A recent trade deal between the EU and China has stalled in Europe’s governing body, a possible result of China’s soft power shortcomings that affect its public perception outside of the Pacific region.

It’s a critical time for global order China and Europe must manage and adapt to increasing competitiveness in their relationship and find a pragmatic, rational and balanced approach to their relations. But they must also increase communication and cooperation to prevent the world from renewing the pattern of major power confrontation.

Europe needs sustainable China policy, as it currently finds itself in a dilemma. It wants the economic benefits of trade with China, but it is loath to cut ties with the United States, which it needs for markets and security. It a fast-changing world, it needs to find a path forward.

The EU-China Comprehensive Investment Agreement (CAI) might look like a free lunch for European companies interested in operating in China but the push for bifurcation of operations both from U.S. and Chinese side could bring unintended negative consequences from such deal.

China and the EU are staunch supporters of multilateralism, and the recent BIT agreement, underpinned by institutionalized rules for win-win cooperation, will significantly shore up confidence in cooperation in global governance.

The treaty is part of a strategic choice made by China, whose interests align with those of the European Union. For the EU, the BIT is a well-thought-out strategic choice based on the world’s post-pandemic economic landscape.

Both China and the European Union have a strong desire to strengthen cooperation, despite the inevitability of future challenges. Green development, the digital economy and global challenges will increasingly be the new driving forces.

Europe’s global interests have long been aligned with those of the United States, but as a new Cold War intensifies between China and the US, the EU states are diverging from what they see as brash US action.

The nations of the ‘European Rim’ face a tough decision in the midst of a post-COVID US-China decoupling – to look east or west for investment and development opportunities? Regardless of the investment sources, the European Rim must prioritize middle class-oriented growth to pursue full employment and economic stability.

As the US-China split seems to intensify, each state within the European Union may soon have to face a difficult decision— Beijing or Washington?