In the spring of 2021, the triangle of EU-US-China relations has taken on a kaleidoscopic dynamic.
Think back to the way the world looked as recently as December 2020. China was emerging strengthened from the virus shock. The United States was embroiled in unprecedented post-election chaos. The Trump administration had let the epidemic run out of control. The European Union, by contrast, was concerting itself around the NextGenerationEU (NGEU) recovery package. As her last hurrah as the de facto leader of Europe, German Chancellor Angela Merkel, backed by her allies in the European Commission, pushed through the EU-China Comprehensive Agreement on Investment.
The configuration seemed clear. America was adrift. The EU and China were forging an axis of pragmatic cooperation on trade, investment, and climate policy. Now, only a few months later, the kaleidoscope has shifted abruptly.
An Abrupt Shift
The Biden administration has moved swiftly to contain the epidemic in the United States and launch an unprecedented third phase of stimulus. It has drawn the line under the nightmare of the transition, but it has not backed away from the confrontational stance toward China adopted by the Trump administration.
China, for its part, has responded by doubling down on the new dual circulation model of increasingly autonomous national economic development.
In Europe, the self-congratulation around NGEU was still in full swing as the continent descended into discreditable recriminations over the botched vaccine roll out. The economic outlook, even with NGEU coming on stream, is grim. Meanwhile, tit-for-tat sanctions with China over Xinjiang mean that the Sino-EU investment deal is on ice. It is best not to even mention it to the European parliament. Not only that but European clothing firms are being systematically targeted by consumer boycotts organized by the Chinese Communist Party (CPP) and orchestrated by China's main search engines.
In the short-run, this leaves the EU little option but to side with the US over China. The question is whether this also betokens a fundamental shift in European strategy toward Asia's rising power. Is the alignment with the US more than tactical?
Declaring Economic War
What is at stake are two different conceptions of strategy toward China.
Already under US President Barack Obama, but with ever greater emphasis under his successor Donald Trump, the trend in US policy has been toward the coupling together of different policy domains—trade, investment, tech, security policy, and rights issues—under the sign of geopolitical competition. What has dominated the American discussion ever more clearly is the prospect of great power competition in what the Americans since 2017 have dubbed the Indo-Pacific arena. From the spring of 2020 this took on the dramatic tones of an ideological Cold War. America's tech sanctions amount to nothing less than a declaration of economic war.
The Biden administration is signaling a willingness to meet and cooperate with China on issues like climate. But if the limitations on the export of chip-making equipment and the sanctions against firms like Huawei, SMIC, and DJI are maintained, the US is effectively announcing its intention to cap China's industrial development. Furthermore, it is doing so on grounds of national security. This is a roadblock to China's advancement that is fundamentally incompatible with Beijing's ambition to claim a position in the world commensurate both with China's history and its current and future economic standing.
America’s strategy has the merit of coherence. It is a classic conception of grand strategy befitting a great power. But as such it also has an uncomfortable aspect of mirroring. The US military-industrial complex begins to mirror that of China. This is not new. It is what President Dwight D. Eisenhower worried about in the 1950s in the wake of McCarthyism, when he warned of the emergence of a military-industrial complex and a garrison state.
The EU’s Multi-Track Approach
Facing China in the 21st century, America's return to classic grand strategy, contrasted until now with the EU's own effort to formulate a policy toward China. As set out in the foundational policy document of 2019 this was based precisely on refusing the American logic of synthesis and linkage. Instead the EU, to the bemusement of many American commentators, defined China simultaneously as a potential partner, a competitor, and a systemic rival. Crucially it did not allow one facet of the relationship to dominate the others.
The draft investment deal negotiated in December 2020 is fully consistent with that position. It opens up avenues for future cooperation and levels the playing field for regular commercial competition without heavy conditionality beyond the provision that China will honor its obligations as an ILO member—no more than a nod, in other words, to concerns about forced labor.
Under pressure from critics suspicious of the deal, both Berlin and Paris insisted that pushing the investment agreement in no way precluded taking a strong stance on other matters of concern to Europeans such as the repressive regime in Xinjiang or the suppression of freedoms in Hong Kong. That too is part of the European multi-track approach. Cooperation in one area does not preclude the open acknowledgement of differences or indeed conflict in another domain. Upholding one alongside the other may, in fact, be essential to securing the legitimacy of the relationship as a whole.
What we have seen enacted in the last few weeks is simply that logic in action. The question is whether China can live with that complexity.
The Chinese regime should not expect the perpetrators of crimes against humanity to be welcome anywhere in the West. It should not expect its security organizations to be able to do business in the West. It may not like it, but it would be wise to recognize the sanctions so far proposed as the limited and largely gestural action that they are. They do not, after all, target China's senior leaders who are actually responsible for what is being done in Xinjiang.
