-dependence on China and other countries with different political outlooks.
European political elites are also concerned by potential job losses from Chinese competition with their high-end manufacturing. It would be naïve to think such structural tensions can be eased with a five-day whirlwind state visit.
Political stalemate
On the diplomatic front, things remain in stalemate. Some in Europe hope Beijing will change course on the war in Ukraine in order to repair the damage done to its European relations. But when it comes to foreign affairs, China’s priorities rarely change.
China has traditionally pursued a policy of non-interference in other countries’ internal affairs. This aligns with its interests in maintaining stability and sovereignty and is appreciated by many Global South countries.
Meanwhile, it also values its close relationship with Russia, particularly as both countries share concerns about perceived Western encroachment and a resentment of US hegemony.
To what extent Beijing can balance its economic and diplomatic support for Russia with its desire to maintain stable relations with the US and Europe is highly uncertain.
Since February 2022, Beijing made several attempts to justify its position on the invasion of Ukraine, hoping to prevent a sustained deterioration in relations.
So far, Beijing’s main achievement in the eyes of European countries is showing its willingness to restrain Putin from entertaining the deployment of nuclear weapons. But European leaders must not expect China to side with them on the war itself.
Driving a wedge
Xi’s choice of visiting France, Serbia and Hungary is instructive, showing that Xi also hopes to use his tour to drive a wedge between Europe and the US.
France, the first European country to establish diplomatic ties with the People’s Republic and a permanent member of the UN Security Council, has always enjoyed its special status in China’s diplomatic priorities.
French President Macron’s talk of European ‘strategic autonomy’ – that is to reduce European reliance for its security on US protection – is perceived approvingly in Beijing, viewed as a possible route to a more multipolar world and a less US-dominated global order.
Meanwhile both Serbia and Hungary have sought to forge closer cooperation with China on all fronts, through its Belt and Road Initiative and other investments projects – even if such friendliness raises eyebrows in Brussels and Washington.
But Beijing’s fruitful relationship with Budapest has already antagonized Brussels and this trip does little to improve that.
One of the purposes for Xi’s visit to Serbia is to commemorate the 25th anniversary of the NATO bombing of the Chinese embassy in Belgrade – an opportunity to criticize NATO in a European country that is not an alliance member, and implicitly reprimand NATO’s growing involvement in the Asia-Pacific region.
In these respects, Xi’s visits will serve to demonstrate division within Europe over the war in Ukraine and US relations. Nonetheless, the trip also shows the extent to which China’s protracted geopolitical competition with the US has already reduced Beijing’s choice of European partners and consumers.
Meanwhile, any improvement in EU relations would require President Xi and his lieutenants to reconfigure China’s approach – but this cannot only be based on lofty talk of ‘win-win’ cooperation that is appreciated little in most European capitals.
As the Chinese economic model evolves and its position on war in Ukraine remains unchanged, both Beijing and European countries need to find a new set of terms and conditions to become reacquainted with each other. Xi’s visit may show how far off that is. But it might well be the first step on finding a new approach.
Dr Yu Jie, Senior Research Fellow on China, Asia-Pacific Programme.