It is common knowledge now that China is a major rival and threat for the United States. Joe Biden pledged to restore U.S. leadership after Trump by confronting China’s growing totalitarian ambitions and restoring historic alliances with European allies. In his trip to Europe, Biden was successful in convincing the EU and NATO to agree to call Beijing a “challenge” to trans-Atlantic values and to “engage China with a view to defending the security interests of the Alliance.” But his recent moves including giving a green light to Nord Stream 2 pipeline project and the AUKUS deal have infuriated Europeans to the extend that Josep Borell, the EU’s foreign policy chief, in a press conference complained that “the United States has made it perfectly clear not only in President Biden but also in Trump and Obama, that they will leave and stop fighting other people’s wars”. “Europe can no longer rely on America to lead” he added.
Given all these contentions, the million-dollar question is: Will the Biden administration be able to keep Europeans to their promises and implement a policy plan that tackles Beijing’s threats to US-EU relations? There are a number of challenges to actually get the EU and NATO to act on China. Some of them are trans-Atlantic, between the US and EU, and some are within EU members.
China’s challenge is viewed differently by the United States and its European allies. The attraction of the Asian market has a tremendous draw on Europe. Europeans realize that China, which has become their largest trading partner, poses a strategic challenge, but they are determined to continue doing business and investing with the People’s Republic of China. Late last year, China and the EU announced their agreement on a Comprehensive Agreement on Investment (CAI), a broad agreement that would include China, the world’s second-largest economy, into the EU’s vast community of countries. The deal, whose final details are still being worked out, brings together 28 countries with a combined GDP of more than $25 trillion and a population of over 2 billion people. The deal, among other things, opens China’s domestic market to EU players and gives Beijing a diplomatic platform to interact with the EU. A case in point is the first quarter of 2021 during which BMW, Daimler, and Volkswagen sold 41 percent of all their cars in China.
The EU’s economic cooperation with China (in general and specifically through CAI) poses a challenge to the Biden administration’s efforts to manage China since it offers Beijing a potential outlet to circumvent US economic and diplomatic sanctions. The Obama administration had hoped to restrain China through a Pacific alliance, but the CAI changes the equation for the Biden team: pressure from the US via the Pacific or even Asia will be ineffective if China can simply shift westward to the huge EU economic bloc. Because China’s global influence has expanded since 2016, as its economy has grown by more than $3 trillion, and the European Union, led by France and Germany, has begun to establish its “strategic autonomy,” the United States must take CAI into account and engage active EU backing in its attempts to manage China.
Furthermore, although the United States is highly convinced that China also poses a military threat, Europe does not appear to have completely grasped this aspect of great power rivalry. For the first time, China was recognized as a “challenge” in a communiqué released last month at the conclusion of a one-day summit conference in Brussels attended by President Biden and other NATO leaders. At a post-summit press conference, Biden argued that Russia and China presented similar threats to NATO.“Russia and China are both seeking to drive a wedge in our transatlantic solidarity”.
Nonetheless, NATO Secretary-General Jens Stoltenberg emphasized that China was “not an adversary,” instead of stating that the emerging strategy was to address “the challenges” posed by Beijing, which will “soon be the world’s largest economy” and “already has the world’s second-largest defense budget and the world’s largest navy.” French President Emmanuel Macron has also said that “NATO is an organization that concerns the North Atlantic, China has little to do with the North Atlantic.” Many people feel NATO is unprepared for China, owing to the fact that NATO action necessitates unanimity. That is, Europeans, particularly the United Kingdom, France, and Germany, should simply like each other, but they don’t, and there is less agreement on what a response to China should include in terms of action, tools, and geographic reach.
Macron and Dutch Prime Minister Mark Rutte had a tense exchange of words during a NATO leaders’ meeting about their divergent views on how Europe should handle military and security policy. “European strategic autonomy,” according to Rutte, is a controversial topic cloaked in a jargony term that would just replicate NATO goals, while Macron, who has advocated for increased military cooperation and strategic autonomy among EU countries, said that the majority of EU leaders agreed with him and that Rutte needed to “clarify his thoughts.”
Some further worry that focusing too much on China would shift NATO’s attention away from Russia, which is Europe’s main concern, or leads to increased Russia-China collaboration. While it has been typical in the U.S. rhetoric to group the two autocratic great powers together, several EU members have made no mention of China in public statements, reflecting how Russia is the main focus, particularly in Eastern Europe and the Baltics.
Chinese hegemony in Eurasia can be realized by either direct Chinese power projection in Europe, in which case the North Atlantic is directly engaged or—more likely—the establishment of a Sino-Russian entente. The two nations have significant and rising interconnectivity when it comes to the security concerns they represent, including increased military cooperation, malicious cyber activity, and the use of misinformation. With China and Russia banding together against their mutual foes, the US and NATO, it’ll only be a matter of time until Europe is directly threatened.
To address these challenges, the Biden administration should remind the European allies —in public and behind-the-scenes diplomacy—that not only is Europe less dependent on the Chinese market than many believe, but the strategic risks and loss of competitiveness associated with trading and investing in China are beginning to exceed the economic benefits. For many foreign investors, the future is not necessarily bright as Chinese businesses become more competitive and Beijing pursues its “Made in China 2025” industrial program to lead in high-tech manufacturing industries. The EU is the most significant commercial partner for all EU member nations. China is exporting higher-value items to the EU while importing fewer commodities in exchange, within global supply chains. Europe will continue to fall behind in the global economy if it does not focus on improving its own industrial competitiveness.
Focussing on negotiating market access with China may cause Europe to lose sight of wider global economic horizons. Biden should push the EU to expand its trade and investment portfolio in India and Southeast Asia as developing Asia overtakes China as the world’s major economic engine. A recent free trade agreement with Vietnam is a good start toward that goal. Closer to home, Europe can revive its role in global commerce by fostering industrial centers in Central and Eastern Europe and Turkey. Europe should invest in regional innovation and industrial competitiveness rather than chasing every last dollar in China. Europe’s economic and political interests are best served by cultivating its own top businesses as global champions and backing fellow democracies throughout the world.
As to the military challenge, European partners must accept that, regardless of a shared threat perception, American participation in European security will alter as a result of China, and Europe will need to adjust accordingly. China’s rising assertiveness is linked to and exacerbates Russia’s more immediate—and existential—threat to certain NATO members. China and Russia are becoming increasingly united, particularly in their determination to oppose the US and Europe. Those Europeans who are worried about diverting NATO’s focus from Russia to China should be warned that Russia is actually amplifying China’s military capabilities, basically making it easier for China to keep the United States out of its backyard. In the technology domain, the two countries are increasingly working together as well raising the risk that China and Russia together can out-innovate the United States which would strain an already stressed U.S. defense budget to support NATO.
Some have talked about driving a wedge between Russia and China but that is unlikely to be effective. Instead, over the long term, the United States and Europe should monitor and prepare for the relationship and need to think about how they can change Russia’s calculus such that it views some cooperation with the United States and Europe not just as possible but also preferable to its growing subservience to Beijing. This requires better intelligence, wargaming, and taking advantage of the fissures that exist between the two countries. At the same time, U.S. and EU need to create headwinds against the China-Russia entente by working together bolstering their democracy and bolstering the resilience of the democracies around the world. At the end of the day, between democratic Washington and autocratic Beijing, the EU cannot be equidistant. Its ideals are almost certain to be similar to those of the United States.