Relaunching a Strategic Partnership or Attempt to Divide Europe?

Translated by Giulia Maffeis

Last week, the President of the People's Republic of China, Xi Jinping, made official visits to France, Serbia, and Hungary, in a context of extreme geopolitical and commercial tensions.

Paris Summit - towards a new balanced and fair commercial partnership

The first step has taken place at the Élysée Palace on May 6, 2024, where Xi Jinping was welcomed by French President Emmanuel Macron and European Commission President Ursula Von Der Leyen, on the occasion of the sixtieth anniversary of Sino-French bilateral relations. These relations were founded during the Gaullist era when China was an emerging economy and France wasn't a NATO member yet. The occasion was chosen to implicitly highlight both France's independence from the United States and European unity for cooperation with those who share our ideals. The summit highlighted the importance of resuming more balanced trade exchanges, especially after EU investigations into unfair competition cases regarding China, highlighting that future trade relations must be based on mutual respect and understanding. This position was also agreed upon by the Chinese president, who reaffirmed the desire to remain "partners" to pursue peace and stability.

Srrbia - a friendship forged in blood

On the other hand, in Serbia, a key client of the "Silk Road Initiative," diplomatic rhetoric turned out to be significantly harsher. President Vučić reaffirmed his support for the Chinese slogan "China is one" and named the United States as the main threat. Here too, the symbolic aspect was not lacking. On May 7, 1999, during the Kosovo war, the Chinese embassy was bombed by the United States, a gesture the Chinese have never forgiven, shaping the common memory of the two peoples who refer themselves as part of a “friendship forged in blood,” which also translates into investments; since China, as the second-largest investor in Serbia after Germany, has invested $39.086 million (UN, COMTRADE), funding the construction of factories, roads, and infrastructure.

Hungary - "A Golden Cruise"

Finally, in Budapest, Xi Jinping's arrival caused great enthusiasm, a tangible sign of both countries' desire to strengthen bilateral relations. For over a decade, China has been one of the main investors in the Hungarian economy, for a total of approximately $9.789 million in investments (UN, COMTRADE 2023). This close partnership is being translated in new and ambitious projects, including the construction of a new railway line between Belgrade and Budapest, a key element of the “Belt and Road Initiative” that will ease connection with the Port of Piraeus, largely managed by a Chinese company, aiming to facilitate the transportation of goods between Europe and China. In the meantime, China is also financially supporting the creation of various factories specializing in the electric vehicle and battery industries, such as BYD. This partnership seems to be part of a strategy to mitigate potential negative impacts of European Union trade policies. In the event of tariff imposition, Hungary would represent an alternative, both logistical and productive.

Who has the most to lose?

Considering current geopolitical crises, everybody is vulnerable. What is clear is that China is, and will continue to be, a crucial player for economic cooperation, fully capable of using its influence through regional dialogue to ensure peace in a world heading towards a multilateral balance.

China needs the EU as much as the EU needs China. Xi Jinping needs the EU because his daily trade volume amounts to €2.3 billion per day, ten times greater than, for instance, trade with Russia. As a result, with the upcoming US elections, China would have every interest in convincing France to strengthen its independence from the Americans due to the protectionist approach that could arise if Trump were reelected.

It's difficult, however, to say whether China could be an efficient mediator in the Russian-Ukrainian conflict. Despite China’s claims of impartiality, it has consistently supported Russia both economically, by purchasing gas and oil, and militarily. For this reason  Von Der Leyen highlighted, during the Paris summit, Beijing's crucial role in avoiding a nuclear escalation, suggesting the total cessation of Chinese supply of dual-use products.

It is also true that the EU needs China, while still reiterating the importance of preserving its internal economy. For example, by improving trade relations, France, along with its European partners, could further consolidate its presence in the Asia-Pacific region. Besides, China plays a crucial role in providing humanitarian aid to Gaza, evidence of their mutual interest in ending the conflict. China has repeatedly urged international intervention through the defense of a two-state solution and the admission of Palestine to the United Nations, thereby solidifying its image as a “guarantor of stability.”

What to expect now?

In regards to trade, it's essential to promote the diversification of value chains, depoliticize trade relations, and ensure fair access to the European market that doesn't compromise security, or initiate de-industrialization processes.

Concerning the conflict in Ukraine, China cannot be seen as a hostile power by the EU but equally urges greater understanding of Moscow's "legitimate security concerns" from European leaders, hinting at the provocations suffered by NATO through repeated attempts to expand going East. On the other hand, the EU must convince China that this conflict could have significant consequences for EU-China trade relations.

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