Despite Joe Biden’s election to the presidency in November 2020, European leaders—particularly German Chancellor Angela Merkel and French President Emmanuel Macron—have been determined to chart an independent relationship with China. For example, just three weeks before Biden’s inauguration, European negotiators announced the conclusion of a Comprehensive Agreement on Investment (CAI) with China, which would significantly expand market access between two of the world’s largest economies.Biden has made public assurances that he has no problem with Europe pursuing “strategic autonomy.” But his diplomatic team has been privately working to pull Europe back into the fold by refocusing attention on China’s human rights abuses in Xinjiang. European leaders would like to artfully evade this conversation while they work to lock in reciprocal technology and investment deals with Beijing. But Beijing is playing right into Biden’s hands, rallying the European public against an accommodative foreign policy.
Indeed, this week was a key turning point in Chinese–European relations. On March 22, the European Union sanctioned China over human rights abuses (this time over its treatment of Uyghurs in Xinjiang) for the first time since the Tiananmen Square massacre of 1989. It was a slap on the wrist, not a substantial blow, with travel bans and asset freezes affecting only four individuals and one corporate entity. But China has responded that it will “not back down.”
Sure enough, in a dramatic escalation that same day, Beijing announced sanctions on ten European individuals, including five members of the European Parliament and several nongovernmental organizations, for “maliciously spreading lies and misinformation.”
Eurocrats and member state leaders alike responded with dismay as if they had expected China to accept Europe’s rebuke quietly. “China’s sanctions … are unacceptable and will have consequences,” tweeted David Sassoli, president of the European Parliament. And in European member states, long-simmering frustrations are coming to a boil. France has just recalled the Chinese ambassador, Lu Shaye, for calling a French scholar a “small-time thug” and a “crazed hyena” on Twitter. Beijing retorted with gusto, with state media highlighting Europe’s own history of human rights abuses, including colonialism and the Holocaust. As China commentator Bill Bishop noted, China’s “propaganda line of defense” on Xinjiang “has effectively shifted from ‘we are not doing it’ to ‘you did it so you can’t criticize us for doing it too.’”
The sanctions spat will likely doom the CAI. Pushed for by the German presidency of the European Council, the agreement expanded Chinese market access for European companies in several sectors and provided some protections against flagrant violations of business norms, such as forced technology transfers. The EU’s smaller member states backed the deal because their firms are likely to get better treatment in talks with China if Brussels is deputized to negotiate on their behalf. That’s why the deal still seems likely to cruise through the European Council, where only heads of state get a vote.
But the CAI then has to pass a second, more challenging hurdle: ratification in the European Parliament. This was always going to be a much harder sell than the media suggested. European public opinion has turned decisively anti-China over the past year and so have several pan-European party alliances that dominate the European Parliament. These officials have long been concerned about Beijing’s human rights record. And because they face fewer direct consequences for Chinese economic retaliation than member states’ leaders at the European Council, they have every incentive to use “tough talk” on China. The mood in the European Parliament is unlikely to improve in the next few weeks as Beijing and Brussels seem likely to escalate their feud. With European companies caught in the crossfire—Swedish clothing retailer H&M has become the target of a consumer boycott on the mainland after it claimed it did not use Xinjiang cotton—the case for increased EU-Chinese economic cooperation is more dubious than ever before.
Meanwhile, U.S. diplomats are racing to pull Europe back on-side. On March 22, the Biden administration followed the EU by imposing its own sanctions on two of the same individuals targeted by the EU’s penalties. U.S. Secretary of State Antony Blinken proposed a revival of high-level talks between the United States and EU to coordinate on China; Josep Borrell, the EU’s foreign affairs chief, is on board. You can bet that Blinken will keep pushing to keep the Xinjiang issue on the front page.
But even if the CAI does die in Strasbourg, France, there are still powerful interest groups in Europe that will resist attempts to decouple from China. Dutch, German, and French companies together accounted for around 90 percent of foreign direct investment (FDI) flows into China in the fourth quarter of 2020, according to Rhodium Group. And the EU’s heavyweight leaders—chief among them, Macron—remain obsessed with the principle of “strategic autonomy.”
The next test for Europe’s China doves will be a reprise of the Huawei fight that dominated 2019 and 2020. Chinese companies are in the final stages of installing the ominously named PEACE (“Pakistan and East Africa Connecting Europe”) cable, a 7,500-mile overland and undersea fiber optic system that will connect China to Europe via South Asia and Africa. The terminus of the cable is expected to surface off the coast of southern France in the fall of 2021.
Macron has sharply restricted Huawei’s access to France’s 5G network, but he seems determined to let the company play another important role in France’s digital infrastructure. Huawei Marine Networks (HMN), a joint venture between Huawei Technologies and British company Global Marine Systems (GMS), began construction of the cable. In November 2019, Huawei and GMS sold HMN to Hengtong Optic-Electric (HKT), another Chinese firm. Yet according to Bloomberg, Huawei is still HKT’s third-largest shareholder.
Huawei is also making the equipment for the cable’s transmission gear and for the landing stations. The French defense establishment has protested that sensitive data may end up transiting the cable. For Macron though, principle seems to be the thing that matters; at a February press conference, he said that with respect to technology, France and the EU should not “depend” on either a “100 percent U.S. decision [or] Chinese solution.”
Europe is learning that strategic autonomy has its downsides. The harder Brussels tries to chart its own course, the more Washington and Beijing will ramp up the political pressure. This week, Washington seemed to gain the upper hand. But despite public outcry over human rights abuses in Xinjiang, there are still powerful interests in Europe determined to avoid economic and technological decoupling with China. With the PEACE cable nearing completion, the next diplomatic battle is already looming on the horizon.
