With 2022 entering the last month and looking ahead to 2023, China's biggest external challenge remains geopolitical pressures from the West.
Specifically, the pressure comes from several sources. First, the strategic adjustment of the United States. The U.S. has listed China as its foremost long-term strategic competitor, and this new strategic positioning has become the long-term basic logic of U.S.-China relations and the driver for the deterioration of China's international environment. Second, the U.S. has successfully pushed its Western allies to choose sides in its relations with China, forming a camp of Western countries that are basically in opposition to China. Such opposition is not only a basic attitude but also includes some common actions (such as economic sanctions) in relations with China. The third is the war in Ukraine that has reunited NATO, strengthened U.S. leadership and control over NATO, and raised questions in the West about China, which has a strategic partnership with Russia.
It is foreseeable this overall international geopolitical situation will affect the external environment for China's development for a long time.
However, the Western camp is not monolithic, and there are some obvious rifts in the transatlantic U.S.-EU relationship. During Donald Trump's presidency, the rift in the relations between the U.S. and Europe began to widen. On the one hand, the old European countries with Germany and France as the core pursue Europe's "strategic autonomy", and former Chancellor of Germany Angela Merkel and French President Emmanuel Macron are representative figures in this. On the other hand, Trump, as a non-establishment president exacerbated the rift between the U.S. and Europe. Fundamentally, the European "strategic autonomy" pursued by the old European countries touches the interests of the U.S. and of the NATO mechanism, which lays hidden dangers for U.S.-European relations.
The war in Ukraine has temporarily healed a rift in U.S.-European relations and reshaped U.S. leadership over NATO. However, as the war drags on for a long time, the friction of real economic interests begins to play a greater role. A typical example is Macron's recent visit to the U.S. According to media reports, Macron said during a closed-door working meeting with U.S. President Joe Biden that although the Biden administration's efforts to curb global warming are commendable, its Inflation Reduction Act (IRA) is "super aggressive" to European companies. Macron warned that failing to get in sync on broader trade issues would kill a lot of jobs in Europe. "I don't want to become a market to sell American products because I have exactly the same products as you," said Macron, stressing that France had its own middle class in need of employment. "And the consequence of the IRA is that you will perhaps fix your issue but you will increase my problem", he said. Macron believes that the IRA, which allows subsidies to U.S. companies, is "a choice that will split the West." He also said in a pleading tone that the U.S. should put itself in the shoes of France, which simply wanted to "be respected as a good friend".
Due to the long-standing U.S.-French relationship, the Biden administration received Macron with extremely high specifications and gave him sufficient respect. However, when it comes to practical interests, the Biden administration has not budged. On December 1, at a joint press conference held after the formal meeting between Macron and Biden, Biden said in response to Macron's criticism and complaints about the U.S. industrial subsidy policy that will "make no apology", and he personally signed the bill. Biden only said that the IRA invested about USD 369 billion to subsidize environmental protection industries such as new energy in the U.S. and that the scale is so huge that there will be "glitches" and it needs to be adjusted. In this regard, some media said that this means that the Biden administration will make concessions, which is an "unexpected victory" for Macron's trip. However, at a White House press conference on December 2, White House Press Secretary Karine Jean-Pierre told reporters that, "we don't have any plans to go back to Congress for legislative changes to the inflation". She added that "for any historic legislation like IRA there is a complex implementation and process which is actively under way at federal agencies".
The relationship between the U.S. and Europe has become more delicate, and this is also evident in the issue of relations with China. It can be considered that China has become a common "target" in the global geopolitical game and a "touchstone" for countries to divide their political and diplomatic camps. Under the Biden administration, the U.S. government has taken a series of actions to put pressure on China, and this escalated in recent months. For example, U.S. Secretary of State Antony Blinken has said he wanted to see the U.S. and its allies increasingly converge in their positions on China. U.S. Commerce Secretary Gina Raimondo remarked recently that China is a growing threat to U.S. companies. The U.S. imposed controls on China's access to certain U.S.-developed technologies in October and wants countries to join in imposing similar export control restrictions on China. The U.S.' assertion of the threat of China has been widely recognized in Europe, with most European countries believing that China is a "systemic competitor", and some countries, such as the United Kingdom, also regard China to be a "systemic challenge".
