Decouple or de-risk? The United States and Europe are converging on China

Differences of language cloak a shared strategic interest

The loose talk in Washington is of decoupling. The European Union has opted for a more precise, and seemingly limited, posture of “de-risking’. We should not be overly misled too by the language. The difference is as much rhetorical as real

For all the noise made by Washington’s hawks (and the genuine strategic concern about China’s intentions in the western Pacific), the Biden administration is not about to break economic ties with Beijing. And, even as it chooses its words carefully, Brussels has more in mind that some restrictions on sensitive technology transfers. In real life, American and European policy towards China has been converging. 

Commission president Ursula von der Leyen is heading soon for Beijing in the company of Emmanuel Macron. Ever the Gaullist, the French president is eager to set out a distinctive European policy. For the Elysee there are few things worse than being seen as a pawn of the United States. Paris though is trapped by the geopolitical realities. So too, for all the counter-clamour of much of German industry, is Olaf Scholz in Berlin.

Xi Jinping’s recent visit to Moscow confirmed what many if not most European leaders have already privately admitted. China cannot any longer be treated as an export opportunity. Nor can the Atlantic be separated from the Pacific. Xi’s partnership with Vladimir Putin may have some limits, but it marks out clearly their joint challenge to the European order. 

So far China has refused to back Putin’s aggression in Ukraine with supplies of sophisticated weapons. But, throwing aside a deep historical attachment to the principle of sovereignty and territorial integrity, Xi is doing all he can to prevent Russia from losing. Putin may have proved himself an idiot but he is still useful. As for the Russian leader, when his troops marched on Kiev a year ago he imagined himself as Peter the Great. Instead he has put Moscow into the pocket of its most powerful and, in the long term, most dangerous neighbour.

Von der Leyen made the connection in her speech last week. “Far from being put off by the atrocious and illegal invasion of Ukraine, President Xi is maintaining his ‘no-limits’ friendship with Putin,” she remarked.

When the European Union last revised its security strategy it referred first to China as a partner, then a competitor and after that a rival. The idea of partnership has not disappeared. The speech reaffirmed the need to work together on global warming and preserving biodiversity. As it happens, the Biden Administration would not disagree. The important point, as the Commission president signalled, is that Europe has now reversed the order. Rival now comes first.

Much of her focus was on the need to extend monitoring of sensitive trade and investment decisions in high technologies and potentially dual-use products. But von der Leyen looked beyond restrictions on such transfers. The putative comprehensive investment agreement drawn up with China in 2021 is being reassessed: “We have to recognise that the world and China have changed during the last three years”. 

De-risking cannot apply only to sensitive goods. One lesson from Ukraine has been the danger of import dependency on a single supplier. Export dependence carries similar dangers. Privately, officials in Berlin are aghast at the reliance on the Chinese market of some of Germany’s biggest companies.

By some estimates, China is the source of more than half of Volkswagen’s sales. How long, the officials fret, would this business survive should Beijing decide to lift its embargo on arms supplies to Moscow and Washington decide to respond with sanctions?  Speak to German business leaders and they will tell you that China is a vital market. The United States, however, is an essential one.

There will always be transatlantic collisions about China policy - and rightly so. The United States is a Pacific power. History, geography and its regional alliance structure give a different strategic perspective and wider responsibilities. Europe’s recent “tilt” is tiny by comparison. But you do not have to sign up to the notion that the new global order will be shaped by a contest between autocracy and democracy to recognise that American and European interests are becoming indivisible.

The Ukraine war has shown that the United States cannot give up on Europe without weakening itself in the Pacific. Likewise, Europe cannot rely on America to preserve its own security order and then two-time Washington in Asia in pursuit of its selfish economic interests.

Ironically, China’s diplomats are now beginning to understand this. Beijing has spent a decade and more seeking to prise open divisions between Europe and the United States. The menacing language its diplomats now direct towards European capitals marks a recognition that the strategy is failing. It may well be that, given China’s global ambitions, such an outcome was always likely. But Xi’s backing for Putin in Ukraine has made it inevitable.