China Power

The 20th Party Congress and the Future of China-EU Relations

Recent Features

China Power | Diplomacy | East Asia

The 20th Party Congress and the Future of China-EU Relations

Developments at the Party Congress suggest China’s relationship with Europe won’t get any easier. European capitals must be ready to respond.

The 20th Party Congress and the Future of China-EU Relations
Credit: Depositphotos

In recent years, European capitals have become increasingly united in their assessment that China is managing its global political rise according to self-defined prerogatives, disregarding rules at home and abroad when deemed necessary. Presently the dominating topic in the European China debate has focused on the question of how to reduce dependencies on China. This is a lesson learned from Europe’s dependency on Russian energy recognized in the wake of the war in Ukraine. In this regard, the volatility of the Taiwan question too has become a widely debated topic among Europeans.

How important these issues have become for the EU was evident during the European Council meeting on October 21, which acknowledged “an acceleration of trends and tensions” in the growing systemic rivalry with China, and the priority need “to diversify the supply of raw materials towards reliable, trustworthy suppliers.”

At the same time, Europeans are still attracted to the Chinese market and investments, as illustrated by the recent row within the German government about whether to allow Chinese investment in the port of Hamburg. German Chancellor Olaf Scholz is also scheduled to travel to China on November 3-4, as the first Western leader to do so since the outbreak of the pandemic. He will be accompanied by a business delegation, in the tradition of his predecessor Angela Merkel.

The 20th Chinese Communist Party Congress that took place from October 16-22 sent messages to the outside world that Europe must heed. The most important message is that of continuity in leadership and policies. Despite concerns among domestic business elites and policymakers about the economic slowdown in China and unpopular zero-COVID measures, Chinese President Xi Jinping has been able to strengthen his hold on power by securing a third term as China’s top leader. That paves the way for Xi to take a third term as president, to be confirmed at the National People’s Congress in March 2023.

Furthermore, he has managed to surround himself with his closest allies in the new Politburo Standing Committee, the center of power in China, making his dominance over all policy domains even bigger, if not uncontested.

This development may also have consequences for foreign policy and diplomacy as it forebodes more power plays by Beijing. Confident about his own position as China’s core leader in the years to come, Xi will feel also more confident to exert the country’s economic and political power in international affairs. In doing so, he will be supported by current Foreign Minister Wang Yi, who has won a seat in the Politburo and will likely take over Yang Jiechi’s position as foreign policy tsar in China’s State Council in March next year.

In recent years, Wang has not shied away from so-called “wolf warrior” diplomacy: deploying coercive diplomacy and bullying countries that show undesirable behavior in China’s view. The aim to exert the country’s power is also echoed in the Party Congress work report, which not only highlights the challenging domestic and international environment with which China sees itself confronted but also speaks confidently about the rise of “China’s international influence, appeal, and power to shape.”

The work report does not make provisions for economic reform, but it is clear about China’s need for global resources and scientific and technological (S&T) knowhow to drive its economic development. It states that global resources should be attracted through “leveraging the strengths of China’s enormous market,” expanding international S&T exchanges by continued investment in promoting “high-standard” opening up to the world in various areas of trade. This reference to “opening up” is not a lofty ideal; it is a necessity for China. In the current geopolitical configuration, in which China and the United States are embroiled in a tech war, economic and S&T collaboration with Europe is  a must for Beijing and the country’s sluggish domestic growth and lack of plans to reform the economy will only increase China’s need for collaboration.

Can Europe Formulate an Economic Diplomacy Strategy?

The outcomes of the 20th Party Congress highlight that China’s policies will see little changes and that Europe needs to find a way to deal with China’s power play. At the same time, European policymakers should take into account the fact that China is as dependent on economic and S&T collaboration with Europe as the other way around. As reducing dependencies will take much time, Europe has to develop a diplomacy vis-à-vis China that is based on European strategic economic strengths and needs, as befits the geopolitical actor it aspires to be. Europe could leverage China’s dependencies as well as its position as China’s top trade partner, an approach that speaks China’s language.

This is even more important as one of the few high-ranking politicians that represent the fraction of “opening and reform,” Premier Li Keqiang, is scheduled to step down from office early 2023. His replacement, Li Qiang, has made a name for himself as Communist Party chief of Shanghai and his catastrophic zero-COVID policy. But as future premier he is expected to focus on innovation and hi-tech industries, which may offer a path for Europeans to define future cooperation in these fields with China.

A European strategy for calibrating its economic relations is essential to finding a way to deal with China as a partner and system competitor (a term outlined in the EU’s 2019 China strategy). Such a strategy would need to balance between protecting the European internal market and reducing vulnerabilities in the areas of trade, investments, and technology as well as welcoming positive signals from China promoting cooperation. It is important to stress to China as it comes out of its Party Congress that cooperation in areas such as S&T as well as dependencies is not a one-way street.

Reducing vulnerabilities is not synonymous with economic decoupling, but the defense of the rules-based, liberal principles of the international order, the defense of human rights, and Europe’s political self-assertion are more important and higher-ranking goals than the economic returns that can be achieved by trading with China. Communicating this to Beijing would be a task for European leaders in particular when speaking to and visiting China, as German Chancellor Scholz is set to do. Sending this message would also prevent European capitals from appearing opportunistic and divided in their approach toward China.

The challenges posed by China, as evident from the outcomes of the Party Congress, require above all a strategic economic and political response and the European Union had better be well equipped for it.