China is the EU’s largest trading partner, while Europe is China’s second largest after the US, with over $1 billion in trade

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China is the big winner from Europe’s Brexit chaos

European Union leaders sat down last week for what was supposed to be a summit meeting to discuss China, perhaps the biggest external economic and diplomatic challenge currently facing the EU. That UK lawmakers have spent the last 33 months since the country voted to leave the EU failing to agree on how to do so has thrown multiple spanners into the complicated workings of the bloc, whose leaders desperately need to hash out unified policies on a number of issues, but are instead constantly derailed by the one member state who, at least in theory, doesn’t want to be there.

Ahead of last week’s summit meeting, the European Commission said that China “is simultaneously a cooperation partner with whom the EU has closely aligned objectives, a negotiating partner, with whom the EU needs to find a balance of interests, an economic competitor in pursuit of technological leadership, and a systemic rival promoting alternative models of governance.” China is the EU’s largest trading partner, while Europe is China’s second largest after the US, with over $1 billion in trade between the two parties done every day on average. Crafting a unified policy on how to interact with Beijing is a key issue for Brussels, and one the EU can hardly afford to screw up. But there is considerable disagreement within the bloc on how to go about finding this balance, with some members, notably Germany, increasingly hawkish with regard to Beijing, both as an economic and security challenge, while other countries remain eager to embrace Chinese investment.

Italy and China

That eagerness was on show in Rome this month, as Italian leaders rolled out the red carpet for Chines President Xi Jinping, after becoming the largest European economy, and first G7 member, to sign up to his Belt and Road trade and infrastructure initiative.
Italy’s participation in Xi’s project is not only an economic win for Beijing, but potentially creates a wedge for use against the wider EU on key issues in future, said Lucrezia Poggetti, a research associate at the Berlin-based Mercator Institute for China Studies (MERICS).

“China is very keen to deal with EU nations separately, rather than as a bloc,” she said. “In bilateral relations, China has the upper hand because of its huge economic power compared to individual European countries.”

At a meeting in Brussels this month, Chinese Foreign Minister Wang Yi said Beijing “firmly supports the European integration process, firmly supports the EU in staying united and becoming stronger, and firmly supports Europe in playing a more important role in international affairs.”

External pressure

Macaes and others have highlighted that Beijing is not the only major foreign power seeking to leverage European disunity. US President Donald Trump has also dangled economic and diplomatic carrots for European capitals willing to break with Brussels on areas of disagreement with Washington..

“Trump has tried the method, bashing Germany over defense, dangling long-desired political prizes before Poland and the UK, and lavishing praise on the Italian coalition Russia is a long-standing but exceedingly clumsy operator. China understands how to insert itself in these debates.”

Tackling this challenge will require something that has been strikingly lacking from European policy in recent years:But while external pressure has so far largely fostered greater division, analysts said it could also help drive the bloc together, as EU member states begin to see the costs of dealing with a player as powerful as China alone, and re-embrace the original purpose of bloc-wide policies. The outside pressure could also help spark long needed reform on just how those policies are made, enabling the EU to benefit all members equally.

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