Europe’s Decoupling from China and EU-ASEAN Relations

TCSS Security Commentaries #031

The EU-ASEAN Commemorative Summit is an important step for Europe as dependency on Russia catalyzes a discursive reframing of “authoritarian enemies,” and the notion of systemic rivalry saturates the bloc’s stance towards China

Milan Thiée, University of Heidelberg

On December 14, the first-ever EU-ASEAN member states summit was held in Brussels. It marks 45 years of partnership between the world’s two most advanced regionally integrated organizations. Both sides reaffirmed cooperation based on shared values and principles, including the rules-based international order and multilateralism. It implies far more than a mere ceremonial commitment to the status quo. The growing EU-ASEAN engagement informs a general shift in the EU’s stance towards China. The summit revealed a novel keenness in Europe’s willingness to court the ASEAN member states to deepen trade relations. European Commission President Ursula von der Leyen proposed an ASEAN investment package worth EUR 10 billion. The summit occurs at a critical juncture as the EU is diversifying its trade relations in response to the collective shock imposed by the Russian invasion of Ukraine. In addition, the war triggered Europe’s commitment to cut dependencies and decouple its economies from China. As a major player in the Indo-Pacific region, the EU aspires to offset the effects of decoupling with China through deepened ties with ASEAN.

Since China’s WTO accession in 2001, EU-China mutual trade and investment cooperation have been considered a highly beneficial development for both parties. However, the acknowledgment of China as a “systemic rival” in 2019 and strategic errors concerning Russia have caused a change of course in Europe’s China policy.

A look into Germany’s rapid shift in discursive framing of China as a trade partner vis-à-vis systemic rival exemplifies this trend affecting most EU states. The Merkel-era China policy is characterized by rapprochement, prioritizing unhindered economic and trade relations over defending values. The gas disaster caused by the Russian invasion of Ukraine identified the Brussels-Beijing relationship as a potential dependency trap.

In October, politicians from all major parties and the EU Commission strongly opposed the Chinese state-owned shipping giant Cosco’s bid to avail 35 percent stake in a critical terminal at Hamburg port, Germany’s largest seaport. Parallels are drawn between strategic errors made with Russia over the last decade, remarked the Cosco deal as a “strategic error” as it exposes Germany’s critical infrastructure to China’s economic coercion tactics.

The ongoing EU vulnerability to disruptions in Russian gas supplies indicates the utmost importance of prioritizing diversified trade agreements with like-minded democracies. Consequently, Chinese investments in Germany and the EU have become subject to a more rigorous examination by security authorities in recent years, investigating potential long-term reliance on Beijing. According to the Hamburg-based think-tank, Körber-Stiftung’s report indicates that 66 percent of Germans favored reducing economic dependencies on China despite economic losses. The survey also highlights that 59 percent of Germans negatively view China’s international influence, compared to 34 percent in 2017. Only seven percent view it positively.

The European bloc finds itself in an uneasy situation between the US-China great power rivalry. In Washington, the Biden administration revived the transatlantic axis, pushing the EU to embrace the geopolitical dimension of its external relations and extending its toolbox of defensive instruments to navigate strategic dependencies. However, Europe’s position is a unique one. During a European Council meeting in October, President Charles Michel warned the EU from implicitly taking the US side in the great power rivalry. Despite unity among EU members to sever dependencies on China, Michel believed in desirable and possible cooperation on global challenges like climate change and avoiding systematic confrontation.

Even on the economic dimension, a clear-headed and sector-differentiated approach appears to be the EU’s only viable solution, as supply-chain dependency on China persists. With electronics, pharmaceuticals, chemicals, and minerals leading the way, the path to building alternative supply chains would be long and costly. Critical dependencies are largely due to industry choices against market conditions to reduce upstream production costs rather than a complete lack of alternatives. The more powerful EU countries in Western and Northern Europe share the closest economic ties with China – thus suggesting a degree of prudence in the decoupling process. However, a systemic rivalry is expected to be the defining characteristic of EU-China relations in the years to come. Yet, discursive invocations of shared values and human rights can be seen as secondary and non-instrumental in attaining a secure spot in a disputed emerging world order.

Milan Thiée is an undergraduate Political Science and Anthropology student at the University of Heidelberg, Germany. In 2021 and 2022, he studied at National Taiwan University as a recipient of the MOFA Taiwan-Europe Connectivity Scholarship.