¡Hola Beijing! : An ambitious Spain aims for global influence

On 30–31 March 2023, on the invitation of Chinese President Xi Jinping, Spanish Prime Minister Pedro Sanchez visited China in his first trip to the country. Sanchez’s trip took place just before Spain takes over for the six-month rotating presidency of the Council of the EU from Sweden in July, during which it intends to boost the EU’s relations with China. Sanchez is the first European leader to meet Xi after the latter’s recent visit to Moscow where Xi released his 12-point peace proposal. Thus, central to Sanchez’s visit to Beijing was the proposal, which despite scepticism from Western leaders in the context of cosier Russia-China ties, sparked his interest. While praising the proposal’s rejection of nuclear weapons and its respect for territorial integrity, Sanchez prompted Xi to understand Ukrainian president Zelensky’s peace plan “first hand”, insisting that Ukraine would set the conditions for peace.

Sanchez is the first European leader to meet Xi after the latter’s recent visit to Moscow where Xi released his 12-point peace proposal.

The visit also took place on the occasion of the 50th anniversary of diplomatic relations between Spain and China, which were established in 1973, followed by a Strategic Partnership signed in 2005.

Trade at the centre

The bulk of the Spain-China relationship has centred around economics, with China being an important source of investments and trade opportunities for Spain, which has battled severe financial and debt crises in recent years. Unsurprisingly, Sanchez’s visit focused on trade, with meetings taking place at the Boao Forum for Asia, often described as China’s answer to Davos. China remains Spain’s largest trading partner outside of the EU. Chinese investments in Spain have steadily increased and have moved beyond their traditional focus in the sectors of agriculture, real estate, and hospitality into more strategic sectors as is evident in Chinese company COSCO’s stakes in ports in Bilbao and Valencia. According to data from the Rhodium Group, Chinese investment in Spain increased from less than €10 million annually before 2012 to over €1.6 billion in 2016. Spain’s chronic trade deficit with China stood at €41.6 billion in 2022 marking a 37 percent increase from 2021. This demonstrates the asymmetry in economic ties between the two countries. In 2022, China replaced Germany as Spain’s top supplier as the source of almost 11 percent of its imports. Hence, building on from his meeting with Xi on the sidelines of the G20 summit in Bali last year, Sanchez reiterated the need to develop a more balanced trade relationship with China as well as a reduction in non-tariff barriers that present difficulties for Spanish companies, mostly comprising SMEs, to access China’s protected and competitive market. In this context, Spanish elites support the EU-China Comprehensive Agreement on Investment that still awaits ratification by the European Parliament, believing that it would generate a level-playing field for economic activity with China. 

From “no pasa nada” to conditional cooperation

While Spain’s relations with China are placed within the wider EU framework, Spain’s approach to China has been relatively moderate.

Spanish elites support the EU-China Comprehensive Agreement on Investment that still awaits ratification by the European Parliament, believing that it would generate a level-playing field for economic activity with China. 

Every Spanish PM has visited China since King Juan Carlos I’s visit to China in 1978. Spain was the first Western country to sign an extradition treaty with China in 2005, and also the first EU member state to send its foreign minister to China after the 1989 Tiananmen Square massacre. During the Dalai Lama’s five trips to Spain, no official authority received him. In 2009, former Chinese Premier Wen Jiabao referred to Spain as “China’s best friend in Europe”. During its previously held presidency of the Council of the EU in 2010, Spain advocated for lifting the arms embargo against China. In 2013, relations were briefly strained when Spain attempted to indict former leaders Hu Jintao and Jiang Zemin through universal jurisdiction over their violations in Tibet. Yet, according to a report by the Institut Français Des relations Internationales, Spain has traditionally been amongst the most accommodating countries in Europe regarding Taiwan, Tibet, and Chinese human rights issues. In 2018, Madrid welcomed Xi, who described relations between China and Spain as “the best in history” during his meeting with King Felipe VI. And during the COVID-19 pandemic, faulty medical supplies received through China’s “mask diplomacy” did not alter Madrid’s “no pasa nada” attitude towards Beijing. However, in the post-pandemic period, in tandem with the rest of the EU, Spain has adopted a more critical stance towards China, resulting in more conditional cooperation based on wariness resulting from China’s assertive behaviour. In 2021, Spain’s leading telecom company Telefonica replaced parts of its previously rolled-out 5G equipment with gear from Ericsson. In 2022, the Spanish government introduced a draft Royal Decree on Foreign Investments implementing the EU’s FDI screening mechanism aimed at scrutinising Chinese investments. The same year, Spain signed a joint statement with 50 countries, expressing concern regarding China’s human rights situation, particularly concerning the Uyghur Muslims. Moreover, unlike fellow Southern European countries Portugal and Italy, Spain did not join China’s Belt and Road Initiative. Besides, the emergence of the far-right party Vox on Spain’s political scene has resulted in ties with China becoming a factor in internal debates.

