Europe's over-reliance on China a fallacy

Some countries are following the way of the US when they stress strategic independence, but that is often self-contradictory

As China-US confrontation and the Russia-Ukraine conflict escalate, and anti-globalization and anti-China trends rise in Europe, Europe's "over reliance on China" has emerged as the most notable anti-China fallacy this year. Decision-makers in both the European Union and governments of European countries have suggested to avoid the reliance. If it further prevails, it will hit the sound development of China-EU relations severely.

In recent years, the escalation of China-US tensions has affected the perception of European countries on China. Worries about the rise of China and pressure imposed by the United States have made European political leaders skeptical of their so-called over-reliance on China or even propose decoupling from China's economy.

Germany's Federal Ministry for Economic Affairs and Climate Action is formulating policies to reduce the country's reliance on China, strengthening review of investment in Chinese enterprises and reducing support for Sino-German cooperation projects. European countries worry about excessive imports, innovative technology, supply chain and market reliance on China. A report, "Dependence in Europe's Relations with China: Weighing Perceptions and Reality", released by the European Thinktank Network on China in April this year showed that the EU has identified 137 types of products as being mainly produced in non-EU countries, of which made-in-China products accounted for 52 percent, including major raw materials such as rare earth, cobalt, magnesium and graphite.

Europe's "over-reliance on China" is caused by misunderstandings and irrational perception. China-EU economic and trade cooperation is two-way, and mutually reliant and beneficial. While it stresses Europe's reliance on China, it has ignored China's reliance on Europe. China has long relied on Europe for foreign investment, technology and exports. Europe is China's largest supplier of technology and equipment. As of February 2019, the total value of contracts on China's technology imports from Europe amounted to $216.76 billion, with the number of projects reaching 56,482.

Large European enterprises have every reason to choose China in terms of seeking optimal production hubs and maximization of profits. Western economics stresses that there is ultimately only one optimal production hub for a product, which is more likely to be China than Europe. China has a large population with great demands and strong purchasing power. The Chinese government is improving efforts to open up to European companies and easing market access for foreign investment. China is opening to Europe in fields including automobile manufacturing, airport and port building, and telecommunications. China also has complete industrial and supply chains. European enterprises can find upstream and downstream suppliers in China easily and efficiently, and European companies gain high and stable returns from their investment in China. Production costs in Europe are high and the Russia-Ukraine conflict has led to an energy crunch, high inflation, low returns and geopolitical risks.

Europe's "over-reliance on China" is an exaggeration that attempts to politicize economic and trade issues. Europe's reliance on China is improving, especially on supply and industrial chains. That shows close economic and trade relations between China and Europe. However, behind the one-sided and overstated "over-reliance on China" is a deliberate promotion of the "China threat" and political interference in China-EU economic cooperation, casting a shadow over bilateral relations.

The talking of Europe's "over-reliance on China" has ignored the features of China-EU relations. Bilateral economic decoupling is a paradox as notable features of China-EU relations suggest. China and the EU are mutually beneficial with strong complementarity and deeply-integrated interests, making the two sides a community of common interests.

China and Europe are interdependent, and both sides benefit from sound interdependence.

China-EU political ties are loose but their economic cooperation is close. China-EU relations are also highly resilient. Twists and turns in the development of bilateral relations will not shake the foundation of bilateral cooperation.

Facts speak louder than sophistry. While some European politicians advocate economic decoupling from China, China-EU trade reached $828.1 billion in 2021, up 27.5 percent year-on-year. The cumulative two-way investment exceeded $270 billion last year. In the first 10 months of this year, China-EU trade reached $711.4 billion, up 6.3 percent year-on-year.

The "over-reliance on China" theory shows bias and deliberation of some European politicians. They advocate reducing reliance on China because of their prejudice against China and personal values to contain China's rise, follow the suit of the United States, and cater to the right-wing populist trend in Europe.

Although Europe and China are competing and have differences, it is the aspiration of most European countries and companies to maintain cooperation with China. Europe does rely on China, especially on market and supply chains. But it is a result of optimal allocation of production factors, and complementarity and integration of the two economies.

Although some European politicians attempt to decouple from China, they cannot ignore the positive results generated by China-EU cooperation. German Chancellor Olaf Scholz stressed that decoupling from China is completely wrong. President of the European Council, Charles Michel, visited China on Dec 1. Chinese leaders expect the EU to uphold sound understandings and jointly oppose decoupling. That is the right path for China-EU relations. While European countries value the importance of cooperation with China, some are unwilling to deepen cooperation. They view China as both a global partner and a competitor, and follow the way of the US as they stress strategic independence. China expects European political leaders to try their best to jump out of the self-contradiction when dealing with China-EU relations.

The author is a research fellow at the Institute of European Studies, the Chinese Academy of Social Sciences. The author contributed this article to China Watch, a think tank powered by China Daily.

Contact the editor at editor@chinawatch.cn.