EUROPE’S MIDDLE EASTERN SIDELINING
The below article “What has Europe lost in the Middle East war?” by Lü Yunmou was published on 18 March on the official social media channel of the MSS-affiliated China Institute of Contemporary International Relations. Lü is the head of the European Security Program at CICIR. This article argues that the escalating Iran conflict has marginalized Europe, and reduced it to a powerless bystander and a victim that suffers the “spillover loses”. Europe’s geopolitical weight has been diminishing as it fails to protect its interests or influence the strategic maneuvers of major powers like the US and Russia.
The Great Diversion: Lü’s central argument is that the current Middle East conflict directly undermines Europe’s security priorities by diverting in a zero sum way critical US resources from Ukraine, and thereby weakening the EU’s strategic position, placing “Ukraine in a more disadvantaged position on the Russian-Ukrainian battlefield”.
Failure of EU energy strategy: Europe’s strategy to replace Russian energy with Middle Eastern supplies has backfired, leaving it vulnerable to price spikes and supply shortages due to the new conflict.
This conflict has left Europe’s energy policy with no room for retreat and its economic growth with no room for advancement. Since the outbreak of the Russia-Ukraine conflict, Europe has pursued a policy of “energy decoupling from Russia,” with establishing energy partnerships with Middle Eastern countries being a key component. Following the outbreak of the US-Israel-Iran war, Europe is now forced to face even fiercer competition in the global energy market, raising the risk of an energy crisis.
European credibility damaged: According to Lü, the crisis exposes the lack of a unified European voice, illustrating the power struggle between top EU officials and the diverging interests of member states. Here he raises the example of “infighting” between HRVP Kallas, who “should be the spokesperson for EU foreign policy”, and President von der Leyen, whose “positions far exceeded the consensus of EU member states”, thereby “exposing the long-standing discord” between both. Moreover, the crisis also reflects the loss of Europe’s traditional role as a neutral arbiter in Middle Eastern affairs.
… the credibility of European diplomacy as a “middleman” has been damaged again. On the Iranian nuclear issue, Europe has long played the role of a “credible intermediary” between the US and Iran, facilitating the 2015 JCPOA agreement. However, in this Middle East conflict, Europe has not only lost its “presence” and influence in the region but has also lost Iran’s trust.
Consequences of EU’s loss of geopolitical standing: Lü concludes by explaining his view that Europe is being sidelined by major powers who are actively reshaping the world order.
In an era of great contention, while the US and Russia are shaping the geopolitical landscape according to their own interests, Europe continues to face strategic surprises, sustained damage to its interests, and a decline in its geopolitical standing across the East, West, and South. Perhaps for Europe, the gradual loss of the ability to defend its own interests and the right to be taken seriously is the most painful loss of all.
ADJUSTING TO EUROPEAN INDUSTRIAL POLICY
The Qianhai Institute of International Affairs, which is based at the Shenzhen campus of Chinese University of Hong Kong published a short analysis on the Industrial Accelerator Act, which was recently put forward by the EU. The comment written by Zeng Yiyao was published in the Greater Bay Area Review of 17 March. The IAA is viewed as a strategic re-industrialization shift and signals a tougher interventionist approach.
Three pressures driving IAA: Zeng identifies three factors that have led to the IAA, these are first “external competitive pressure and dependency risks in key strategic industries”, second “frequent geopolitical conflicts have intensified Europe’s ‘energy anxiety’”, and third the “structural pressure of Europe’s long-term industrial contraction”.
From “soft” to “hard” industrial policy: The IAA’s significance for the author lies in the shift from incentivizing towards mandating industrial development. It therefore reflects the “EU’s determination and targeted measures for ‘re-industrialization’.”
In the past, EU industrial policies mostly relied on financial subsidies, state aid, and accelerated approvals to encourage investment. However, the IAA attempts to transform “re-industrialization” and “de-risking” into directly enforceable institutional tools, turning industrial policy from principled initiatives into a policy system with clear rules. ... This means European industrial policy is gradually shifting from a “soft” mode dominated by market rules to a “hard” stage characterized by strategic orientation and intervention.
Two impacts on Chinese companies: The author identifies several potential risks to Chinese companies, including market exclusion, compliance burdens, and forced technology transfer.
