Leaders of the European Union and China meet for a "difficult" virtual summit on Friday with two other countries at the top of the European agenda: Russia and Ukraine.
Beijing’s supportive line toward Russia’s invasion of Ukraine has brought the 27 EU states together behind a tough stance on China after years of divisions fuelled by some bloc members’ reluctance to put at risk access to Chinese trade, investment and tourists.
“Member states are unified. There is no question of divide and rule,” said a senior EU official ahead of the summit. “It is going to be the most difficult summit we have had. This is not business as usual.”
While China’s diplomats insist it is a neutral party on Ukraine, Chinese government and state media rhetoric has been strongly supportive of Russia’s justifications for the invasion.
That stance puts Beijing sharply at odds with the EU, which has hit Russia with punitive sanctions and supplied weapons to Ukraine.
Ursula von der Leyen, European Commission president, and Charles Michel, EU council president, will tell China's leader Xi Jinping and premier Li Keqiang that the war "is not in China's interest", the senior official said.
They will also make clear that arming Russia or helping it dodge sanctions “will have consequences for EU-China relations”, said an EU diplomat, adding these could include sanctions on China. “A war on European soil is an existential thing for us,” the senior official said.
EU policy toward Beijing had taken a tougher tone following China's de facto ban on Lithuanian imports in December, imposed after Vilnius allowed Taiwan's government to open a representative office under the name "Taiwan".
China, which claims sovereignty over Taiwan, sought to isolate Lithuania with the import block, but it provoked opposition across the EU's 27 members and in January Brussels launched a complaint at the World Trade Organisation.
"Europe is more united on China than it has been for years," said Noah Barkin, a China expert at Rhodium Group, a consultancy. A shift away from a pro-China trade stance by the German government elected in December was "hugely important", Barkin said. "Germany is a leader in Europe."
Even German companies, which are major exporters to and investors in China, were “reassessing the risks”, he said.
Divisions exploited
In past years China exploited divisions in the bloc. Germany has often prioritised friendly ties with Beijing, with 2.8 per cent of its gross domestic product coming from sales to the Asian country, according to analysts at Rabobank, the Dutch bank. Others members states including Hungary and Greece have enthusiastically sought Chinese investment.
Gabrielius Landsbergis, Lithuania's foreign minister, told the Financial Times in February that the mood in the EU toward China had shifted when exports from other member states that contained Lithuanian parts were also blocked. Beijing's decision was seen as an assault on EU single market rules guaranteeing unfettered trade between members.
“It’s a new tactic . . . When it was felt that the single market was the target then the attitude changed,” he added.
EU diplomats in Beijing said China’s position on Russia’s invasion of Ukraine had been a wake-up call.
“You cannot disassociate economics from politics now,” one said. “[To use] China’s language, Ukraine is a ‘core interest’ for us . . . Basically it’s life or death. We are prepared to take economic hits ourselves.”
In private, Chinese officials and advisers admit they were caught off guard by the unity of western countries’ response to Russia’s invasion.
“The sanctions against Russia have gone beyond what the central government expected,” said one former Chinese official who now advises the Xi administration on commercial relations with Moscow.
But Beijing has shown no sign of distancing itself from Russia. China said on Wednesday it was willing to push relations with Moscow to a “higher level”.
Shi Yinhong, an international relations expert at Renmin University in Beijing, said China's criticism of Nato's eastward expansion in Europe as well as of US and EU sanctions on Russia, were "very strong statements".
“Disagreement over the Russia-Ukraine conflict will certainly intensify,” Shi said.
A second European official argued the EU was now more confident in confronting China despite their €671 billion annual trade in goods and services.
“The importance of the EU to China is bigger than the other way round,” the official said. “China is trying to make domestic consumption the main driver for growth but consumption is very weak, they have to rely on exports . . . Is China willing to risk [sales in] western countries to help Russia?”
Investment agreement
At their last summit-level meeting in September 2020, EU leaders focused largely on a deal intended to open China’s huge market.
Less than two years later, that Comprehensive Agreement on Investment is history. After the EU sanctioned Chinese officials over alleged human rights abuses in Xinjiang, Beijing retaliated against several European parliamentarians, and MEPs blocked ratification.
Reinhard Bütikofer, a German Green MEP who was sanctioned by Beijing, said Berlin’s new coalition government – which includes his party – is far more sceptical of China than its predecessors.
Bütikofer said a pact between Russia and China signed last month formed an “axis” that was seeking to bring down the western liberal world order. “They are revisionist powers. We have passed the point of no return.”
Bilahari Kausikan, a former Singaporean diplomat and ambassador to Russia, said it was unlikely the EU pressure would do much to separate Beijing from Moscow.
“China is in a big dilemma, but they won’t break with Russia because they do not have another strategic partner,” Kausikan said. “They made a mistake. They were taken for a ride [by Putin] but now they are stuck with him.” – Copyright The Financial Times Limited 2022
