The pluses and minuses of China’s agenda in Europe

European nations must better leverage their opportunities in Africa and Asia against China’s domination.

Xi and BRI
Aside from narrow politics, the BRI concept makes plenty of sense. Source: GIS

Last week, China’s President Xi Jinping undertook a five-day tour of Europe, visiting France, Serbia and Hungary. This selection of host countries might appear odd at first, but it hides a double strategy. Officially, Mr. Xi made commemoration calls: in France, he highlighted its recognition of the People’s Republic of China 60 years ago; in Belgrade, he ruminated on NATO’s “brazenly” bombing the Chinese embassy there 25 years back; and in Budapest, he observed the 75th anniversary of Hungary establishing diplomatic ties with China.

Beijing’s interlocking agendas

The practical issues of the trip are closely linked. France is important as a country that aspires to be a political leader in Europe. President Emmanuel Macron, known for his ambitious personality, is striving to shape the continent’s future according to Paris’s agenda, which traditionally opposes the United States’ leading influence in Europe.

Serbia’s process of accession into the European Union has been bumpy. It is historically close to Russia and a country where Chinese investments are playing an expanding role.

Hungary, an EU member state, opposes several of Brussels’ policies and is therefore singled out as a troublemaker in EU circles. China finances infrastructure projects in Hungary, and a big assembly plant for Chinese electric vehicles is to be built there – a particular rub for Europe’s car-making countries. Despite the controversies, Budapest is assuming the union’s rotating six-month presidency on July 1, 2024.

President Xi’s agenda was to reinvigorate his giant, continent-linking Belt and Road Initiative (BRI), and prevent European countries from too closely toeing the restrictive U.S. line toward China. Should Brussels prove amenable, Beijing could follow up with a more pronounced divide-and-rule Europe policy.

Aside from narrow politics, the BRI concept makes plenty of sense. When one looks at the globe, three dominant areas are striking: the huge Afro-Eurasian landmass, the Americas and Antarctica. Some 80 percent of the world’s population lives in Eurasia and Africa. Building connections between their economic centers, linking them to resources, markets and each other, is critical for future development.

Europe’s tough challenge

The problem is China’s penchant for domination and the passivity of European countries when opportunities should be grasped. Given the Middle Kingdom’s hegemonic aspirations and assertive policies toward neighbors and trade partners, the obstacles to the BRI are as much political as they are economic.

China is pushing the initiative by financing infrastructure and transportation projects along the BRI’s different lines, be they maritime or overland. A worried U.S. and Western Europe have scrambled to develop alternatives, but they are likely to come up short. The catch is in Beijing’s approach: it directly identifies suitable BRI projects, finances them (to a significant extent), and, whenever possible, dispatches its construction companies to perform the work. The West, in contrast, offers financing, but only when the recipient parties meet certain values-based conditions. Obviously, the Chinese way is more practical.

Purely for trade reasons, the BRI is as important for Europe as it is for China.

In recent years, the BRI engine has begun to sputter. The Covid-19 pandemic and Beijing’s decision to freeze all activity played a large part in that. Also, some participating governments have grown concerned about their debt to China (not known as a forgiving lender), and rumors have circulated that Beijing no longer has enough money to offer. However, with the China-U.S. rivalry heating up, the BRI has regained its top-priority status, which will invigorate economies and trade. It is also part of Beijing’s broader political strategy of trying to undermine the Washington-led international order while making China’s trade less dependent on the U.S. dollar.

If one considers trade reasons only, the BRI is as important for Europe as it is for China. However, politics poses a challenge here: U.S. and trans-Atlantic relations are crucial for Europe, which is a mere peninsula attached to the imposing Afro-Eurasian landmass. European countries can only address this dilemma with self-awareness and skillfully balanced policies.

How not to talk with China

Against this backdrop, Beijing may have included the vanity of the French president and the uneasy circumstances of Hungary and Serbia in its political calculations. Geographically, the latter two countries can serve as BRI entrance points into the EU. Political differences among European leaders can also help drive a wedge between Europe and the U.S.

In Paris, two sets of talks took place. One was between the two presidents. It was inconclusive, but President Macron could chalk up at least one success: the Chinese market will open again for cognac. While hardly a geopolitical breakthrough, it is a happy thought that France can resume selling and the Chinese enjoying the delicious aroma of the world-famous brandy.

A strange discussion occurred between President Xi and European Commission President Ursula von der Leyen when she addressed the issue of unfair trade practices and punitive tariffs. The focus was on the automotive industry – specifically, electric cars and green energy technologies. Both Ms. von der Leyen and Mr. Macron studiously avoided such terms as “subsidies” or mentioning other specific forms of China’s mercantilist practices. Instead, they referred to industrial “overcapacity” in China, therefore allowing the Chinese guest to deny wrongdoing in trade. Any export-oriented industry has overcapacities in the context of the home market, and this applies to European countries as well.

The problem with such discussions is that Europe can no longer argue against subsidies and unfair state intervention, as it has also engaged in this kind of toxic malpractice.

It seems likely that, overall, President Xi returned to China having confirmed the view in Beijing that Europe is completely disoriented.

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