In setting China up as an adversary, the EU is tilting at windmills

In the classic Spanish novel Don Quixote, the knight insisted on attacking windmills he had mistaken for giants, and ended up unhorsed. In real life, the European Union has increasingly and aggressively taken on China over the past few years, often at the expense of its own economic and social goals. The EU has long complained about its trade deficit with China, attributing it to a lack of market access. Yet it refuses to ratify the Comprehensive Agreement on Investment (CAI) – a golden opportunity to expand EU exports to China. The China-EU investment deal, which took seven years to negotiate, addresses many EU concerns and offers arguably the most favourable market access terms among China’s bilateral deals. But in 2021, the European Parliament suspended its ratification after China sanctioned several European parliamentarians in response to EU sanctions on a group of Chinese officials for alleged human rights violations in Xinjiang. To break the stalemate, China proposed in 2023 that both sides lift sanctions; in April that year, China rescinded its sanctions on EU parliamentarians. The European Parliament, however, dug its heels in, vowing to “remain a strong defender of universal human rights and fundamental values”. Consequently, the investment agreement remains in deep freeze. Is Brussels genuinely serious about cutting its trade deficit with China? Such a confrontational approach will also slow the EU’s energy transition, obstructing its adoption of Chinese clean energy technologies. Thanks to Chinese advances, the cost of solar and wind technologies has fallen by 60-90 per cent since 2010. As a result, the cost of electricity generated by over 90 per cent of wind and solar plants commissioned last year was lower than that by the most cost-effective fossil fuel alternatives. Chinese electric vehicles can also contribute in no small measure to lower EU emissions. Still, since 2013, the EU has subjected China’s solar products to steep anti-subsidy and anti-dumping tariffs. EU countries also shut out Chinese-made products. For instance, Italy last month introduced rules to exclude Chinese solar components from tenders to build solar capacity in the country. Last October, the EU slapped punishing anti-subsidy tariffs on Chinese electric vehicles despite Beijing’s plea to find a solution satisfactory to both sides. Brussels’ trade measures are highly likely to backfire as they did for 5G. Used to China’s median download speeds of over 200 megabits per second, I was annoyed by the slow internet speeds when in France and Germany earlier this month. It turns out the EU median speed was roughly half of China’s, mainly due to inadequate infrastructure. Clearly, EU efforts to ban 5G leader Huawei Technologies have held back its internet speed. In addition, Brussels’ answer to US President Donald Trump’s trade protectionism and unilateralism will prove self-damaging. The EU aims to reshape the multilateral trading system by working with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free-trade agreement that includes Japan, Britain, Mexico and Canada – but not China. Without China, the EU has a better chance of dominating the agenda of its envisaged trade body. But it would be extremely difficult, if not impossible, for any world trade body to function properly without China – the world’s largest trading nation accounted for 14.2 per cent of exports and 10.6 per cent of imports globally in 2023. It is also the EU’s third largest trading partner and the top trading partner for more than 120 countries. Moreover, Brussels’s plan will, as Trump’s anti-globalisation programme does, result in an economically fractured world rather than an integrated one, which the EU’s prosperity depends on. Brussels’s heavy-handed approach towards China is largely ideologically driven. Obsessed with the antiquated mindset of democracy vs authoritarianism, it positions China as a “systemic rival” and regards confrontation as politically correct. I have long been puzzled by accusations in Brussels that China was trying to sabotage EU unity whenever it sought friendly relations with member states. Does it expect China to forge fraught relations with all of its members so they would act in unison against it? Brussels’ animosity towards China was again on display as China hosted a gathering of world leaders at the Beijing parade and ceremony marking the 80th anniversary of its victory over Japanese aggression in the second world war. EU foreign policy chief Kaja Kallas framed China’s inclusion of leaders from Russia, Iran and North Korea as “anti-Western optics” and “a direct challenge to the international system built on rules”. On its part, China persists in treating the EU as a partner, and wishes to see a strong and united EU become an important pole in the evolving multipolar world. The idea that China is an adversary of the EU is nothing short of imaginary – like the giants Don Quixote believed he was fighting. Brussels continues to live in the past, even as the transatlantic alliance is increasingly called into question. US Vice-President J.D. Vance’s attack on the EU at the Munich Security Conference in February highlighted how divergent the two parties are in values and policy. Many in Europe regard the US trade deal with the EU as a humiliation; there is a sense that the concessions effectively forced on the EU a reverse Marshall Plan – the American post-war initiative that drove investment into Europe to help rebuild the economy. Don Quixote realised his folly and repented. How long will it take the EU to see where its true interests lie?

In setting China up as an adversary, the EU is tilting at windmills

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Like Don Quixote’s knight, the EU is wrestling with an imaginary enemy and setting itself for self-inflicted social and economic damage

Like Don Quixote’s knight, the EU is wrestling with an imaginary enemy and setting itself for self-inflicted social and economic damage