Hungary has long been Europe’s black sheep. Liberals wring their hands at Budapest’s rolling back of press freedom, the dishing out of government contracts to aspiring autocrat Viktor Orban’s friends and family, and Orban’s unsettling closeness to leaders such as Russian President Vladimir Putin and Chinese President Xi Jinping.
Hungary has long been Europe’s black sheep. Liberals wring their hands at Budapest’s rolling back of press freedom, the dishing out of government contracts to aspiring autocrat Viktor Orban’s friends and family, and Orban’s unsettling closeness to leaders such as Russian President Vladimir Putin and Chinese President Xi Jinping.
So it came as little surprise that at the recent summer conference of the World Economic Forum, held in the Chinese port city of Tianjin, Hungarian Foreign Minister Peter Szijjarto sounded more aligned with Beijing than with his European peers. “Political leaders in Europe … are interested in so-called decoupling or de-risking. Which, to be honest, according to our understanding, would be a brutal suicide.”
He may as well have directly called out Ursula von der Leyen, the president of the European Commission, one of the European Union’s most hard-line voices on China. It was her speech in March to the Mercator Institute, a Brussels-based think tank (sanctioned by the Chinese government), that first popularized the term “de-risking,” which has now been adopted as the more sophisticated alternative to “decoupling” throughout Europe and even in Washington. Rather than cutting China completely off (as suggested by decoupling), von der Leyen talked about “stress-testing our relationship to see where the greatest threats lie concerning our resilience, long-term prosperity and security.”
Between Szijjarto and von der Leyen lies a gulf of opinion about China within the continent. Across the West, concern is rising about China. In 2019, most European Union member states adopted the language of China as both a rival and partner. That has now been superseded by a general agreement that there is a need to de-risk. Yet what those words really mean is disputed. Some leaders share Szijjarto’s opinion that any de-risking would be fatally damaging to their own countries and feel that the hard-line narrative of rolling China back comes from Washington diktat rather than from their own national interests. Others have been radicalized by Russia’s assault on Ukraine into a harder position on Beijing, even as China tries to diplomatically distance itself from its long-term partner in Moscow.
French President Emmanuel Macron, right, reaches out to shake hands with Chinese President Xi Jinping during a welcome ceremony in Beijing on April 6. Ng Han Guan/Getty Images
Nowhere was the divide clearer than in French President Emmanuel Macron’s visit to Beijing earlier this year. Much to the chagrin of China hawks in Europe and the States, the French leader took a delegation of more than 50 businesspeople to Beijing, coming home with new deals for Airbus, EDF, and L’ Oréal, among others. China will also find comfort in the words of German Chancellor Olaf Scholz, who recently told a press conference that de-risking “is not in the first place up to the state, because we don’t tell [companies] where to invest,” almost exactly echoing Chinese Premier Li Qiang’s words only days earlier.
In contrast to France and Germany, some of Beijing’s fiercest critics are found in Central and Eastern Europe. Lithuania has allowed Taiwan to open a representative office in Vilnius and in turn recalled its ambassador from Beijing; Poland and Romania have banned Huawei; and new Czech President Petr Pavel became the first EU head of state to directly talk with the Taiwanese president. He has also pledged to visit Taiwan.
It wasn’t long ago that these countries had competed to be China’s gateway into Europe. In the aftermath of the 2007-09 financial crisis, China offered them an attractive alternative source of investment and trade. Some were also engaged in political disputes with the EU machinery (as Poland has been over matters of judicial independence in the country), whereby closeness to China became leverage over Brussels. So in 2012, the 16+1 was formed, a loose economic grouping of Central and Eastern European countries, later becoming the 17+1 with the entry of Greece. Some of them, such as Poland and Hungary, went on to join China’s Belt and Road Initiative, too. China promised new bridges, railways, and more open access to the Chinese market.
An aerial view shows part of the new highway connecting the city of Bar, on Montenegro’s Adriatic coast, to landlocked neighbor Serbia on May 11, 2021. The road is being constructed by China Road and Bridge Corporation, the large, state-owned Chinese company. Savo Prelevic/AFP via Getty Images
What changed in just a decade? For one, the extravagant promises of the Belt and Road turned out to be largely a mirage. Central and Eastern European countries hoping to balance out their trade imbalances with China were disappointed when neither the 16+1 nor the BRI helped. Rail routes that crossed Russia made little sense when most of the goods China wanted from Europe were subject to sanctions. In fact, the region’s trade deficit with China has only been increasing, with exports to China down 4.9 percent last year, and imports from China up 13.8 percent.
Sources in the Polish and Czech diplomatic missions tell me that their countries have also been let down by the lack of Chinese investment. Analysis by the Central and Eastern European Center for Asian Studies on this question found that, remarkably, eight of the original 16+1 countries saw no Chinese infrastructure projects by 2020. (This is typical of the Belt and Road Initiative’s modus operandi, where Chinese contractors often made big promises to try to win political favor in Beijing, where the BRI was tightly associated with Xi’s leadership, and then simply never delivered them.)
