European Commission President Ursula von der Leyen pushed for a policy of reducing risks from China, now the US is also on board.
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As the United States prepares to disengage from China, Europe could soon find itself in a sweet spot.
US President Joe Biden has been tough on China for most of his term so far, calling it the world’s second largest economy most serious competitor To America. Diplomatic dialogue between the two hit a snag earlier this year when Washington accused Beijing of using a spy balloon to obtain intelligence from US military sites.
“The US’s hawkish stance towards China means that China needs to improve relations with Europe to mitigate the impact of export controls. China therefore has an incentive to work hard to improve relations with the EU,” Anna Rosenberg, head of geopolitics at the Amundi Institute. , he told CNBC via email.
Officials in Europe have taken a slightly different approach from the Biden administration, favoring a softer stance toward Beijing, recognizing its importance to the European economy. This is shown by data from the European Statistical Office China was the third largest buyer of European goods during 2021.
“The EU is in a very different situation than the US, which is clearly pursuing a politically-led disengagement from China,” Jacob Kirkegaard, a non-resident fellow at the Peterson Institute for International Economics, said via email.
“From China’s point of view, the EU is the most important high-income market to which it still has largely unrestricted access. This in turn makes it less likely that China will actively seek to limit trade with the EU,” he said, adding that China “has quite a what to lose from a trade war with the EU.”
In recent months, European Commission President Ursula von der Leyen has pushed Beijing’s de-risking policy – reducing dependence on the country in critical sectors such as raw materials and semiconductors. However, European officials are far from supporting a complete severance of economic and diplomatic ties.
“The political need to de-risk the EU-China relationship is quite different from the US-China relationship. In a world characterized by rivalry between the US and China, the EU is the most important economic partner for both – this brings significant political advantages to the EU. against both Beijing and Washington,” Kirkegaard also said.
The EU’s single market, where goods and services move freely across borders, is home to 23 million companies and more than 450 million consumers, according to the European Council.
“We don’t want to fuel the US-China rivalry,” an EU official told CNBC on condition of anonymity because of the sensitive nature of the situation. “We prefer to calm things down … without being naive,” the same official said.
US rhetoric towards China eased slightly after the G7 leaders’ meeting at the weekend, with Biden leaning towards the concept of reducing risk rather than fully separating the world’s two largest economies.
Beijing would not like the idea of G7 leaders meeting to criticize China’s policies. Following the rally, China banned its companies from buying from the American chip manufacturer Micron.
Alicia García-Herrero, a senior fellow at the European think tank Bruegel, said Europe may not find itself in an easy position during these tensions between the US and China.
“I actually very much doubt that will happen,” she said of the prospect of Washington and Beijing looking to Europe for their economic ties.
“China is taking a lot of retaliatory actions against Europe in many ways, and the sense that Europe is increasingly dependent on China — this kind of strategic dependence on green energy is becoming more and more clear,” she said, adding that Beijing is aware of its influence. applies as Europe seeks to develop a more sustainable economy. China is the largest supplier According to a study published by the European Commission, there are several critical raw materials in the world that are used in products such as electric vehicles.