De-risking must be Team Europe’s strategy on China

After German Chancellor Olaf Scholz’s visit to Beijing, France’s Emmanuel Macron must make clear when President Xi visits Paris that de-risking is more than just ‘made in Brussels’, write Gesine Weber and Earl Wang.

Gesine Weber is a visiting scholar at Columbia University. Earl Wang is a doctoral researcher and adjunct lecturer at Sciences Po. 

When leaders of EU member states meet with their Chinese counterparts, these meetings concern not only bilateral relations.

Even if they do not represent the EU or other EU national capitals, it does matter for the coherence of the EU’s strategy on China. The state visit of Chinese President Xi Jinping in Paris on 6-7 May will be one of these moments where a Team Europe approach will be critical.

In fact, the most recent Franco-Chinese and German-Chinese interactions were everything but good examples of a coherent approach to China.

European Commission President Ursula von der Leyen announced the EU’s de-risking strategy towards China at the end of March 2023 ahead of her joint visit with French President Emmanuel Macron to China.

Ten days later, President Macron instead expressed his opinions on Taiwan and European strategic autonomy in an interview on the flight back from Beijing, sparking concern and criticism among allies. President Macron made such an expression in the hope that China, in return, would alter its relations with Russia on the War in Ukraine.

Following an anti-subsidy investigation launched in October 2023, the European Commission announced the listing of Chinese EVs as a product subject to registration at the beginning of March 2024.

Six weeks later, German Chancellor Olaf Scholz’s trip to Beijing – accompanied by German leading corporate leaders, especially in the automobile sector – ended with an agreement to cooperate more closely on automatic and connected driving, and the implicit messaging that de-risking was predominantly left to German companies rather than actively pursued by the government.

For member states with close commercial ties with China, a “business as usual” approach is opportune in the short term.

De-risking implies reducing dependencies on the market, investment and critical goods, which logically implies an economic cost due to the diversification of markets and supply chains.

Particularly for European companies with a big footprint in China, the de-risking strategy requires upfront investment with uncertain outcomes.

Politically, the de-risking strategy is not welcomed with open arms in Beijing. The readout of the Xi-Scholz meeting by the Chinese Foreign Ministry depicts its pushback on such a notion.

When pursuing national interests in their engagement with Beijing, letting the Commission serve as the “bad cop” is a convenient approach for member states.

Accordingly, Macron has to do better when Xi visits Paris on 6-7 May. He has to be clear that the de-risking strategy is more than just “made in Brussels” but one echoed by EU member states – thus, “made in Europe”.

Concretely, the focus should be on reducing dependency on the Chinese market, investment or China as a paramount supplier, particularly in the fields of critical raw materials.

In fact, even for sectors or commodities which do not concern critical technologies, dependency becomes a risk when weaponised. Lessons from the dependency on Russian energy have taught Europe about it. No one will claim that adjusting to dependency is easy, but it is more about resolve than feasibility.

Moreover, emerging concerns about Chinese suspected espionage in Europe and an increasing number of negative ratings on the Chinese economic outlook by rating agencies provide further rationale for de-risking.

Therefore, the need is to make de-risking a Team Europe strategy of the EU and its member states to reinforce its collective bargaining power.

Macron, an ardent promoter of European strategic autonomy, should be in a perfect position to champion this approach.

In his second Sorbonne speech last week, Macron again underlined the importance of a European answer to over-subsidies – both on the Chinese and US sides – in critical sectors, including an active industrial policy and massive investment, yet without falling into a protectionist logic.

Macron’s exchanges with Xi will demonstrate how serious Macron is about his Sorbonne spirits.

This is not to say that the EU or its member states should put a hold to any form of cooperation with China. There are good reasons why Europe opted for de-risking over decoupling and has followed its triptych strategy – China as a partner, competitor, and systemic rival – since 2019.

For Germany, for instance, discussions on relations with China should not be framed only by the corporate executives accompanying Scholz’s most recent visit. We shall not forget that the Federation of German Industries (BDI) rang the alarm bell that China serves both as a partner and a systemic competitor at the beginning of 2019.

Most importantly, de-risking is part of a broader China strategy that the EU has failed to flesh out so far, but such a strategy is critical sooner than later.

Getting China and Team Europe’s approach right (or failing to do so) will be a decisive factor for the EU’s role as a geopolitical actor. It may be even more the case as a potential second Trump administration may force the EU and its member states to clarify their stances in US-China competition.

If Europe wants to be a serious and relevant actor on the world stage, a concerted strategy on EU foreign policy between the EU and its member states is vital.

Macron’s invitation to von der Leyen for a trilateral meeting with Xi in Paris on 6 May is a promising chance to demonstrate a Team Europe approach to China.