April 19. 2024. 7:58

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Von der Leyen wants ‘de-risking’ not ‘de-coupling’ in new China doctrine

It is not in Europe’s interest to decouple itself fully from China, and the bloc should instead look into diplomatic and economic ‘de-risking’, European Commission President Ursula von der Leyen said on Thursday (30 March).

It was the first time Von der Leyen gave a full speech on the bloc’s relations with Beijing.

“I believe it is neither viable – nor in Europe’s interest – to decouple from China”, Von der Leyen said, speaking at a think tank event in Brussels, as she laid out her vision for the future of the bloc’s relations with the world’s second-largest economy.

“Our relations are not black or white – and our response cannot be either – this is why we need to focus on de-risking – not de-coupling,” Von der Leyen said at the event co-hosted by the European Policy Center (EPC) and Merics.

Her ‘China doctrine’ comes ahead of her expected trip with French President Emmanuel Macron to Beijing next week, following Chinese President Xi Jinping’s visit to Moscow, where he signalled ongoing support for Russia’s President Vladimir Putin.

It also comes at a time when the EU, in light of Russia’s invasion of Ukraine, has become more conscious of its dependencies and has started trying to re-balance its economic relationship with one of its largest trading partners.

“How China continues to interact with Putin’s war will be a determining factor for EU-China relations going forward,” Von der Leyen stressed.

About Beijing’s stance on Taiwan, human rights violations in Xinjiang, and economic retaliations against Lithuania, Von der Leyen said, “these escalatory actions point to a China that is becoming more repressive at home and more assertive abroad.”

“We are concerned by what is behind this return to the global stage,” she added.

“We have seen a very deliberate hardening of China’s overall strategic posture for some time. And it has now been matched by a ratcheting up of increasingly assertive actions,” she added.

The bloc has been grappling with growing concerns over Beijing’s deepening relationship with Moscow, underscored by its refusal to condemn the Kremlin’s aggression against Ukraine.

China has not crossed any red lines for us yet, EU’s top diplomat says

China has not crossed any red lines in terms of supplying arms to Russia and wants to “minimise the risk of being associated with Russian military activities”, the EU’s chief diplomat Josep Borrell told several European media, including EURACTIV.

“Most telling,” von der Leyen said, “were President Xi’s parting words to Putin on the steps outside the Kremlin when he said: ‘Right now there are changes, the likes of which we haven’t seen for 100 years. And we are the ones driving these changes together.’”

The Chinese Communist Party’s “clear goal is a systemic change of the international order with China at its centre (…) We have seen the show of friendship in Moscow which says a thousand words about this new vision for the international order,” Von der Leyen said.

Use of coercive instruments

As a second pillar of the EU’s strategy, Von der Leyen said the bloc should aim for “economic de-risking”, for which the starting point would be “having a clear-eyed picture of what the risks are”.

Economically, the EU needed to “rebalance” the relationship and reduce its reliance on China, she added.

Von der Leyen asked EU member states to make “bolder and faster use” of new economic tools against China, including screening of foreign subsidies and a new policy against economic coercion.

Over the past years, EU member states have been cautious of over-empowering the European Commission to take decisions on punishing coercive countries.

EU agrees on anti-coercion instrument to fight foreign interference

In the early hours of Tuesday (28 March), negotiators from the European Parliament and EU member states agreed on a common text for an anti-coercion instrument to help the bloc fight off attempts of economic coercion from third countries.

Von der Leyen also announced the EU will introduce a new Economic Security Strategy later this year to address what she called an “unbalanced” economic relationship.

“Europe should develop a targeted instrument on outbound investment. This would relate to a small number of sensitive technologies where investment can lead to the development of military capabilities that pose risks to national security,” she said.

“We need to ensure that our companies’ capital, expertise, and knowledge are not used to enhance the military and intelligence capabilities of those who are also systemic rivals,” she added.

Beyond that, she added that the bloc needs to “define its future relationship with China” in sensitive high-tech areas such as microelectronics, quantum computing, robotics, artificial intelligence and biotech.

Killing CAI?

Von der Leyen also seemed to imply that the bloc could terminate pursuing a landmark trade deal with China.

“We have to recognise that the world and China have changed in the last three years – and we need to reassess CAI in light of our wider China strategy,” Von der Leyen said.

The EU’s executive had been pausing efforts to promote the Comprehensive Agreement on Investment (CAI) with China, recognising that it will struggle to secure backing from the European Parliament while Beijing maintains sanctions on five EU lawmakers.

“We know there are some areas where trade and investment pose risks to our economic or national security, particularly in the context of China’s explicit fusion of its military and commercial sectors,” Von der Leyen said.

“This is true for certain sensitive technologies, dual-use goods or even investment which comes with forced technology or knowledge transfers,” she added.

Rather measured tone

However, the European Commission chief also seemed to measure the toughness of her tone throughout her speech.

While on the one side pointing towards human rights abuses and Beijing’s more assertive tone on the world stage, Von der Leyen seemed to indicate the door for dialogue is not closed.

“But our story about how we relate to China is not yet fully written — and it need not be a defensive one,” she added, in a more reconciliatory tone.

Russia’s war in Ukraine has changed the lens of how many of the bloc’s states are looking at Beijing, with some starting to pay more attention to Washington’s message about the dangers of dependence.

EU expected to take a tougher stance on China

The EU should view China primarily as a competitor with limited areas of potential engagement, the bloc’s foreign ministers have been advised by the EU’s diplomatic service ahead of talks about the state of play of the relations with Beijing on Monday (17 October).

The EU’s diplomat service (EEAS), last autumn had recommended the bloc should view China primarily as a competitor with limited areas of potential engagement rather than a partner.

Nevertheless, many EU member states have remained hesitant to pull away from the profitable Chinese market, with first and foremost, Germany and France, whose biggest trading partner is China.