Has the EU finally found its spine when it comes to China?

There is no point putting lipstick on a pig: the relationship between the United States and China, two powers holding a combined 40 per cent of the world’s GDP, is at its most depressing and alarming since the establishment of their diplomatic relations in 1979. As soon as you think bilateral ties couldn’t get any worse, Washington and Beijing prove us wrong by closing consulates and harassing each other’s diplomats.

This puts the European Union, that slow, cumbersome bureaucratic machine, in a tricky position. On the one hand, Europe doesn’t want to rock the boat with either the US or China. Yet on the other, EU officials and European heads-of-state are beginning to realise that the US-China grudgematch is forcing them to do the one thing they want to avoid: pick sides. On everything from trade and technology to high-stakes geopolitics, Europeans are increasingly bearing a resemblance to the struggling teenager caught between two estranged parents.

No European leader would like the return of normality more than German Chancellor Angela Merkel, a woman who will conclude her 16-year reign as Europe’s most powerful politician next year. Building the Germany-China relationship has been one of Merkel’s pet projects in the realm of foreign policy. And what better way to accomplish that objective than to exploit China’s massive domestic market for the benefit of German business? Berlin’s exports to China have increased five-fold since Merkel took the chancellorship in 2005. China has been Germany’s most important trading partner for four consecutive years; in 2019, over £180 billion in goods were exchanged between the two. For Merkel, this year’s drama about Covid-19 and all things China is a significant distraction from finally concluding an investment deal with Beijing that EU officials have been trying to negotiate over the last seven years.

And yet China’s perfidiousness this year is finally beginning to weigh on normally business-minded Europeans. The EU doesn’t like to rock the diplomatic boat, so the fact that the continent is now starting to assert itself against China’s business practices and foreign policy is a reflection of how unhelpful the Chinese Communist Party’s behaviour has been over the last six months. While Merkel may secretly wish for business as usual, even she is having a difficult time sweeping China’s litany of offences under the rug.

The Europeans are now responding. On 24 July, EU foreign ministers agreed on draft conclusions that raked the Chinese over the coals for the imposition of their draconian national security law in Hong Kong. Calling the new law ‘a matter of grave concern,’ the EU ministers wrote that Beijing’s recent actions in Hong Kong ‘call into question China’s will to uphold its international commitments, undermine trust and impact EU-China relations.’ European exports that could assist the CCP with repression and surveillance in the once-autonomous territory are now prohibited. In addition, the EU will reassess its extradition agreements with Hong Kong and may rip them up entirely—a step Boris Johnson took earlier this month.

Granted, this is about the bare minimum the EU could do. But the step comes at a time when some European states are taking unilateral action to curb what many of them see as predatory Chinese business practices. Austria, the Czech Republic, Germany and Poland are hoping to establish a series of regulations that enhance scrutiny on foreign acquisitions of domestic companies. The European Commission presented a proposal last month that would prevent overseas buyers (hint: China) from undercutting competitors who wish to invest in European industry.

On the technology front, France is now in the process of phasing out Haiwei, the Chinese telecommunications giant, from operating in the French market. This decision comes shortly after the British announced that all Huawei equipment in the UK’s mobile systems are to be stripped out by 2027. Beijing reacted to these measures with predictable scorn, all but threatening the British—and any other state that dares to go down the same path—with extreme economic consequences.

The Trump administration is now engaging in an attempt to convince the international community that the Chinese Communist Party is bent on world domination. Last week, US Secretary of State Mike Pompeo delivered the most strident speech on China a US official has ever given. Despite Washington’s claim that this whole-of-government campaign is not meant to pressure Europe to turn its back on the Chinese, nobody should be under any illusions about the White House’s main objective: the US wants a dependent Europe.

The Europeans are unlikely to give Washington everything it wants. China is, after all, the EU’s second-largest export market and largest source of imports. The chances of Europe embracing a full Western-China economic decoupling resides somewhere between zero and none.

But China’s own actions have woken up an otherwise sleepy European continent to reality: Beijing is clearly not the lovable, benevolent giant its leaders claim it is.