Xi's balancing act

China tests EU cohesion on Ukraine and trade

Trade and Ukraine were on top of the agenda during Chinese President Xi Jinping’s first visit to Europe in five years, but reaching a closer understanding on either issue appeared elusive. As with the hectic diplomacy between Washington and Beijing over the past year and a half, Mr Xi’s six-day visit appeared to achieve little more than emphasise each side’s agenda and further engagement; if anything, his three-country itinerary, which included Hungary and Serbia, appeared to test the cohesion of Europe. Coming close after the visit by German Chancellor Olaf Scholz to China last month, the main item on the agenda of a trilateral meeting with French President Emmanuel Macron and European Union (EU) Chairperson Ursula von der Leyen was China’s support for Russia in its war against Ukraine, principally in the transfer of dual-use technology. Ms Leyden said the EU also counted on China to use its influence on Russia to end its war against Ukraine. The EU, however, has been relatively circumspect in its responses on this issue; it has not followed the example of the US, its ally, which has imposed sanctions on select Chinese institutions they suspect of extending support to Russia.

Mr Xi’s position did not suggest a rethink. Though he diplomatically went along with Mr Macron’s call for a global truce during the summer Olympics in Paris, he has not committed to participate in a peace conference on Ukraine in June and has maintained that the crisis must end through negotiation, underlining the fact that he had not instigated the war, nor was part of it and had no intention of participating in it. On trade, the EU leaders’ argument for more balanced trade and better market access did not move the needle. China retaliated against France’s role in the EU’s investigation into Chinese electric vehicles by launching an anti-dumping investigation into European brandy, especially French cognac, which is popular in China. But apart from lifting restrictions on German beef and apples earlier, Mr Xi has not budged on the question of wide EU market access. On the bloc’s concern on China’s state subsidies to its electric vehicles, Mr Xi maintained his earlier stance that the industry had played a major role in alleviating the impact of climate change. 

Mr Xi’s visit to Hungary and Serbia, however, is likely to have sent a discomfiting message to mainland Europe. Hungary is an EU member where growing authoritarianism is testing the limits of EU membership. Serbia has been a candidate for membership since 2012. Both countries are pro-Russian in orientation and also among the first to sign on to China’s Belt and Road Initiative (BRI) programme. The Belgrade-Budapest high-speed railway is a flagship project of this initiative and is part of a “16+1” initiative by China to promote business and investment relations with central and eastern European countries on the edge of the European Union. It is expected to connect to Greece, creating an unprecedented land-to-sea passage through Eastern Europe to Mediterranean ports, offering China geostrategic entry and proximity to EU markets. On the whole, Mr Xi may well have gained more from his trip to Europe in furthering China’s national interests than the European Union did from hosting him.