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Brian Y. S. Wong

With the impending return of the “America first” president Donald Trump to the White House, some advocate that Beijing and Brussels rebuild trade ties and shield themselves against the precipitous protectionist measures from Washington.
However, with Chinese and European Union negotiators knee-deep in protracted discussions over tariffs on Chinese electric vehicles (EVs), and a flare-up in Sino-Lithuanian relations signalling more tension, there are headwinds preventing drastic improvements in diplomatic ties in the foreseeable future.
There are three particular obstacles: Europe’s perception of the Sino-Russian relationship, the bilateral trade deficit and the degree to which China’s market is open to European firms and investors.
On her recent visit to China, German Foreign Minister Annalena Baerbock reiterated the detrimental impact of China’s support for Russia on Sino-European ties.
To be clear, as a key economic and trade partner to Russia, China is no more supportive of Moscow’s military aggression in Ukraine than India, which has reportedly imported 13 times more oil from Russia since the outbreak of the war. India is still rapidly consolidating ties with the United States and Europe alike.
Yet Chinese indignation over Western commentators’ apparent double standards is met with limited sympathy from policymakers and politicians in major European capitals, who castigate China for its purported supplying of dual-use exports to Russia. Such resentment has also spilled over into the public, albeit to a lesser extent.


A European Council on Foreign Relations study across 11 member states last year found that while most viewed European trade and investment relations with China as “balanced” or more beneficial than risky, on average 41 per cent of Europeans would be in favour of sanctions against China if it supplied weapons to Russia, even if those sanctions seriously damaged Western economies.
Furthermore, the Sino-European trade deficit has grown considerably during the pandemic, ballooning to US$418 billion in 2022. While the gap has since decreased, concerns remain among pro-business lobby groups and politicians that Chinese manufacturers are rapidly dislodging home-grown champions within the EU.
Vociferous allegations of China using competition-distorting subsidies fail to conceal the real problem facing Europe highlighted in the report by former European Central Bank head Mario Draghi: suboptimal productivity growth that constricts manufacturing capacity and spurs an over-reliance on both the US and China. Such grievances are in turn leveraged by select voices to drive forward the geopolitical agenda of “de-risking” from China.
There is growing scepticism among European firms about the viability and vitality of Chinese markets. Persisting difficulties with market access and ambiguous regulatory standards were cited by the European Chamber of Commerce’s recent position paper which called for a strategic rethink of doing business in the country.


These issues are by no means intractable. There exists a modicum of goodwill from both sides. Moreover, consumers and some manufacturers in Europe stand to gain from more comprehensive and robust ties with China – the former, from cheaper and higher-quality goods, and the latter from China’s dominant position in most critical supply chains, especially in what Beijing calls its “three new” exports of EVs, lithium batteries and solar photovoltaic modules.
With a sluggish rebound in domestic consumption, lethargic investor sentiment, and the risk of more drastic pressures to decouple from across the Pacific, China would also benefit immensely from stabilising ties with large European economies.
However, the first step to mending rifts is the acknowledgement that they have structural roots, as opposed to merely transient, cyclical causes.
With US president-elect Donald Trump pledging a swift end to the Ukraine war, it is not too late for China to push a proposal for a peaceful resolution that preserves as much of Kyiv’s territorial sovereignty as possible while offering all other parties to the conflict a tenable off-ramp.




State-owned enterprises should step in to offer humanitarian and developmental aid to both Russia and Ukraine. Long-lasting regional peace can only come through the provision of security guarantees to Ukraine by a credible coalition of states.
Chinese diplomats should also acknowledge and respond to their European counterparts’ concerns about Russia’s strategic intentions. Divide-and-conquer cannot be a viable strategy in the face of the broad alignment among EU member-states – short of Hungary – on the war.
Concerns over both trade imbalances and market access can be assuaged through leading Chinese manufacturers working collaboratively with European counterparts to scale up and bolster joint ventures, technology exchanges and alignment on regulatory and disclosure standards.
This would require strategic empathy on the part of Chinese leaders and bureaucrats, as well as the capacity to address the perceptions of the European people.

Given the sizeable overheads, it is unlikely that most European countries will re-emerge as manufacturing powerhouses. However, Beijing must also recognise that the drive by European firms to relocate supply chains out of China is a secular trend that cannot be reversed.
A practical compromise would be for Chinese manufacturers to work with European counterparts to set up joint ventures in third-party nations in Southeast Asia and Latin America. China could provide expertise, technological support and even subsidies to advance the interests of all parties.
As Chinese leaders plan next year’s macroeconomic policies at this month’s economic work conference, they must focus on measures that will enable economic growth, increase access to foreign capital and maintain a transparent, hands-off regulatory regime in new high-potential sectors.
It will take more than just time for investor confidence and entrepreneurial trust to be restored in Europe and beyond. Moreover, there must be more emphasis on growing the pie and less of a preoccupation with undue securitisation. Actions always speak louder than words.


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The Chinese and European economies can both benefit from increased engagement, especially if Beijing can assuage investors’ concerns


The Chinese and European economies can both benefit from increased engagement, especially if Beijing can assuage investors’ concerns.


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China could adopt strategic empathy to mend ties with Europe

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The Chinese and European economies can both benefit from increased engagement, especially if Beijing can assuage investors’ concerns

The Chinese and European economies can both benefit from increased engagement, especially if Beijing can assuage investors’ concerns