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Europe in a Win-Win Situation as Geopolitics is Redefined by China and the United States

As China and the U.S. redefine geopolitics, Europe faces a win-win situation

As China and the U.S. redefine geopolitics, Europe faces a win-win situation

Europe Finds Itself in a Sweet Spot As U.S.-China Tensions Mount

As the United States looks at disengaging from China, Europe could soon find itself in a sweet spot.

U.S. President Joe Biden has, for most of his term so far, adopted a harsh tone on China, calling the world’s second-largest economy the most serious competitor to America. Diplomatic dialogue between the two hit a rockier patch earlier this year when Washington accused Beijing of using a spy balloon to obtain intelligence from U.S. military sites.

“The U.S.’ hawkish policy stance towards China means that China needs to improve relations with Europe to mitigate the impact of export controls. Therefore, China has an incentive to work hard on improving EU relations,” Anna Rosenberg, head of geopolitics at Amundi Institute, told CNBC via email.

Officials in Europe have adopted a slightly different approach from the Biden administration, preferring to take a softer stance with Beijing, recognizing its importance to the European economy. Data from Europe’s statistics office shows that China was the third largest buyer of European goods during 2021.

“The EU is in a very different situation than the U.S., which is clearly pursuing policy-led disengagement with China,” Jacob Kirkegaard, a nonresident senior fellow at the Peterson Institute for International Economics, said via email.

“The political need to de-risk the EU-China relationship is completely different from US-China relations. In a world characterized by U.S.-China rivalry, the EU is the most important economic partner for both — this gives the EU significant political benefits versus both Beijing and Washington,” Kirkegaard added.

European Commission President Ursula von der Leyen has, in recent months, pushed for a policy of de-risking from Beijing — reducing dependency on the country in critical sectors such as raw materials and semiconductors. However, European officials aren’t anywhere near supporting a total breakup in economic and diplomatic ties.

“We don’t want to feed the U.S.-China rivalry,” an EU official, who did not want to be named due to the sensitive nature of situation, told CNBC. “We prefer to calm things down… without being naïve,” the same official said.

The American rhetoric toward China eased slightly following a meeting of G7 leaders over the weekend, with Biden warming to the concept of de-risking, rather than completely detaching the two largest economies in the world

FAQs

What is the reason for the different stances between the US and Europe on China?

The US is pursuing policy-led disengagement with China, while European officials recognize China’s importance to the European economy and have a need to de-risk the EU-China relationship.

Why does China need to improve relations with Europe?

Due to the US’ hawkish policy stance towards China, Beijing needs to improve relations with Europe to mitigate the impact of export controls.

What is the EU’s stance on breaking up economic and diplomatic ties with China?

Although European Commission President Ursula von der Leyen has pushed for a policy of de-risking from Beijing, European officials are not supporting a total breakup in economic and diplomatic ties with China.

Is China aware of the leverage it holds over Europe?

Yes, Beijing is aware of the leverage it holds as Europe looks to develop a more sustainable economy. China is the largest supplier of several critical raw materials in the world, according to a study published by the European Commission, which are used in products like electric vehicles.

As China and the U.S. redefine geopolitics, Europe faces a win-win situation
As China and the U.S. redefine geopolitics, Europe faces a win-win situation

Europe’s advantageous position amidst the redefining of geopolitics by China and the U.S.

Europe may soon find itself in a favorable position as the United States looks to disengage from China. President Joe Biden has taken a harsh tone towards China, referring to it as America’s most serious competitor. However, officials in Europe have favored a softer stance towards Beijing, recognizing its importance to the European economy. Ann Rosenberg, head of geopolitics at Amundi Institute, says China needs to improve relations with Europe to mitigate the impact of export controls. While European Commission President Ursula von der Leyen has pushed for a policy of reducing dependency on China in critical sectors such as semiconductors and raw materials, European officials are not yet ready to support a total breakup in economic and diplomatic ties. Europe is the most important economic partner for both China and the US, according to Jacob Kirkegaard, a nonresident senior fellow at Peterson Institute for International Economics. “We don’t want to feed the US-China rivalry,” an unnamed EU official said. The US rhetoric towards China softened slightly following a recent G7 meeting, with Biden warming to the concept of de-risking rather than completely detaching the two largest economies in the world. Meanwhile, Beijing retaliated against Europe in several ways and is aware of its leverage as Europe looks to develop a more sustainable economy.

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