Chinese Premier Li Qiang waves his hand as he returns with German Chancellor Olaf Scholz.
John MacDougall | afp | Getty Images
Europe is charting a new path for its relationship with China, but officials within the region say they fear retaliation in the event that they get it flawed.
The concept of withdrawing from risk from China is gaining momentum. On the G7 meeting in late May, each the US and Europe agreed to cut back their dependence on Beijing moderately than sever relations altogether.
In recent times, the USA has been increasingly vocal concerning the threat to national security posed by China. Meanwhile, European decision-makers have taken a more cautious approach – aware of how essential the Chinese market is for domestic corporations.
A senior EU diplomat who’s involved within the negotiations between the 27 EU capitals but doesn’t need to reveal his name as a consequence of the sensitive nature of the case told CNBC that there’s “definitely” awareness that China could retaliate. “But that is why we want to speak about it,” said the identical diplomat.
One other anonymous official who works within the EU for one among Europe’s largest economies also said: “Countries will all the time be afraid of it, but that does not imply we shouldn’t do it.”
The entire bloc wonders what it means to present up risk from China. Ursula von der Leyen, president of the European Commission, the EU’s executive body, described it as raising specific concerns the EU has with Beijing, including on human rights, but also negotiations on fairer competition and market access.
On Tuesday, the commission suggested the EU should review its foreign investment screening policy in addition to tighten export control rules. The institution didn’t say these ideas were developed directly due to China, but said the bloc needed to attenuate risks “in a context of heightened geopolitical tensions and accelerated technological change.”
The 27 EU heads of state will debate the difficulty at a summit later this month.
The Chinese embassy in Brussels was not immediately available for comment when contacted by CNBC on Thursday.
Lithuania, a Baltic country in north-eastern Europe, is a good example of a country aware of potential retaliation from China. In 2021, it became the primary European country to have a Taiwanese representative office, which was called Taiwan. Most nations within the region use the name of town of Taipei.
China has condemned the move because Beijing considers Taiwan to be a part of its territory, without the suitable to conduct diplomatic relations independently – subsequently it doesn’t need its own representation in Lithuania. As a result, China withdrew its ambassador from Lithuania and imposed a customs blockade on Lithuanian imports into China.
“For years, the West has argued that economic cooperation will persuade dictators to support them [a] rules-based international order. But all we did was feed their economies while allowing them to interrupt all the foundations. China is betting that we’ll repeat this error. It is time to try something different,” Lithuanian Foreign Minister Gabrielius Landsbergis tweeted in April.
Earlier this month, the European Commission urged more EU countries to ban Chinese telecommunications groups Huawei and ZTE.
Thus far, 10 countries in Europe have banned or restricted the access of those two corporations to their 5G networks. They’re concerned concerning the threats these two corporations pose to the safety of the bloc.
In line with Reuters, China criticized Europe’s position and added that the commission had no legal basis to ban telecoms giants.
An EU official, who didn’t need to be named as a consequence of the sensitive nature of the case, said: “We now have not seen the identical level of retaliation” on the back of this announcement in comparison with country by country.
But the identical official said: “If we act inside a common framework, we will likely be in a much stronger position to retaliate.”
European leaders are still determining how you can change relations with what they’ve described as a more assertive China, but their staff are aware that there’s a difficult balance to strike between reducing dependence on China and never upsetting it.