If Beijing responds by targeting European parliamentarians and think tankers it must take responsibility for widening the conflict. It should not be surprised if the result is to put the investment agreement on hold and if the increasingly heated conflict tips the EU into the arms of the US. It is Beijing that is forcing the linkage that the European advocates of a multi-faceted détente were trying to avoid.
Toward Confrontation
Where do we go from here?
Right now, the initiative on both sides of the Atlantic clearly belongs to those who favor confrontation. Given China’s bullying tactics, it makes good sense to concert Europe's approach both with the US and other partners. It is important to send Beijing a clear message. If it wants to do business with Europe it needs to recognize and respect how Europe's political system works and the limits that imposes as well as what it enables in terms of the credible commitment to the rule of law, the securing of property rights, and so on.
Bluster about the “century of humiliation” may play well with the Chinese audience but it will cut no ice in Europe. That too is an uncomfortable fact that China has to reckon with. Like it or not, unlike with regard to Africa, Europe has little or no guilty conscience with regard to China. It may not be fair, but that's Realpolitik.
Of course, Europe too needs to recognize the limits of its bargaining power. Defense of Europe's own values is paramount and non-negotiable. But any pretension on Europe's part to "changing" the direction of Chinese development in any fundamental way is absurd. Beijing may choose to "clean up" the cotton production process in Xinjiang. It may lighten the regime of repression in Hong Kong. But that is not going to modify its basic strategic stance on either question.
It would be good for public discourse in Europe if the European nations involved made a collective effort to come to terms with the historical legacies of European imperialism in China. It would contribute to public enlightenment and might help to soften the hard edges of public opinion on both sides. But it is a fantasy to imagine that the European public is ever likely to warm to a profoundly alien Chinese regime. Suspicion, mistrust, and resentment lurk close beneath the surface. Companies that choose to profit in both markets will navigate as best they can with varying degrees of cynicism and ethics. They will be mindful both of Chinese consumers and the reputational damage that can be done by Western NGOs. If that means that less cheap clothes are sold in the West made out of Xinjiang cotton that is a small price to pay.
The broader question is whether these conflicts will dominate the entire agenda. The European proposition in pushing forward the December investment agreement, was that they should not. What China’s over-reaction is risking is a fusion of issues that will make progress on other fronts impossible. It could even lead to a full alignment with the US position. That would be momentous.
A Question of Primacy
So far, Europe's denunciation of the abusive regime in Xinjiang creates only a partial alignment with the US. The US-China relationship is currently defined from the US side as a great power clash. Indeed, as President Biden has made clear, what is at stake are questions of preeminence. As the US president has put it with the blunt self-confidence of a baby boomer: "China has an overall goal ... to become the leading country in the world, the wealthiest country in the world, and the most powerful country in the world … That’s not going to happen on my watch."
That is a profoundly unfortunate way for the US to formulate its own objectives. Clearly it is going to take some time for America to come to terms with the logic of a multipolar world, in which it is not obvious what being number one means. A lot hangs on it doing so. But in the meantime, this is not Europe's battle. Questions of value and the defense of Europe's own autonomy are essential. Questions of primacy are not.
Europe's advocacy of a multi-pronged strategy of engagement with China was and is correct. That means a degree of compromise. As in the era of détente in the 1970s it involves certain double-standards and even hypocrisy. Then and now, given the high stakes involved, it is a price worth paying. It was the correct strategic diagnosis for Europe, but as has now become clear its viability depends on China's willingness to accept the logic of differentiation.
Europe’s Lesson
The multi-pronged strategy is fragile. On both sides public opinion is a real force. If Beijing antagonizes large segments of European opinion, the tensions and inconsistencies inherent to the multi-pronged détente strategy will collapse into antagonistic fusion. The fact that China has already managed to arouse the shared indignation that it has, at a time when Europe is divided over so much else, is a sign of how labile this balance is.
The conflict is not set in stone. Europe is developing as a global actor. And others are learning how to interact with it. Clearly European grand strategy is fragile. It does not have the massive blob-like autonomy of the policy machine in the US, let alone that in China. This may be frustrating for Europe's would-be strategists, but it reflects the unique political structure of the EU. Multi-pronged détente may be Europe's natural mode, but this is fundamentally conditioned and constrained by public opinion and democratic structures operating at many different levels. It does no harm for other global powers to learn that lesson.
Adam Tooze holds the Shelby Cullom Davis chair of History at Columbia University and serves as Director of the European Institute.