And for projects that are delivered (or at least started), concerns linger over cost, quality, and debt. The infamous highway to nowhere in Montenegro, also a member of the 16+1, is cited by officials in other Central and Eastern European countries as a reason to doubt the Belt and Road Initiative. Designed to connect the country’s impoverished north and bolster trade with nearby Serbia, only a quarter of the 165-kilometer (103 miles) highway has been finished. Yet already, the project has racked up a bill of nearly 1 billion euros (about $1.1 billion)—almost a quarter of the country’s GDP—and raised questions over whether it can really be finished. “Every country has a highway story,” a Polish diplomat told me.
And as with BRI projects across the global south, China’s courting of often corrupt and divisive politicians means that Beijing unwittingly inserts itself into domestic political debates in recipient countries. The most controversial leaders—such as Orban—are often the ones most eager. When these leaders leave office, Chinese companies and projects inevitably lose a champion, which is exactly what has happened after Greek Prime Minister Alexis Tsipras was replaced with Kyriakos Mitsotakis and the Czech Republic voted out President Milos Zeman in favor of Pavel.
But the true turning point came with the Russian invasion of Ukraine. China’s rise and unwavering stance on Taiwan had already unsettled some post-Soviet states, including Lithuania, reminding them of another Communist leviathan. But it’s China’s prevarication on Ukraine that really cemented the likeness to Russia. Beijing has still not explicitly criticized Putin, and has failed to make any real moves to mediate in the crisis despite imploration from Ukraine’s regional allies, such as Poland. The eventual 12-point peace plan and the appointment of a Chinese “peace envoy” came more than a year after the invasion began, and there are real questions over whether they don’t serve Russian interests better. Then there was the car-crash interview by China’s ambassador to France, Lu Shaye, who in April said: “Ex-Soviet countries don’t have an effective status in international law.” By the time Chinese officialdom walked back the answer, it was too late.
The 17+1 became 16 when Lithuania left in 2021 and is now down to 14, as Estonia and Latvia have also both left. It looks like the Czech Republic, under Pavel, will be the next to go. As the Central and Eastern European countries become more critical to Beijing, they’ve also become more friendly with Taipei. Lithuania and Taiwan now have representative offices in each other’s capital, with the former now the seventh-largest market for online shoppers from Taiwan. Poland, the Czech Republic, and Lithuania were among those to donate vaccines to Taipei during the coronavirus pandemic. There is shared solidarity with another small, young democracy on the doorstep of another belligerent giant.
Other issues have dented China’s image across Europe. The full extent of its mass-scale internment of the Uyghur minority in Xinjiang has shocked and appalled, evoking memories of the Holocaust. Germany’s Green party has been particularly vocal in criticizing China’s ongoing human rights abuses, particularly in the form of Reinhard Bütikofer, a Green member of the European Parliament who has been sanctioned by Beijing. There was also the measurable impact of COVID-19—a 2021 poll from the Central European Institute of Asian Studies found that most respondents associated China primarily with COVID-19, with almost half of Polish respondents believing the virus was not only lab-made, but spread deliberately.
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But if some countries now see China with skepticism, many others still benefit from the economic relationship with Beijing, especially the EU’s two most powerful member states. China’s bilateral trade with France and Germany is only increasing, with the two European powers exporting more each year. For Germany, two-thirds of its rare earth materials come from China, crucial for its burgeoning electric vehicle and semiconductor industries. Even more significant are the revenues from French and German companies operating in China—equating to just under 7 percent of the German GDP and around 6 percent for France.
France, Germany, and most other EU member states have adopted the language of de-risking, but the politicians still need to hammer out what this really means. For example, while von der Leyen cites EU legislation on green energy and sought-after raw materials (such as rare earths) as examples of de-risking, Scholz says that it has to be directed by companies, not governments.
Another disagreement is over controls on outbound technology and inbound investment. In her March speech, von der Leyen includes these “trade instruments” in her definition of de-risking, especially banning exports of dual-use technology that Beijing could conceivably use for military purposes.
But when they were included as a part of the European Commission’s economic security strategy last month, some member states reportedly had “a relatively unenthusiastic response.” Even the Dutch government, which had recently acquiesced to U.S. demands to limit the export of cutting-edge semiconductor-making machinery to China, called screening a “very heavy instrument” and suggested that the burden of proof was on Brussels to argue why this would be needed.
While these relationships are important to European economies, they’re also messy. As the economist Keyu Jin has pointed out, the nature of what Beijing offers the world has now changed. Instead of toys and clothes, it’s more about semiconductors and renewables, competing with major European powers. So even after his rapturous reception in Beijing, Macron recently called for a trade war over electric vehicles, fearing that China’s homegrown champions will flood the market this year. “We must not repeat in the electric car market the mistakes we made with photovoltaics, where we created a dependency on Chinese industry and made its manufacturers prosper,” the French president said in May.
