New Chinese Premier Li Qiang used his inaugural overseas trip to propose a new approach to Europe. In an effort to avoid reproducing the complicated relationship between Beijing and Washington with the European bloc, the premier focused on areas where the two blocs have similar goals.
At meetings in Germany and France this week, Li Qiang went on the offensive to get the attention of government and business representatives. The prime minister pledged to prioritize the fight against climate change and announced a debt relief deal for Zambia.
The announcements were made during the New Financial Pact Summit in Paris, convened by French President Emmanuel Macron.
Li’s approach indicated that Beijing has embarked on two paths to closer ties with Europe: looking to tackle trade relations and climate cooperation, while separating from thornier issues such as China’s support for Russia in the Ukraine War.
In contrast, Chinese officials have made climate cooperation with the US conditional on foreign policy requirements.
“Chinese elites see engaging with Europe and reassuring the bloc as a top strategic priority,” says Seaver Wang of the California-based think tank Breakthrough Institute. “Due to Russia’s war in Ukraine, Europe and the US are more strategically aligned than they have been for decades.”
Beijing’s new approach was adopted as the European Commission explores ways to reduce the risks of its economic relationship with China, decreasing its dependence on raw materials and limiting the export of cutting-edge technology.
Chinese diplomats and state media are highly critical of the term “risk reduction” and have advised European capitals not to get too involved in US trade disputes.
In May, Chinese Foreign Minister Qin Gang warned his German counterpart that if the European Union “distances itself from China in the name of reducing risks”, it would also miss out on opportunities, cooperation, stability and development.
But Li, whose mission includes injecting life into a lethargic Chinese economy that is increasingly in need of private investment, took a more conciliatory approach in Berlin. At a roundtable with German companies, he said he understands the concerns and that “protecting against risk” does not mean conflicting with cooperation.
To the extent that the concept of risk reduction is still open to interpretation, the Chinese side “is trying to identify what the space is between speech and action,” says Yu Jie, a senior fellow at think tank Chatham House. “Political Europe talks about it all the time, but business Europe is less interested in it.”
Li also expressed some of the fears of entrepreneurs, warning them that “not cooperating is the biggest risk, not developing is the biggest insecurity.” Chief Executive of the chemical giant Basf, Martin Brudermuller warned in March that, although there are risks associated with operating in the Asian country, “failing to be present in China is also a huge risk”.
BASF is one of several large German groups, including chipmaker Incheon and the country’s top automakers, that are heavily dependent on China for sales and supply chains.
A growing number of chief executives at companies such as Siemens and Mercedez-Benz have publicly rejected calls from Berlin and Brussels to move away from China, arguing that the market is too big for that. In the words of an automotive supplier executive, “We are totally dependent on China.”
Li was joined on his trip to Germany and France by representatives of Chinese companies including battery giant CATL, which has opened a factory in Germany, and solar panel maker Longi, which hopes to build a factory in the country.
The premier praised France’s opposition to distancing and “factional confrontation” – a thinly veiled allusion to the US approach.
Last week, leader Xi Jinping met with Anthony Blinken, the first US secretary of state to visit Beijing in five years, and announced that there was “progress” towards stabilizing relations. However, a day later President Joe Biden sparked fury in Beijing by describing Xi as a dictator at a private fundraiser.
On the other hand, the Chinese premier praised the relationship with France in a round table with French businessmen: “The good level of trust between the countries allows us to see stability and opportunities for common growth in our mutual interdependence”.
On Tuesday, as Li was on his way to dinner with a delegation of Bavarian officials and businessmen, the European Commission said it would advance a proposal to screen overseas investments and improve the implementation of export controls – measures seen as being aimed against technology ties with China. But EU member states are still cautious about such measures.
The President of the European Commission, Ursula von der Leyen, one of the most intransigent European authorities in relation to China, urged member states to support the risk reduction strategy. But she acknowledged that most trade and economic relations with China will remain as they are.
While the Commission’s new proposals are still controversial, German executives remain convinced of a greater need to diversify their suppliers, so that they are not exclusively from China. Some say the Chinese side overestimates its ability to build a coalition with European companies against risk reduction.
“Li’s argument that the business community doesn’t want to reduce risk is nonsense. We are concerned about that, yes,” a German executive told the Financial Times.
Jens Hildebrandt, director of the German chamber of commerce in Beijing, says he sees “clear signs of risk reduction”. According to him, some companies are transferring their production from China to other Asian countries, to protect themselves against future sanctions or export controls.
“The reasons for reducing risk come from multiple sides. The Chinese regime doesn’t have all the tools at hand to tell Chinese companies they need to do less risk reduction.”
Climate change and the green transition also featured prominently at Li’s meetings in Germany. The two sides released a memorandum that laid out principles for climate cooperation.
Beijing froze climate talks with the US for several months last year, and attempts to revive them have made little headway.
“Europe’s more stable relationship with China helps the West preserve its last stand on cooperation on climate change, something that can never be meaningfully addressed without Beijing’s involvement,” says Li Shuo of Greenpeace Asia.
Both climate analysts and German companies, however, warn that they have been waiting a long time for Chinese action, as opposed to just words, on cutting emissions. “It’s time to take concrete action. We need to be realistic; there are some things they just can’t handle,” says Hildebrandt.