First, market share contraction and rising compliance costs will occur simultaneously. Through localization requirements for public procurement and subsidies, the IAA effectively restricts the market access of Chinese products in the EU public sector, creating an asymmetrical competitive advantage for European companies. Moreover, Chinese export companies must also simultaneously contend with the EU’s New Battery Regulation requirements such as carbon footprint declarations and battery passports. This combination of rules will force companies to restructure their supply chain data systems, significantly increasing compliance and time costs. Second, investment models will be forcibly restructured, with a risk of core technology spillover. Under the IAA framework, the investment model for Chinese companies in Europe will be forced to shift from “product exports” to “production capacity going overseas.” In particular, mandatory technology transfer clauses mean that if Chinese companies wish to establish large factories in Europe, they may have to license core intellectual property to EU partners. For new energy companies that rely on technological advantages, this implies a forced reduction in their technological autonomy. The restriction that foreign shareholding shall not exceed 49% means that Chinese investors may lose controlling stakes in joint ventures and be unable to dominate operational decisions. This directly undermines the fundamental interests of Chinese enterprises’ globalization.
Adapting to the EU’s industrial policy: Zeng suggests to view the IAA as an outline (or a handbook) of the EU’s regulatory environment. She writes that the “the increasing clarity of these rules actually allows us to leverage our own advantages” so that China could then “tailor a new path for cooperation that meets Europe’s specific needs”. Based on that she puts forward a three way response to the EU’s policy:
A tactical diplomatic approach towards the EU - noting that the EU is not a monolith and that certain member states (like Germany) are going to resist protectionism. Exploitation of differences through targeted diplomacy should therefore be the approach in order to deal with the current situation.
… first, we can exploit internal EU divisions to conduct “precision diplomacy” and rule-based bargaining. On foreign trade, the EU is not a monolith: France supports protectionism, while Germany, Sweden, the Czech Republic, and others strongly oppose it, fearing cost increases and trade wars. Germany has even led a group of 10 countries forming the “Friends of Industry” alliance to advocate for open trade. During the buffer period for the act’s implementation (estimated at 1–3 years), we should combine government and business efforts to carry out “precision diplomacy,” focusing on strengthening communication and cooperation with rational member states that oppose barriers, striving to soften the final implementation rules of the act or secure exemptions for major China-EU cooperation projects.
Taking the Chinese joint venture experience into account:
Second, we can cleverly respond to Europe’s desire for “market in exchange for technology” to build a resilient new cooperation paradigm. Europe’s current strategy in the new energy sector is strikingly similar to our approach during the internal combustion engine vehicle era of “joint ventures, shareholding restrictions, and market in exchange for technology.” Now that the roles of ‘offense’ and ‘defense’ have shifted, our enterprises should maintain strategic composure and proactively change their cooperation models. It is recommended to consider models such as “technology licensing,” “joint supply chain incubation,” or cross-shareholding with traditional European automakers. By sharing some non-core technologies, we can bind (or lock in) deep local interests in Europe and transform European giants into loyal partners within the EU. At the same time, we must accelerate the implementation of our planned battery production capacity of over 300 GWh in Europe before the new regulations are fully tightened, creating an irreplaceable “incumbent advantage.”
Focusing on communicating “on every levels of dialogue” the narrative of China as a solution to European problems.
Third, under the new circumstances, we should position ourselves as a “problem solver” to alleviate Europe’s “energy anxiety.” At a time when global traditional energy markets are experiencing greater volatility and supply uncertainty has significantly increased, we must downplay the promotion of product price advantages in our communications with Europe (to avoid intensifying concerns about “dumping”) and instead position Chinese new energy production capacity as “the optimal solution to resolve Europe’s energy crisis and inflationary pressures.” Consensus must be reinforced at every level of dialogue: rejecting Chinese new energy products only drags down Europe’s climate goals and raises costs for the public. Rather, China should be embraced as a partner in Europe’s quest for ‘energy independence and a green transition.’
HINTING AT DIALOGUE WITH RUSSIA IS A RECOGNITION OF REALITY
On 19 March, the Chinese edition of the Global Times published a commentary by Zhang Hong, a researcher at the Institute of Russian, Eastern European and Central Asian Studies at the Chinese Academy of Social Sciences. Titled “What is the hidden meaning behind Europe’s desire to reset relations with Russia?”, Zhang looks at possible strategic motivations behind European Council President Costa’s statement that the EU should prepare for future dialogue with Russia.
Allowing room for maneuver during intensified strategic anxiety: For Zhang, the EU is signaling a potential opening for dialogue with Russia as a response to the diminishing reliability of US security guarantees and the mounting domestic costs of the conflict. Moreover, the “stalemate in Russia-Ukraine peace talks has intensified Europe’s strategic anxiety”.
