Watching China in Europe—November 2024

Cherry on Top

If it takes a crisis to move the EU forward, as the adage goes, then we may be on the brink of major breakthroughs. Interconnected political, economic, and security crises, after all, are spreading across the 27-nation bloc. In the EU’s largest member state, Germany, years of economic stagnation and coalition infighting have pushed the government of Chancellor Olaf Scholz to the brink of collapse. In France, newly minted Prime Minister Michel Barnier is scrambling to avert a financial crisis with budget cuts that could trigger a revolt in parliament, toppling his government after only a few weeks in power. The ruling Dutch coalition, just three months old, nearly broke apart last week in a fight with far-right leader Geert Wilders over immigration policy. And then there is Russia’s horrific war in Ukraine, a threatening trade conflict with China, and—the cherry on top—a US election, which could vault Europe’s worst nightmare, an unhinged Donald Trump, back into the White House.

There are lots of moving parts here, but let’s start with Europe’s message to a new US administration on China, as Brussels girds for a change of government in Washington. The hope is that, if Trump wins, the EU can sidestep the tariffs he has promised to slap on Europe (and everyone else) with a stone-cold message about transatlantic cooperation on China. “We won’t be able to move forward on China if the US slaps 10% to 20% tariffs on us,” one EU official told me. “Our message is that they would be taking away our capacity to act on China. They would be emboldening the wrong people and weakening the right people in Europe. They would be hurting the [European] Commission and flipping it against them.” This message may not resonate with Trump himself, but it could have an impact with the China hawks who surround him, the thinking goes.

Out in the Cold

This warning will be coupled with the promise of closer transatlantic cooperation on China challenges that are at the top of the US priority list. EU officials have been making the rounds in European capitals over the past month in an attempt to win broad backing for such a message. After pushing through duties on electric vehicle (EV) imports from China, Brussels is moving ahead with plans to monitor outbound investments, with the European Commission expected to publish new guidelines by next month. On connected vehicles, an assessment of cybersecurity risks is underway. The European discussion on export controls has also advanced, with technology leaders such as Germany, France, and the Netherlands engaged in preliminary conversations with the Commission about how to better coordinate policy. One European official described this as a major step forward: A few months ago Berlin and Paris seemed content to leave The Hague out in the cold.

More trade action against China is in the pipeline, with steel, chemicals, and machine tools in the Commission’s sights. Some officials, behind closed doors, are pushing for the EU’s new anti-coercion instrument to be used if Beijing responds too forcefully to the Commission’s new duties on EV imports. “At some point it needs to be used,” a French official told me. “There is an argument that Beijing’s actions in the EV dispute already amount to economic coercion.” Once Poland takes over the rotating presidency of the EU Council in January, we could also see a more forceful push in Brussels to sanction Chinese entities for supporting Russia’s war efforts—a key demand of the outgoing Biden administration. Two years after Commission President Ursula von der Leyen pushed China to the very top of her foreign policy agenda, there is a lot in the EU pipeline.

Locked in the Basement

My fear, however, after spending several days in Washington last month, is that although the China coordination message may carry weight with a Kamala Harris administration, it is likely to fall flat with Trump. “The idea that you strengthen von der Leyen because she is tough on China, this is not the way Donald Trump thinks. He will see this as a useless exercise, a waste of time,” a national security official who served under him told me. What will be paramount, he said, is not the substance of any European offer but the politics of the people who convey it. Scholz and French President Emmanuel Macron should be “locked in the basement” while right-wing leaders such as Italy’s Giorgia Meloni or Poland’s Donald Tusk, both tough on immigration, are pushed to the fore. “If I were Europe I would try to make Meloni the [Shinzo] Abe of a second Trump administration, the former official said, referring to the former Japanese leader who developed a relationship with Trump over golf. “If you lead with Scholz and Macron, you will fail.” 

In my conversations in Washington, I was surprised by the level of disdain, on both sides of the political aisle, for what the EU has achieved on China. There are two main reasons for this. First, US officials don’t believe that, when push comes to shove, Germany and France will follow the Commission’s lead on China. Officials pointed to Scholz’s decision to break with Brussels, other big European capitals, and members of his own coalition, by voting against the EV duties last month. Even in Berlin, this is seen by many officials as a strategic misstep that was driven by short-term political calculations and the chancellery’s antediluvian free trade fundamentalism. Second, there is a view that even when there is a degree of consensus among the EU-27 on how to move forward on China policy, the bloc moves far too slowly. As one official close to von der Leyen told me: “It is an evolution, not a revolution that we are engaged in”. This urgency gap is likely to color transatlantic relations regardless of who wins the US election on November 5. 

Spinning Heads

It pains me to say it, having lived in Berlin for two decades and observed how the debate on China has progressed in recent years, but Germany is now seen in key capitals across Europe as the biggest obstacle to confronting the strategic issues that count most. In conversations with French, Dutch, and eastern European officials in recent weeks, I have been pressed repeatedly to explain German moves, small and large, that have left other capitals scratching their heads in disbelief. Why, for example, was regional Social Democratic leader Manuela Schwesig, the tainted architect of a dubious plan to sidestep US sanctions on the Nord Stream 2 pipeline, invited to a reception with Joe Biden in Berlin and seated next to the president? Why are senior government officials celebrating the 75th anniversary of the People’s Republic of China alongside disgraced former Chancellor Gerhard Schröder?

How can the government credibly speak of diversification and de-risking—joint declarations with India notwithstanding—when its biggest companies are setting new records for investment in the Chinese market? Why, moreover, at a time when G7 allies are mulling new restrictions on Chinese technology in connected vehicles, are the CEOs of German carmakers on a mission to deepen their technology partnerships with Chinese counterparts? And why is the chancellor tacitly endorsing this push, whether he realizes it or not, at a time when these same carmakers are cutting thousands of jobs and closing factories in Germany? It is enough to make the head spin. 

Silver Linings

This is why, as Politico reported earlier this week, officials are now saying that only the crisis generated by a Trump victory may be sufficient to shake some European leaders out of their lethargy. “If it is Trump, we will try to make the best use of the shock by dumping our debt brake and making big investments in our security,” a German diplomat told me. “If it’s Harris, the challenge will be to make sure we don’t fall back into complacency.” A senior Commission official echoed that sentiment: “If Trump wins everything will accelerate because Europe will find itself squeezed between the US and China. Europe only develops in times of crisis. And this would certainly fit that definition.” Few in Europe are yearning for Trump. But if he returns to power, we may all need to comfort ourselves with silver linings.