Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
When Xi Jinping last visited Europe in 2019, he put on a charm offensive that matched his lofty ambitions. The Chinese president still believed he could bend the west to China’s will, and came to Europe’s capitals to prove that Beijing’s ascendancy would result in shared prosperity. He signed commercial deals in Paris, celebrated Rome’s participation in the Belt and Road Initiative, and made bold promises of economic co-operation to Athens.
Xi’s European tour this week has taken place under radically different circumstances. In his five-year absence from the continent, China’s economic growth has slowed and Beijing has drawn the west’s ire by tacitly supporting Russia in its war in Ukraine. While the Chinese leader could have treated the trip as an opportunity for rapprochement with Europe, he chose instead to sow divisions.
Consider his itinerary. Meetings with European Commission president Ursula von der Leyen and President Emmanuel Macron in France harked back to Beijing’s former charm offensive, with small concessions on threatened Chinese tariffs on French cognac. But much of Xi’s trip has been spent embracing Chinese allies that are troublesome members of the European family.
Visiting Belgrade on the 25th anniversary of Nato’s bombing of the Chinese embassy gave Xi opportunity to criticise the Atlantic alliance and voice support for non-EU Serbia’s claim to Kosovo. And his two-day visit to Viktor Orbán’s Hungary has displayed China’s deepening ties with the EU’s most disruptive member.
The Chinese president’s ambitions were more straightforward than in 2019: to keep Europe’s market open to Chinese products, and avoid the EU following in the path of the US. Given its ability to export huge quantities of cheap electric vehicles and green technologies, helped by what Brussels calls unfair state subsidies, Beijing fears EU tariffs. After German chancellor Olaf Scholz’s trip to Beijing last month underscored the beleaguered Germany economy’s dependence on China, Xi seemed to think he could head off the risk of tariff barriers by exploiting Europe’s faultlines.
Yet his confidence underestimates the extent to which the majority of EU countries now see China both as a security threat, exacerbated by its growing ties to Russia, and an economic threat, given its potential to undercut European manufacturing just as the economy recovers from the pandemic and a surge in energy prices. Recent cases of alleged Chinese spying have not helped Beijing’s image. And cosying up to the strongman leaders of Hungary and Serbia will have done little to assuage concerns in key EU capitals about the Chinese leader’s authoritarian worldview.
What is most striking about Xi’s visit is that he appears to have offered no concessions on the EU’s trade concerns — regarding China’s excess capacity in EVs and green technology, industrial subsidies, and market access. Neither does he appear to have given any reassurances that China will restrict the flow to Russia of dual-use goods, which are supporting its war effort.
With domestic demand slowing and the US market essentially closed to Chinese EVs, however, Europe remains the largest market left for Beijing, and an important prize for Xi. The EU is also deploying tools, such as its foreign subsidies regulation — which allows Brussels to block companies subsidised by foreign governments from public procurement bids, mergers and acquisitions — that give it real leverage. If it is to make headway in its economic and foreign policy goals with Beijing, Europe will need to project greater unity and resolve, and, taking a leaf from the Chinese leader’s own book, be ready to adopt more hardball tactics.