Europe is sinking into an increasingly severe strategic passive situation. From being previously unable to secure a seat at the Russia-Ukraine negotiation table, it is now gradually sliding into a predicament where even if it participates in negotiations, it will struggle to hold a firm position. To a certain extent, the dialogue signal released by Costa is also intended to alleviate Europe’s diplomatic anxiety regarding the Russia-Ukraine peace talks and to reserve strategic maneuvering room for European diplomacy.
Acknowledging multipolarity, but clinging to political correctness: Zhang reckons that “Costa’s statement is a microcosm of the diverse prospects and contradictory complexities in the EU’s transformation toward strategic autonomy”, and although Europe has come to terms with the “reality of a multipolar world” and “acknowledged the ineffectiveness of confrontation”, it is still trapped in its political correctness - and therefore not able to change its course.
Costa’s remarks merely hint that European diplomacy may make adjustments in the future based on new geopolitical realities, rather than implementing them immediately in the short term. Europe has now soberly realized that the United States may not be reliable, its own economy may not be able to sustain the burden, and confrontation with Russia may not be winnable.
Not a change of policy but a contingency plan: Europe’s signal to prepare for dialogue with Russia is a strategic contingency option amid recognition of harsh realities, not an actual strategic shift or full autonomy.
However, Europe’s strategic clarity does not equal strategic autonomy, and cognitive diversification does not mean policy adjustment. … Preparing for future dialogue with Russia is not a European strategic turn, but merely one of its strategic contingency plans. In the short term, Europe still cannot abandon its dependence on the United States and NATO; preparing for dialogue with Russia is merely one possible option for Europe’s future diplomacy.
Expression of unfinished strategic adjustment: Zhang concludes by stating that “Europe has finally begun to move from blind confrontation to facing reality with open eyes”, but adjusting its policy will be an arduous process, and “Costa’s latest statement is the most authentic footnote to this long, painful, and still unfinished strategic transformation.”
HUNGARY’S DISTANT RELATIVE
Kong Yuan, the deputy director of the European History Research Office at the Institute of European Studies of CASS published an article about “The “Eastern” Myth of Hungarian National Origins” in the last issue of 2025 of the Journal of Minzu University of China, a publication linked to Beijing’s Minzu University, formerly known as the Central University for Nationalities - a research institution in Beijing affiliated with the National Ethnic Affairs Commission of China and primarily focussing on ethnology and anthropology.
This journal article looks at the persistent role of “Eastern” identity in the construction of Hungarian national origin myths across different historical epochs - from medieval aristocratic legitimacy and 19th-century nationalism to the contemporary “Opening to the East” policy under Viktor Orbán. Kong argues that Hungary’s perceived Eastern roots serve as a dynamic resource for the country’s political identity.
…, the nation is an imagined community; in the Hungarian context, the “East” is precisely the carrier of this imagination. The East is both the mythological source of Hungary and a symbolic resource for its modern political identity.
In the search for distant relatives: This “Eastern myth” functions as a response to isolation from Germanic and Slavic peoples, and according to Kong provides a strategic alternative to Western integration and a cultural foundation for modern partnerships with Eurasian nations, particularly with China.
This pursuit of seeking roots in the East is the result of multiple factors: living between Slavs and Germans, Hungarians have always felt an indelible linguistic and cultural alienation. ... Driven by a strong sense of loneliness, Hungary has developed an impulse to search for distant relatives in its ancient Eastern homeland.
Transcending Western ideology and mutual learning: Zhang concludes that Hungary’s “Eastern identity” has not only developed “a narrative of civilizational continuity that transcends Western liberal ideology”, it also “regards the East as an alternative path to modernization, pursuing differentiated development under the guidance of ‘multiple modernities.’” This resonates with China’s concept of “civilizational mutual learning.” Kong thinks that this cultural foundation facilitates Hungary’s pursuit of a self-reliant development path as a regional power in a multipolar world.
It constitutes the very cultural foundation supporting the establishment of the China-Hungary all-weather comprehensive strategic partnership for a new era. Hungary’s “Eastern narrative” and China’s advocated idea of “mutual learning among civilizations” form a deep resonance at the level of cultural psychology, providing a new interpretive framework for civilizational dialogue between China and Hungary.
Cross Purposes translates and contextualizes Chinese experts’ views on EU-China relations. Opinions other than those referred to are my own and do not reflect those of any other individual or institution. Content is edited with the help of AI. Mistakes are my own.
Excellent stuff, thank you