U.S. and EU’s Strategy for China: Irreconcilable Differences?

In his speech at the State Department, Secretary of State Anthony Blinken remarked that the U.S. would confront, compete and cooperate with China according to necessity. The three terms recall the strategy adopted by the EU in 2019, where Brussels defined China as a partner (cooperate), economic competitor (compete), and a systemic rival (confront). Interestingly, the UK too, after leaving the EU, adopted a similar definition in its Integrated Review: compete where necessary, co-operate where possible, counteract when necessary. An initial assessment would suggest Western actors have ultimately decided to follow the EU’s approach to China. However, if it is true that actions speak louder than words, there are some deafening differences. 

The first difference regards economic competition. Despite the increasing number of areas and sectors in which China is an economic competitor for the EU - which now no longer includes exclusively manufacturing economies but also services-based ones - China is still largely perceived as a great economic opportunity. In confirmation of this came the formal conclusion of the Comprehensive Agreement on Investments (CAI) on December 2020, which faces an uncertain future. Truthfully, CAI did more than signalling the EU’s view of China and its resilient propensity for engagement, it also attempted a move in the direction of the much-desired reciprocity and levelling the playing-field that would eventually allow the EU to better enjoy the economic opportunity it views in the Chinese market. On the other side of the Atlantic, the situation is not that dissimilar and yet, extremely different. Much like the EU, the U.S. cannot ignore its economic ties with China and the economic opportunities the Chinese market offers. After all, the trade war enacted by the Trump administration was ultimately aimed at granting better access and treatment for U.S.’ enterprises in China, exactly what the EU was trying to obtain with CAI. 

However, the perception of China as an economic competitor is stronger and more preponderant in Washington. In large part, this is the result of technological competition, an area in which the EU lags behind, with the exception of a few niche sectors. The run for overall technological primacy as well as pre-eminence in specific technological sectors has largely informed the U.S.’ positioning towards China in recent years. Now, areas of concerns that had previously covered technological advancement and the protection of intellectual property have been directed to the hardware side of the competition. Worries regarding the availability and production of rare earth metals as well as semiconductors have furthered the perception of China posing a serious threat to U.S.’ economic wellbeing and heightened competition. Notably, such a competition encompasses geopolitical arenas in regards to third-parties that play a central role in the production of fundamental hardware, such as Taiwan and South Korea. The growing tensions have sparked a debate regarding supply chains and value chains, and broadened national security to include these issues. The EU too raised concerns regarding supply chains, mostly after the pandemic, which has shown the weaknesses of the EU in that field. However, technological primacy is lower on the EU’s list of priorities, and the notable different interests within it have made the EU’s concerns much softer and to a certain degree, delegated the China “economic competitor” aspect to member states. 

The second difference regards systemic rivalry. Only a few months ago, at the very beginning of 2021, if one were to ask where the EU was approaching China as a systemic rival, finding an answer would have been a difficult endeavour. Sure, one could have pointed to the European Commission’s white paper on foreign subsidies, aimed at avoiding market distortion and unfair competition within the market, but very little more. Recent events, however, have seen the old alliances revived for a moment as the U.S., the EU, Canada, and the UK placed sanctions on China against the violation of human rights in Xinjiang. Was it the first sign of a realignment of the U.S. and EU’s China policy? Hardly so. Both actors approach China in a multifaceted manner, but the EU still privileges collaboration in a wider set of issues and instances, the other, the U.S., has clearly taken a stance of rivalry and confrontation, with some exceptions for collaboration. For example, when Biden proposed a coalition of democracies, the EU and its member states did not follow suit. Now, the fight against climate change is viewed as a potential area of collaboration, but it is evident how it is also an area where tensions can easily arise. Furthermore, the arrival of the Biden administration has, if anything, acerbated the systemic rivalry by placing values at the centre of its foreign policy­ - something that the transactional approach of the Trump administration hardly cared about. Values is the area where the U.S. and China are most incompatible. There, compatibility between the EU and the U.S. is high, but the EU remains reticent in overplaying that card aware that it can only create further frictions with China. In such a sense, the sanctions on Xinjiang are an exception. 

Beyond the official “tripartite” approach, if we think about security, there is a reason why some member states and now, Brussels has decided to adopt their own Indo-Pacific strategy. Defending and advancing the EU’s interests in the region on one hand is an expression of the EU’s desire for strategic autonomy, and on the other it is making clear that the EU’s strategy for the region is not framed in anti-China/containing China terms, distancing itself from the strategy adopted by the U.S. 

Overall, Biden is mending the U.S.’ relationship with the EU, but there is a clear desire and drive to work towards a more common approach vis à vis China. The more China responds defensively and positions itself rigidly with no space for mediation, the more likely it is for the EU to shift towards an approach to China more similar to that of the U.S. A recent report from the EU underlining China’s “authoritarian shift” and the “fundamental divergence” between the EU and China is a testimony of the EU’s move towards a more US-like China policy.[1] Moreover, in many respects, the EU remains dependent from the U.S. (in terms of defence but also technology) and American influence in the region is undeniably still strong. Thus, the near future is likely to witness more coordination and collaboration between the U.S. and the EU. However, notable differences remain, which still limit collaboration between the U.S. and the EU to specific actions and areas. The conclusion of CAI, the recent moves by the EU toward strategic autonomy, the decision to adopt its own Indo-Pacific strategy, are all signals of the EU’s desire to position itself autonomously from the U.S. It thus remains apparent how areas for disagreement shape two different approaches: one still reliant on engagement (EU) and one that is mostly dictated by rivalry (U.S.).