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China’s Big Week for European Diplomacy

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China’s Big Week for European Diplomacy

China will host the leaders of Germany and France less than two weeks after Xi’s visit to the U.K.

China’s Big Week for European Diplomacy
Credit: Flickr/ Friends of Europe

As Diplomat readers doubtless know, Chinese President Xi Jinping was in the United Kingdom last week, making him the first Chinese president to visit Britain in ten years. However, Xi’s trip to London (with a stopover in Manchester) was only the beginning of a flurry of Chinese diplomacy with European Union countries.

In the next week, German Chancellor Angela Merkel (October 29-30) and French President Francois Hollande (November 2-3) will visit China. King Willem-Alexander of the Netherlands is already there, and held talks with Xi on Monday. In this context, Xi’s U.K. visit is part of a broader context: China’s growing relationship with Europe (and particularly the European Union) as a whole.

China’s relationship with the EU has changed drastically in since the 20th century. That change is most obvious on the economic front. “Just two decades ago, China and the EU traded almost nothing,” proclaims one fact sheet from the European Commission. In 2014, total bilateral trade was worth 466 billion euros ($514 billion). Today, the EU, if taken as a whole, is China’s largest trading partner, accounting for over 14 percent of China’s total global trade in 2014. China, meanwhile, is the EU’s second-largest trading partner (after the United States).

Given the rapid rate of growth in EU exports to China, Brussels sees even more potential in the relationship. EU exports to China were worth 48 billion euros ($53 billion) in 2004; by 2014 that number had skyrocketed to over 164 billion ($181 billion). European governments are particularly eager to enter China’s lucrative service sector, which still has tight restrictions on foreign investment, but which Chinese leaders have promised to open up as part of their plan for economic rebalancing.

The overall trend of economic engagement has received major boosts from China’s grand strategic visions. Most notably, the “One Belt, One Road” is ultimately a plan to link China and East Asia to Europe. That means Europe will be a strategic region for China as it seeks to turn the “belt and road” into action. Beijing has found Eastern and Central Europe more receptive to its offers of investment and infrastructure building, but Xi’s visit to London proves that Western Europe may be increasingly willing to get on board the Silk Road train.

One telling sign: 14 of the 28 EU member states signed on as founding members to China’s Asian Infrastructure Investment Bank, which will provide funding for infrastructure projects in Asia (many of them likely linked to China’s “belt and road”). Non-EU members Norway and Switzerland also signed up for the AIIB.

Outside of the “belt and road” framework, China also sees Europe as a key part of its “going global” strategy, which calls for Chinese companies (particularly state-owned enterprises) to invest and operate overseas. Beijing wants its companies to take the next step in terms of global competitiveness, and that requires gaining experience operating abroad as well as establishing a solid reputation in key industries (such as high-speed rail lines and nuclear power). Chinese companies will also need additional technology transfers to continue to make their way up the supply chain.

On both these fronts – providing a market, building the Chinese brand, and providing technology – Europe is an attractive option for Beijing. That’s doubly true as the United States has demonstrated time and again that it has serious reservations about allowing Chinese companies access to key sectors. It’s hard to imagine Washington allowing Chinese investment in a nuclear power plant, for example – but the United Kingdom signed just such a deal during Xi’s recent visit.

China’s interests in Europe are clear, but what does the EU think of China? It’s a complicated question, especially as the EU rarely functions as a coherent whole in the foreign policy realm. Instead, each individual member operates its own distinct China policy, finding a balance of interests that works best for its national security. Economics is a big part of the equation – China’s massive market and ballooning middle class remain almost irresistible, despite all the talk of a growing slowdown. Outside of that, however, European governments must decide how their individual national security interests are affected (or not) by China’s actions in the political and security domain.

London is trying to position itself as first in line for China’s European plans, labeling itself China’s “best partner in the West.” But it’s not the only European country that has experimented with the role of China’s “bridge to Europe” – as Richard Q. Turcsanyi pointed out in a recent Diplomat piece, Poland, Hungary, and the Czech Republic all can lay some claim to that position. It’s more appropriate not to talk of single “bridge to Europe” or “best partner” for China, but to acknowledge that a number of European countries are moving to deepen their relationships with China in the hopes of capitalizing on Beijing’s changing interests in Europe.

We saw Britain’s approach on display during and before Xi’s visit: an emphasis on economics above all else. When asked if London was jeopardizing its national security by moving closer to China, British Foreign Secretary Philip Hammond  replied that “national security depends on economic security” – making it clear which is the foremost concern for the U.K.

Germany and France have different perspectives and will make different calculations in balancing their relationship with China. Germany, despite being China’s largest trading partner in Europe, has traditionally maintained a more reserved approach to political ties; it didn’t upgrade its relationship with China to a “comprehensive strategic partnership” until 2014, for example (ten years after the U.K. and France did so). Now, with economic concerns rising in Germany as China’s economy slows, Merkel may be seeking to revitalize the relationship. Meanwhile, she may also want Chinese help in dealing with security issues of deep concern to Berlin, from the ongoing refugee crisis in Europe to the still-unstable situation in Ukraine.

France, meanwhile, has seen slower growth in its trade with China over the past few decades compared to Europe overall, while softer issues such as human rights (notably French protests over the Tibet issue in 2008) have been a major factor in the relationship. Rather than economics, Hollande has said that his trip is primarily focused on climate change. His trip is designed to urge China to work with France “to make a success of the climate conference” in Paris later this year, according to AFP.

Economics, climate change, security concerns – the relationships of EU countries with China are enormously complex, and each government must decide how prioritize various aspects. Those choices, in turn, will have ramifications for China’s own strategic and economic interests. So keep an eye on China’s EU diplomacy – its interactions with the U.K., Germany, and France will set the tone for China-Europe relations moving forward.