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Home»Finance»EU China Policy Under von der Leyen 2.0
Finance

EU China Policy Under von der Leyen 2.0

September 24, 2024No Comments8 Mins Read
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How the EU’s Security Approach Affects China-Europe Relations
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On September 17, the new European Commission under re-elected President Ursula von der Leyen was announced in Brussels, opening a new chapter that will shape the next five years of the European Union. This announcement came not long after the Draghi report was published earlier this September to address how the EU can improve its internal policies, also featuring China and the United States as relevant benchmarks. 

Furthermore, the announcement came merely a few days before now-confirmed Trade Commissioner Valdis Dombrovskis met Chinese Commerce Minister Wang Wentao to discuss the hot topic of the EU’s electric vehicle (EV) tariffs. The tariffs, which have been provisionally applied on Chinese EV makers since July 5, have been at the center of China-EU relations for some time, and constitute one of the biggest challenges to trade and diplomatic cooperation between the two parties.

The New Energy Transition and the EV Question

Teresa Ribera Rodríguez will be taking over the new ambitious competition and Green Deal portfolio. She’s expected to follow the ambitious lines traced in the Draghi report. The report identified three areas where the EU can reignite its sustainable growth: closing the innovation gap with the United States and China in advanced technologies, creating a joint plan for decarbonization and competitiveness, and reducing dependencies. 

In Ribera’s first interview as commissioner, she admitted that her biggest challenge will be to foster an EU-wide understanding that national and local interests have a place within broader EU interests. To Ribera, the single market will need to be the new focus of the EU competition at the global level, not the single states. Broadening the focus to the internal market would allow companies to compete at a global scale and follow the path traced by Draghi. She is also against a trade war in the EV sector with China, telling the Financial Times: “We need to identify the best tools for how we can develop the car industry in Europe but are also effective in terms of avoiding this trade war.” 

Wang Wentao just spent a week visiting several EU states to negotiate a way out of the tariffs. While he made some headway in Germany with Vice Chancellor Robert Habeck, who favors a political solution similar to what Spanish Prime Minister Pedro Sanchez said in Beijing when calling for avoiding an all-out trade war, Wang had less success in Italy, as Italian Minister of Foreign Affairs Antonio Tajani did not back a political solution. The EU seems likely to go ahead with the tariffs, as declared by Dombrovski after his personal meeting with Wang. 

See also  It's the U.S., not Europe's banking system that's a concern, top economists say

Beyond EVs, other appointed commissioners have agendas capable of equally shaping the EU’s broader China policy. 

A Tough New Foreign and Security Policy Chief

Former Estonian Prime Minister Kaja Kallas, the newly designated vice president and high representative for foreign and security policy, might not be an enemy of Beijing, but she was put on a wanted list by Vladimir Putin, a “dear friend” of China’s leader Xi Jinping, at the beginning of 2024. She seems to be tougher than Borrell in her stance toward China, and has a track record of turbulent relations with Beijing. 

In an interview given while she was the leader of the opposition in Estonia in 2020, Kallas drew sharp and controversial parallels between the situation in Xinjiang and the Holocaust. She called for a more robust EU policy toward China, urging for the latter to be held to the same human rights standards as Russia. She also advocated for the widespread adoption of rules that would limit the influence of Chinese companies in the EU.

In 2021, when she was prime minister, Kallas supported a public letter signed by over 70 researchers, journalists and institutions warning against Chinese influence in Estonia. In the same year, she also urged European and U.S. leaders to create a better infrastructure project capable of challenging the Belt and Road Initiative (BRI), but without the problems of Chinese influence. 

Her call to action was not taken well by Chinese state media. Directly addressing Kallas, Chinese state media reminded her that Estonia had signed a memorandum on the BRI back in 2017, and explicitly stated that if Estonia did not reconsider its “reckless diplomatic strategy, it will backfire and end up hurting itself.” 

