Expert Speak Raisina Debates
Published on Apr 22, 2020
Reset in EU-China relations tougher in a post Covid19 world

The year 2020 was meant to be for a relationship reset for the EU and China. However, the Covid-19 pandemic has disrupted planned activities to rebuild ties and further polarised European perspectives on China. The negative perceptions of China may become more entrenched among certain European countries due to Beijing’s propaganda campaign throughout the crisis and its determined forays into Central and Eastern Europe. While this may not cause lasting damage to the relationship given the continuing interest in strong business ties, 2020 will see the gulf between the EU and China widen further.

Last year marked the beginning of a more assertive European approach to China, a country it labelled as an economic competitor and a “systemic rival” politically. But bilateral ties became strained even before this. The EU has been wary of China’s increasing presence in the continent and its growing relationship with the economically weaker Central and Eastern European countries. Brussels sees this as an attempt to undermine EU solidarity and lies at the root of its mistrust of Beijing. The ‘17+1’ grouping — countries from this sub-region that include full EU members, plus China — has prevented the EU from formulating a unified approach to China. A new screening mechanism to scrutinise foreign investments in critical industries was finalised in April 2019 to prevent further Chinese penetration in the continent. Many European companies are also contemplating banning the Chinese company Huawei from developing its 5G infrastructure. This has led Beijing to threaten retaliation against European companies operating in China.

A year of summits

None of this, however, negates the strength of the bilateral business relations. China is the EU’s second-largest trading partner after the US, while the European bloc is Beijing’s largest trading partner. Both naturally remain committed to revitalising economic ties in 2020. Germany claimed EU-China relations to be a big priority for 2020 under its rotating presidency, while China declared this to be its ‘year of Europe’. A series of summits scheduled for Beijing, Brussels and Leipzig were planned to make progress on economic and business ties. The finalisation of the Comprehensive Investment Agreement was the most critical agenda for the year, one that would supersede the bilateral investment treaties EU members have in place with China. The investment agreement could eventually lead to a broader free trade agreement.

There continue to be several outstanding issues that have been under negotiation for long. More market access to key sectors in China, such as telecommunications, financial services, manufacturing, and information and communications technology, is a must for EU. A reduction of government subsidies to state-owned enterprises and more significant progress on sustainable development are also important European demands. Given the strong Chinese reluctance to give in to these demands, a one-year timeframe was already ambitious. This timeline is now clearly disrupted as all these summits have to be rescheduled.

Widening trust deficit

Even once the summits are rescheduled, it may not be so easy to pick up from where the EU and China had left off. China’s mismanagement of the outbreak of Covid-19 — the initial censoring and manipulation of information — did not generate hostile reactions in Europe as it did in the US. But it did not go unnoticed. It is China’s campaign of misinformation that is likely to have a much more significant impact on European views on China and exacerbate the existing gulf in bilateral trust than its initial handling of the crisis. It will harden the negative perceptions already prevalent among key European states of the Chinese model of governance.

Chinese propaganda has ranged from blaming Italy as the source of the virus to questioning the West’s handling of the crisis. It has also stepped up its effort to provide medical aid to European and other countries. This “mask diplomacy” is meant to project its image as a global saviour, particularly in Europe. However, it has conflated aid and commercial deals, resorted to automated bots to exaggerate the sense of appreciation in recipient countries, and blamed the failure of its testing kits on European incompetence.

This Chinese propaganda has already rankled the EU, and it has sought to correct the narrative. German Chancellor Angela Merkel downplayed the Chinese medical assistance, calling it a gesture of reciprocity. This was an apparent attempt to undermine the Chinese narrative but also serve as a reminder of European aid to China in the initial stages of the virus outbreak. French President Emmanuel Macron has also recently raised questions over the authenticity of information coming out of China about its handling of the crisis. The sternest rebuke has, however, come from the EU foreign policy chief, who spoke of the “politics of generoity”, a “struggle for influence” and a “global battle of narratives” that was seeking to discredit the EU. He urged the member states to defend the union against its detractors.

A divided Europe

The poor quality of Chinese medical supplies will raise further questions in some quarters about China’s reliability as a partner going forward. But it simultaneously also heightens their concerns about Beijing’s attempts to carve out a larger space for itself on the continent by fuelling discord among the member states. The manner in which China stepped in to assist the ‘17+1’ countries, along with Italy and Spain, have been highly appreciated there. The Italian foreign minister went so far as to claim that his country’s earlier endorsement of the Belt and Road Initiative paid dividends as it allowed them “to save lives”. The president of Serbia, an EU-aspirant, also portrayed China as “the only country that can help”.

China’s response was also in stark contrast to that of the EU. Similar requests by Italy and others to their European allies did not elicit an immediate response. The decisions of some countries to close borders and ban the export of medical equipment led some to denounce European solidarity as a “fairy tale”. The reluctance of the wealthier EU members to even provide the economic relief demanded by these countries made matters worse.

Despite the recent EU efforts to provide both economic and medical relief, China may have already sowed the seeds for future expansion among these countries. As poorer European countries work towards rebuilding their economies post-COVID-19, they may turn to China for the much-needed loans and investments. In that context, the effectiveness of EU efforts to protect strategic infrastructure and businesses in post-Covid-19 Europe, and their ability to prevent further Chinese penetration remains to be seen.

Given the scale of the economic and trade ties, EU-China relations are too big — and essential — for either to allow them to crumble. But 2020, which was earmarked for a reboot of the bilateral ties, may see a widening of differences before any longer-term calibration materialises.

The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.

Contributor

Aryaman Bhatnagar

Aryaman Bhatnagar

Aryaman Bhatnagar is a foreign policy security and political analyst based in New Delhi. He was a German Chancellor Fellow of the Alexander von Humboldt ...

Read More +