But doubts about Chinese competition are counterbalanced by resentment of U.S. measures. For months, the conversation dominating European capitals has been President Joe Biden’s gargantuan subsidies package in the form of the Inflation Reduction Act. About $369 billion has been put aside for renewable energy projects, such as electric vehicles and the batteries that go into them. This is a core industry for U.S. allies globally (such as South Korea), but also in Europe. Late last year, Thierry Breton, the EU’s internal market commissioner, abruptly pulled out of a summit with U.S. officials, complaining that the agenda “no longer gives sufficient space to issues of concern to many European industry ministers and businesses.” This came after Macron cornered U.S. Sen. Joe Manchin, an architect of the Inflation Reduction Act, and accused him of “hurting my country.”
As concerning as the package itself is the Biden administration’s failure to anticipate the backlash. “As ever, U.S. foreign policy is being made with domestic politics in mind,” one diplomat told me. After European objections, Washington is now working on possible exemptions for its allies. But the Inflation Reduction Act has already fired the starting gun on a subsidies race—the European Commission has drawn up its own “Green Deal Industrial Plan,” has relaxed state aid rules, and is negotiating the setup of a “European Sovereignty Fund.”
Chinese President Xi Jinping walks past honor guards during a welcome ceremony at Moscow’s Vnukovo airport on March 20. Anatoliy Zhdanov/Kommersant/AFP via Getty Images)
For China, these fractures and disagreements between European countries, and between the EU and the United States, are there to be exploited. It punishes the critical and rewards the more supportive—for example, while Macron was treated to a long tête-à-tête with Xi on his visit to China, von der Leyen was sidelined by Chinese officialdom and vilified by state media. By dealing with countries and leaders on an individual basis rather than collectively, the Chinese government tries to break the narrative of Western unity, telling audiences at home and abroad that the turn against China is really just driven by Americans.
The United States certainly has a role to play—as much as China tries to take advantage of these fractures, Washington exerts pressure in the other direction, trying to keep the herd together. Sanctions on Huawei that made it impossible to source Taiwanese semiconductors helped Washington make the case that the Chinese company’s network cannot be relied upon; sustained pressure has finally resulted in the Dutch government’s banning exports of advanced lithographic printers to China; and the war in Ukraine has given renewed force to the argument against relying on authoritarian regimes, particularly in Berlin.
Yet one should also never underestimate the ability of politicians to work against their own interests. This kind of U.S. pressure is exactly what the French, in particular, rail against. In the event of a U.S.-China conflict, Europeans “would become vassals instead of a third pole” if they were not able to build their “strategic autonomy,” Macron said on his way back from Beijing, pushing back against the White House.
But the same can be said for the Chinese Communist Party. Beijing has routinely underestimated how much its threats against individual countries, and even politicians, spark a defensive solidarity across the EU. In Washington, pundits quip that the only truly bipartisan issue is China; the same is increasingly the case in Brussels, especially in the last few years of so-called wolf-warrior diplomacy from China.
European observers closely followed China’s retaliatory sanctions on Australian products such as barley, beef, and wine, first imposed in 2020 as punishment for Canberra’s suggestion that an independent inquiry into COVID-19’s origins should be carried out. Then in 2021, Beijing delisted Lithuania as a country of origin in its customs system, effectively banning all imports from the country. These economic sanctions ultimately extended to goods produced with Lithuanian parts, disrupting supply chains in the EU’s single market. The EU eventually took Beijing to court for arbitration by the World Trade Organization.
That same year, Beijing’s sweeping sanctions on members of the European Parliament, academics, and think tanks (such as the Mercator Institute) came as retaliation for the EU’s sanctions on four officials who played key roles in repression in Xinjiang. It was a knee-jerk reaction driven, in part, by the need of Chinese diplomats to prove their own nationalist credentials—a reaction that effectively killed the Comprehensive Agreement on Investment, a long-planned investment deal that had been shepherded for years by former German Chancellor Angela Merkel and former Chinese Premier Li Keqiang. There is no chance that the European Parliament will ratify the agreement now. All of these retaliatory actions may play well for a domestic Chinese audience, but they ultimately bolster the calls of China hawks and contribute to anti-CCP unity.
Similarly, from my conversations with Chinese officials, it’s also not clear that Beijing truly understands the depths of feeling in Europe about the invasion of Ukraine. The region’s World War II experience, memories of the Soviet Union, and geographical proximity to the war zone make this a deeply emotional issue for Europeans—especially those on Russia’s border. Though the Chinese government is no stranger to the emotive power of wartime memory, state media and foreign ministry officials blame the conflict on NATO, reflecting China’s tendency to see the world solely through the lens of competition with the United States. And yet, if it were not for the invasion, China’s European friends would be able to make a much more persuasive case for continuing business as usual with Beijing.
But as it is, Europe still finds plenty to disagree about on China. Josep Borrell, the EU’s de facto foreign minister, put it well in a recent speech when he implored that though “we cannot speak with one voice, as there are multiple voices within the EU … at least we need to be on the same wavelength.” Finding that wavelength will be difficult, if not totally impossible.
Cindy Yu is an assistant editor of The Spectator and presenter of the Chinese Whispers podcast.
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