EU President Charts Independent China Path

At an event sponsored by two Brussels think tanks, EU President Ursala von der Leyen defined the challenge of China and Europe’s response, deftly avoiding a single mention of the United States, telling listeners "the point here is that we do not want to cut economic, societal, political or scientific ties."

Excerpts below, full text [here]

Defining a European strategy towards China – defining what success looks like – must start with a sober assessment of our current relations and of China's strategic intentions.

Just as China has been ramping up its military posture, it has also ramped up its policies of disinformation and economic and trade coercion. This is a deliberate policy targeting other countries to ensure they comply and conform. 

This is all part of a deliberate use of dependencies and economic leverage to ensure that China gets what it wants from smaller countries…the imperative for security and control now trumps the logic of free markets and open trade.

Chinese Communist Party's clear goal is a systemic change of the international order with China at its centre…. I believe it is neither viable – nor in Europe's interest – to decouple from China. Our relations are not black or white – and our response cannot be either. This is why we need to focus on de-risk – not de-couple. 

There are some islands of opportunity that we can build on. Take climate change and nature protection

The point here is that we do not want to cut economic, societal, political or scientific ties.China is a vital trading partner – accounting for 9% of our goods exports and more than 20% of our goods imports. 

We have to ensure that our trade and investment relations promote prosperity in China and in the European Union. The Comprehensive Agreement on Investment, the so-called CAI – for which negotiations concluded in 2020 – aimed at such rebalancing. 

 And we know there are some areas where trade and investment poses risks to our economic and national security, particularly in the context of China's explicit fusion of its military and commercial sectors. This is true for certain sensitive technologies, dual-use goods or even investment which comes with forced technology or knowledge transfers.

We are deeply mindful of what happened with Japan's imports of rare earths from China a decade ago when foreign policy tensions between the two in the East China Sea became acute.

China's changing policies may require us to develop new defensive tools for some critical sectors. The European Union needs to define its future relationship with China and other countries in sensitive high-tech areas such as microelectronics, quantum computing, robotics, artificial intelligence, biotech, – you name it Where dual-use purposes cannot be excluded or human rights might be implicated, there will need to be a clear line on whether investments or exports are in our own security interests. 

So we have to look at where there are gaps in our toolbox which allow the leakage of emerging and sensitive technologies through investments in other countries. This is why we are currently reflecting on if and how – Europe should develop a targeted instrument on outbound investment.

We will focus on free trade agreements where we do not yet have them – such as with New Zealand, Australia, India, our ASEAN and Mercosur partners – on modernising  agreements where we have them – such as those with Mexico and Chile – and on better using the others that already exist. We will enhance cooperation on sectors such as digital and clean tech, through the Trade and Technology Council with India or the EU-Japan Green Alliance. And we will invest in infrastructure in the region and beyond through the Global Gateway strategy.

China is a fascinating and complex mix of history, progress and challenges. And it will define this century. But our story about how we relate to China is not yet fully written – and it need not be a defensive one. We must collectively show that our democratic system, our values and our open economy can deliver prosperity and security for people.