However, the attitude of European countries towards China is not unchanging. There are signs that while the EU has on different occasions referred to China as a "strategic adversary", it is taking a different approach than the U.S. One geopolitical analyst remarked that, "the EU is trying to develop its own China strategy that is very different from the United States. This strategy is about 'risk reduction', not 'decoupling'". Decoupling refers to the systematic separation of economic ties between the two superpowers, but for the EU this is not in its interest. According to Eurostat, China was the third largest buyer of European goods in 2021 and the most important market for EU imports. At a time when the European economy is in trouble, China's importance as a European market has become even more important. Some analysts believe that "while the United States is trying to pull the EU in the direction of keeping a distance from China, the EU is keen to maintain economic ties with China." This desire has been exacerbated by the economic impact of the war, which will have an even more severe impact on the European economy next year."
Since the beginning of this year, European heavyweight politicians have visited China. For example, in early November, German Chancellor Olaf Scholz visited China and obtained a large purchase order from China. On December 1, European Council President Charles Michel too went to China. Western analysts say that the proximity of the two heavyweight visits from Europe demonstrates Europe's pragmatic attitude towards China and expects that EU-China relations will improve in the short term.
We note that recent statements by Dutch officials also show a difference from what the American Government expects. While the U.S. has urged its allies to tighten controls on exports of high-end semiconductor equipment to China, Micky Adriaanssens, the Dutch minister of economic affairs and climate, insists that the Netherlands and Europe should have their own strategies. She said that "we (the Dutch) have to think this through — what are the risks of doing business with China with regard to specific products and value chains". She further added that "in general we in the Netherlands are very positive and always have been about good relations with China. We do a lot of business with China. A lot of Dutch companies are working there". China accounts for 11% of Dutch imports (after Germany) and about 5% of Dutch exports. The minister said the relationship was "really giving a boost to innovation and trade which is fundamental to Europe. We should cherish that also". Judging from these recent changes, researchers at the ANBOUND believe that in the future, the geopolitical and geoeconomic relations between China, the U.S., and Europe will once again fall into a complex multi-party game. Although China's geopolitical relations with Europe and the U.S. will still see the basic pattern of confrontation, the relationship between the U.S. and Europe is undergoing subtle changes. To a certain extent, the new situation of changes in U.S.-EU relations may provide China with new geopolitical and geo-economic space and bring China more policy options.
Under the overall unfavorable geopolitical environment, China will need to have different thinking and attitude than the U.S. in developing political and economic relations with Europe and needs to adopt different policies and countermeasures. All current U.S. policies on policy are to contain China's development and to mitigate or eliminate the possibility of China challenging U.S. hegemony. Europe's goals, however, are very different from those of the U.S. As a loose alliance of countries formed by many countries, the EU cannot have the same diplomatic and economic interests as the U.S., and many European countries must consider their own economic interests. To this end, China might adopt a completely different strategy in its relations with Europe than the U.S.
For the more aggressive U.S., China may maintain a more competitive attitude in its strategies though still under the general framework of maintaining cooperation. However, for Europe, China needs to maintain a softer posture, promote economic and trade cooperation, strengthen economic ties for the purpose, and minimize conflicts in its relations with Europe.
In fact, the Chinese government has already adopted a similar strategy. On December 1, during his talks with European Council President Charles Michel, Chinese President Xi Jinping mentioned four points in the development of China-EU relations. The first is that there are no fundamental strategic differences and conflicts between China and Europe and that China supports the EU's strategic autonomy. Second, as there are differences in history, culture, development level, and ideology between China and the EU, differences should be properly managed through communication and consultation, where the key is to respect each other's major concerns and core interests. He also added that China is willing to hold the China-EU human rights dialogue. Third, Xi remarked that it is necessary to carry out a higher level of cooperation. According to him, China will remain open to European businesses and hope that the EU will eliminate interference and provide a fair and transparent business environment for Chinese enterprises. Fourth, the Chinese President mentioned the necessity to strengthen international coordination and cooperation. It appears that Xi's four-point proposal outlines a new cooperation framework for the future development of China-EU relations.
Final analysis conclusion:
As geopolitical tensions become normalized, the rift in the U.S.-EU transatlantic relationship widens as economic interests are disputed. In its relations with Europe, China will need to adopt a different starting point and strategy from its relations with the U.S. and have the relations built based on economy and trade. The world will not remain in the extreme geopolitical game for long, China has to seek the normalization of its relations with Europe.
