Watching China in Europe—December 2024
The Fog Thickens
It is difficult to remember a time when the fog enveloping Europe-China relations was so thick. On the one hand, the underlying dynamics that have led to a deterioration of ties between Brussels and Beijing over the past half decade remain in place. These include a significant shift in the bilateral economic relationship, which has seen China morph from a lucrative market for European products into an existential threat to European industry. And they include Beijing’s deepening support for Russian President Vladimir Putin’s war in Ukraine, which has turned China, in the span of a few short years, into a threat to European security. These two drivers will be with us for a while and could metastasize into something far more serious in the years to come.
On the other hand, the election of Donald Trump promises to reshape the geopolitical triangle formed by the United States, Europe, and China. Trump could impose across-the-board tariffs of 10% or more on European products as soon as he enters the White House on January 20. He could try to impose a peace deal on Ukraine that strengthens Putin, turning Russia into an even greater threat to Europe and NATO. Trump’s MAGA army could launch an attack from across the Atlantic on European liberal democracy itself, working hand in hand with far-right populists on the continent to undermine the EU’s foundations.
Missing in Action
Reaching consensus on how to respond to potential developments such as these is a colossal challenge for a bloc of 27 countries with vastly different interests. It is doubly difficult at a time when the EU’s biggest member states are missing in action. Germany will be preoccupied with an early election and coalition talks to form a new government for the first four months of Trump’s presidency. France’s government could collapse as early as this week, setting off a financial storm that could envelop the eurozone. Perhaps the only good news from the old continent is that a new European Commission took the reins in Brussels this week. Returning President Ursula von der Leyen and her team have a short window to try to avert a transatlantic blowup. Is the Trump team open to negotiating with them? How will Europe respond if they are not? And would a trade war between Washington and Brussels push Europe into China’s arms?
I came away from a series of closed-door conferences in Europe and the United States in recent weeks—including the biannual Stockholm China Forum (SCF) hosted by GMF and Sweden’s foreign ministry—gloomier about how the coming months will play out. I was not alone. The decision to hit Europe with tariffs appears to be close to a done deal, and nothing that European policymakers can offer the new administration—from purchases of US liquefied natural gas and defense goods to promises of closer collaboration on China—may change that. “My sense is that it will be too little too late,” one official who is close to the Trump team told me. “Trump’s response will be: If you wanted to work together on China, why haven’t you done more? He will see it as an insincere effort to avoid tariffs.”
Bears, Chameleons, and Rattlesnakes
What Europe can do, however, is try to ensure that US tariffs do not end so high and broad-based that Brussels has little choice but to respond in kind, triggering an escalatory dynamic that would be difficult to stop. “There are tariffs, and then there are tariffs,” a senior EU official told me. At SCF, where the rules dictate that speakers not be identified by name, the Americans were full of advice for the Europeans. One urged them to engage actively with the Trump team instead of walking around “depressed and mopey”. Another warned them against retaliating with tariffs of their own, regardless of what Trump does.
That speaker laid out the array of possible responses from US allies to Trump: the bear (that hugs Trump tightly as former Japanese Prime Minister Shinzo Abe did with some success), the chameleon (that remains immobile, trying to blend in with its surroundings in the hope Trump will not see it), and the rattlesnake (coiled and ready to lash out if stomped on). “This is the European instinct. But Trump doesn’t react well when bitten,” the speaker said. My concern is not that the Commission will overreact. It will not sit idly by if Trump comes after Europe. But I expect it to be as measured as possible to prevent transatlantic tensions from spiraling out of control.
The Schröder Blueprint
There is a risk, however, that European member states send very different messages. Europe as whole may be blamed by the Trump team for the actions of individual states. France, a diplomat in Paris told me, is preparing for strategic autonomy on steroids. This could lead its opportunistic president, Emmanuel Macron, whose relationship with Beijing has soured over French support for the EU’s electric vehicle (EV) duties, to try to patch things up with Beijing next year. From Macron’s perspective, this would show Trump that Europe (in the French president’s own words) is not a vassal of the United States.
And then there is Germany, which heads into a shortened election campaign with incumbent Olaf Scholz scrambling to close a 15-20 point gap in opinion polls between his Social Democrats and the conservative bloc led by Friedrich Merz. With little to lose, some politicians in Berlin worry that Scholz could be tempted to play the anti-American card, as his party colleague Gerhard Schröder did in 2002 (with some success) in the run-up to the US invasion of Iraq. If Trump does slap tariffs on Europe, they would hit an ailing German economy particularly hard, making the US president an attractive political target for a diminished leader struggling to rouse his base. It is a risk that the Merz camp is keenly aware of.
Geopolitical Paralysis
The most likely outcome from Trump’s victory for transatlantic relations, therefore, is neither a grand bargain on China nor a sudden softening of Europe’s approach toward Beijing. After all, if Trump follows through on his promise to impose tariffs of 60% on Chinese imports, the move is likely to divert them from the United States to Europe, forcing the Commission to mount an even more forceful defense against an influx of cheap Chinese products. Instead, the most probable scenario is that the divisions between Brussels and EU member states on China policy widen, leaving Europe geopolitically paralyzed. “When China comes after us, it unites Europe. When the US does it, we splinter,” a senior official in Brussels told me.
The Trump team has to ask itself whether a divided Europe that is more susceptible to Chinese pressure and less likely to go along with US policy demands—from export controls and outbound investment screening to bans on Chinese technology in connected vehicles—is what it wants. It is wrong for the incoming administration to assume that Europe will simply cave in to US demands when confronted with massive pressure—even if an argument can be made that an Abe bear hug makes a lot of strategic sense given Europe’s vulnerabilities. “Our hope is that people on the US side are aware of the risk that they could end up as an island,” a former EU official told a recent conference in Berlin. An American speaker at the SCF conference added: “If Europe deindustrializes, that is a national security risk for the US as well.”
Merz to the Rescue?
Some European soul searching is also in order. Leaders such as Scholz and Macron need to ask themselves why Europe’s credibility on China is so low after a year in which the Commission pushed through duties on the country’s EVs, launched an economic security strategy and deployed its full array of level-playing-field tools against Beijing. It was clear at the conferences I attended that the level of frustration with Europe is high not only in Trump-land, but also among officials who ran China policy under the outgoing Biden administration. The grim reality is that Berlin and Paris have been far too slow and passive in responding to the Commission’s initiatives. Scholz never understood that his “Zeitenwende” needed to be about more than just Russia. Europe’s response to Beijing’s support for Moscow has been embarrassingly meek, even if member states now appear on the verge of imposing sanctions on Chinese companies that are helping Russia build attack drones for use in Ukraine.
When Foreign Minister Annalena Baerbock presents her assessment of Germany’s China strategy next month, she will describe the glass as half full, diplomats say. But if you look at the most important decisions Berlin has taken since the strategy was unveiled last year, most notably the vote against the EV duties, it is not a pretty picture. Would a Merz government be any different? If his Christian Democrats end up in a grand coalition with the Social Democrats, the most likely post-election scenario according to polls, there are reasons to be skeptical. Merz would face a perfect storm. Within weeks of coming to power, he would be attending a G7 summit in Canada, and a NATO summit in the Netherlands, while scrambling to cobble together budgets for 2025 and 2026 in the face of massive pressure to increase defense spending. And he would be operating in a zero-growth environment in which German companies are cutting jobs and closing factories. Where would de-risking from China rank on his priority list? “We will need a narrative, and we will need it quickly,” a CDU official close to Merz told me. “Our intention is to work toward a faster-paced de-risking from China, but this won’t happen overnight.”