Spain signed a joint statement with 50 countries, expressing concern regarding China’s human rights situation, particularly concerning the Uyghur Muslims.

No more punching below for Spanish foreign policy 

Despite its important geography surrounded by the Mediterranean Sea and the Atlantic Ocean and its historic ties with the Latin American nations, a triad of challenges involving the country’s economic woes in the aftermath of the 2008 financial crisis, unrest emanating from the Catalan separatist movement, and continuous domestic political turbulence has resulted in an underperforming foreign policy. Spain’s focus was traditionally limited to the Maghreb and Mediterranean regions in addition to managing migration flows from Africa. But in recent years, the tide has turned favourable for Spain to emerge from being a passive actor in the EU towards a more global actor. Cracks in the traditional Franco-German guard, as well as other European member states taking the lead on issues including support for Ukraine, are providing openings for Spain. Brexit, and the contrast of Italy’s eurosceptic government with the refreshingly pro-EU nature of Spanish politics, are opportunities for Spain to garner greater influence at the European level. These have enabled Sanchez to prioritise the international arena ever since he took over from his predecessor PM Mariano Rajoy in a no-confidence vote in 2018, emphasising that Spain would be “at the vanguard” of the European debate. In a big win for Spanish influence, Josep Borrell, who was Foreign Minister in Sanchez’s government, was appointed as the head of the European External Action Service in 2019. Since the war began, Sanchez has remained a staunch NATO ally and supporter of Ukraine, committing to supplying 10 modern Leopard tanks and visiting the country twice. Ranking fourth within the EU in its reception of refugees, Spain has welcomed over 170,000 Ukrainian refugees since the start of the war. Spain’s upcoming presidency of the Council of the EU, which will prioritise the Union’s ‘strategic autonomy’, will further offer the country an opportunity to expand its engagement on the European and global stage.

Brexit, and the contrast of Italy’s eurosceptic government with the refreshingly pro-EU nature of Spanish politics, are opportunities for Spain to garner greater influence at the European level.

The presidency arrives amidst a more stable Spanish economy, with the country’s March inflation rate at 3.3 percent being amongst the lowest in Europe in part due to its lesser dependence on Russian gas. Previously, Spain was particularly affected during the pandemic with its GDP falling by 11 percent in 2020. Yet the Spanish economy rebounded by over 5 percent GDP growth in 2021 supported in part by the Next Generation EU recovery funds. For Sanchez, the visit to Beijing showcased Spain’s increasing global influence in the run-up to national elections scheduled for December 2023, where polls predict the opposition Popular Party as ahead of Sanchez’s Socialist Party. Furthermore, Sanchez’s close relations with both France and Germany, the traditional power brokers in the EU, will also be useful for Spain’s global ambitions. Preceding his voyage, Sanchez described China as a “top-tier global actor”, urging the world to listen to its voice. Analysts like Jose Ignacio Torreblanca from the European Council on Foreign Relations believe Spain is well-positioned to “act as a facilitator” due to its relatively “easy” ties with Beijing. But while Madrid may compartmentalise its trade ties with Beijing away from its stance on the war, European Commission president, Ursula von der Leyen has stressed that Beijing’s position on the war will be a “determining factor” in EU-China ties. Whether Sanchez can finally deliver on Spain’s geopolitical ambitions remains to be seen. The stakes for Europe are high, and after years of punching below its weight, the Eurozone’s fourth-largest economy’s adoption of a more pro-active and bold approach to foreign policy can only be welcomed.

• International Affairs
• China
• European Union
• India
• Debt Crises
• economic
• FDI
• GDP
• Investment
• NATO
• Spain-China relationship
• trade

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