Kallas was supportive of a broader EU China policy rather than the China-CEE (Central and Eastern Europe) mechanism, which Estonia quit in 2022. However, in a 2022 interview on the Russia-Ukraine conflict, she declared that “China is an important actor, but given the scale of the conflict with Russia, we can’t make China our adversary. We can’t afford that.”

See also  Smaller consultancies eye opportunities as China crackdown hits sector leader

Industrial Strategy

Another interesting figure is Stéphane Séjourné, who will be the newly appointed executive vice-president for prosperity and industrial strategy. Compared with Kallas, he has adopted a more open attitude to China. 

Séjourné met Premier Li Qiang in Beijing in April 2024 as the French foreign minister, in the context of the 60th anniversary of the establishment of the diplomatic relations between France and China. In his visit, he requested that China send a clear message to Moscow over the Russia-Ukraine war, and declared that both Europe and China are open markets for investment. He further assured his Chinese counterparts that President Emmanuel Macron’s strategic autonomy would not signal any protectionist closure on the EU side. 

Yet, he is not entirely lenient. Earlier this year, Séjourné also showed his distaste for China’s unilateral change to the aviation route M503, which he considered a threat to the status quo in the Taiwan Strait. His position gained him support from the Taiwanese minister of foreign affairs, who openly thanked him, and the news was also reported by Taiwanese media. 

Back in 2021, during his term as member of the European Parliament with Renew Europe, Séjourné also declared he would not vote for the now frozen EU-China Comprehensive Agreement on Investment because of the situation in Xinjiang. In an article published the same year, he demanded EU leaders to use their persuasion power to stop the internment camps and uphold human rights in China, and to demand measures to stop forced labor in the country. However, Séjourné will not be in charge of trade relations by himself. 

Economic Security: The ‘De-risking’ Commissioner

Lastly there is Maroš Šefčovič, a Slovakian diplomat, who was specifically tasked by von der Leyen with managing the difficult process of “de-risking, not decoupling” with China. Šefčovič engaged with China as the vice president for the European Green Deal. Most recently, he attended the Fifth EU-China High Level Environment and Climate Dialogue with Chinese Vice Premier Ding Xuexiang, in Brussels in July 2024. These talks were notably held in the midst of the EV chaos. 

See also  The De-risking State in Southeast Asia

In 2023, Šefčovič declared that, when it comes to EV battery production, “Made in Europe” is important. He argued that production should be driven by the willingness to keep emissions down, but also equally committed to treating employees fairly, instead of making it “some kind of race to the bottom where price is the only criterion.” He further stated that the “best, cleanest, and safest cars in the world have been always produced in  Europe,” adding, “I believe this will continue to be so.” 

It must also be remembered that Šefčovič, who is a veteran European Commission official and was also the EU’s chief Brexit negotiator, was already a representative in 2019, when China-EU relations were of a very different nature. For instance, he was the head of the EU delegation at the 2019 Belt and RoadForum, where he shared some more nuanced opinions over a common vision for connectivity based on sustainability, and mitigating global challenges through a rules-based international order. 

These protagonists of the EU’s recent “change of guard” will need to manage the difficult EU China policy inherited from von der Leyen’s first term. Trying to balance the special status of China as a “partner, a competitor and a systemic rival” has never been harder amid the challenge of combining EU interests with broader ambitions. 

Furthermore, the divided opinions of many EU leaders contribute to a feeling of uncertainty on whether the EU’s broader China policy will be able to placate differences or will become too fragmented to be managed consistently. Fragmentation is especially concerning in light of the EU’s ambition globally, as indicated by the pathway laid out in the Draghi report. If member states and commissioners cannot balance broader interests, the EU’s actions will fall short of boosting the internal market’s expected global competitiveness. 

While a comprehensive EU strategy will surely emerge later in von der Leyen’s second term, early signs of discord are already apparent. The deferral of the vote on final EV tariffs underscores how, when national interests take precedence, the much-needed “European understanding” over priorities and common goals is likely to remain more of an aspiration than a reality. 

China Der Leyen policy Von
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