Gonzalo de Cadenas-Santiago
Director of economics and financial research
As China emerges rapidly and forcefully from the pandemic, the Biden administration promises a continuation of President Trump’s hard line, yet with a more multilateral and predictable approach. Brussels defines China as a cooperation, negotiation and economic partner, as well as a systemic rival. This is particularly true because the EU and US differ with regard to China in one fundamental respect: the US can afford a relative decoupling from the Chinese market, but the EU cannot due to its important economic ties.
This degree of economic dependence is creating challenges for countries struggling to balance their own values with those of Beijing, without closing the door on matters of security and human rights. Thus, in the third decade of the century, we will see an increase in tension that will pivot on technology, but which will have the legitimacy of being broad, multilateral and value-based, especially in light of recent events such as China’s handling of the pandemic, its treatment of ethnic minorities and its proven military and technological ambitions.
For the past two decades, China has seen Europe as the third, though weaker, hub in a multi-polar world. It has taken a threefold approach to the EU’s strategic interests. Firstly, targeting the main institutions. Then, its most powerful members. And, lastly, the smaller states. At times, Beijing has used its economic and strategic power to play one member against another and the EU against the US. But its goal has been constant: To ensure that the EU is deeply committed to China and its well-being.
As regards Washington, Beijing is suspicious of a multilateral approach that seeks to isolate it. Biden’s government has already contacted China’s neighbors, such as Australia, India, South Korea, Japan, and New Zealand, in order to address various aspects of China’s conduct. Biden has also promised to assert US values more strongly as a way of restoring his reputation overseas, and Beijing understands this as a veiled threat and the beginning of another wave of criticism.
As I indicated earlier, this new phase of tension will pivot on technology and business relations, issues where dissent between allies represents a weakness capitalized on by China. The US and EU have different approaches toward the use of Chinese technology companies. The US considers them both a threat to national security and a source of competition in key areas, while the EU offers a much friendlier environment, to the extent that EU countries have purchased Chinese technology with a view to incorporating it into their infrastructure, something which would be unthinkable across the Atlantic.
If Washington extended its sanctions against Chinese companies beyond its own borders, the EU and its member states could cease to cooperate with the US with regard to security.
The prospect of another “Cold War” resulting from a rapid deterioration in relations between the EU and China and the US is far from inevitable. But the straining of relations with our main allies in the defense of the values of liberal democracies, on the other hand, is not. Let us be constructive and consider who has taken care of us thus far. It has not been China.