Interpreting the EU’s “Common Understanding” on China
Dealing with Competition in the Stalemate Phase, China Shock as a Psychological Escape
INTERPRETING THE EU’S “COMMON UNDERSTANDING” ON CHINA
Xin Hua, the director of the Center for European Union Studies at Shanghai International Studies University, commented last week (16 July) on a report in the South China Morning Post by Brussels correspondent Finbarr Bermingham about an EU policy paper, titled “Common Understanding - The Threats and Challenges We Face: Assessment of the EU’s Strategic Environment”, that was agreed among the 27 EU member states in early July. The paper describes China as a “key enabler” of Russian aggression against Ukraine and put forward the assessment that Russia and China seek to “establish regional dominance and reshape the global order in line with their interests, fostering a return to a sphere-of-influence logic.” Xin Hua sees the rather low-key and unannounced publication of this policy document as a sign of division between EU member states on China.
It’s the US, stupid: Xin Hua believes that the current attitude of the EU is a remnant of its earlier alignment with the United States, in that it
Starting from the Biden administration, the EU leadership has accepted the strategic narrative of the US “political elite,” believing that a “new Cold War” has begun and that great-power geopolitical rivalry will become the main driving force shaping the international strategic landscape. As a result, when it comes to strategic assessments and strategic planning regarding the international situation, they have clearly chosen sides, positioning themselves against China, and have adhered to their own erroneous perceptions of China on the issue of the Russia-Ukraine conflict.
Weakness bears trade opportunism: But, at the same time, and against the overall background of US-China rivalry, Xin recognizes that Europe out of its own weak position is adopting an opportunistic and transactional attitude on the economic level, as it is “not willing to abandon its commercial interests in China and is still prepared to partially maintain trade relations with China.”
Low-key adoption as a sign of division: Xin Hua states that internal contradictions within the EU still exist, for example “differences and confrontations between Western Europe and Central and Eastern Europe, as well as between Germany and Southern Europe, remain deep-seated, as they have always been, and are unlikely to change significantly in the future.” This means for him, that the low-key adoption of the policy paper “reflects that the EU itself is aware that the existence of internal divisions means there is no very reliable consensus on relations with China”.
EU will become more aggressive: He believes that the “China-EU ‘trade war’ is currently on the verge of triggering”, and he expects that due to the EU’s strategic perception of China, it is likely that the EU will …
… adopt more aggressive protectionist and economic nationalist policies when handling economic and trade relations as well as scientific and technological cooperation with China. Consequently, the resistance facing the forward development of China-EU economic and trade relations is bound to grow increasingly larger.
DEALING WITH COMPETITION IN THE STALEMATE PHASE
On 15 July, 2026, The Observer published a summary of a speech by Jean-Monnet Professor Ding Chun, President of the Shanghai Society for European Studies and Director of the Center for European Studies at Fudan University. He gave the speech on 5 July at a seminar on corporate strategy for going global at East China Normal University. Ding discusses frictions and prospects of Chinese companies investing in Europe and suggests that despite escalating geopolitical tensions and trade barriers created by the EU, structural divisions among EU member states offer a window for Chinese wedging-strategies.
Perception shift: Prof Ding points out that the geopolitical perception of China within the EU has deteriorated and shifted away from partnership toward a focus on China as a threat. He assumes that this pivot drives the EU’s current defensive policies.
The biggest change lies in the transformation of the geopolitical definition. The original ‘three-way definition’ between China and the EU used to preserve a certain amount of flexible space, but now it is increasingly tilting toward the direction of a ‘systemic threat.’ A sense of crisis regarding insufficient innovation universally exists within the EU, and clamors for ‘Europe First’ and comprehensive supply chain substitution are rising daily, deriving a trend of pan-securitization.
Divide et impera: Although Ding asserts that the current frictions cannot easily be overcome, he points out that the EU can also not be treated as a monolithic entity because individual member states operate under conflicting economic interests. Therefore, he assumes that the asymmetric dependence of key economic players like Germany on the China creates an enduring strategic leverage point for bilateral negotiations.
I believe that the normalization of competition and cooperation between China and Europe has become unavoidable. As the manufacturing capabilities of both sides gradually draw closer, competition in the stalemate phase will become increasingly fierce, and there is a risk that the economic anxiety on the European side may escalate into political-level targeting. … Of course, the EU is not a monolithic block. The French faction leans toward traditional trade protectionist measures, a strategy they adopted when responding to Japanese and South Korean automobiles entering the European market; Germany, on the one hand, cannot separate itself from the support of the Chinese market for its global profits, and on the other hand, still maintains confidence in its own industrial innovation capabilities. This asymmetric dependence leaves room for bilateral negotiations and maneuvering.
CHINA SHOCK AS A PSYCHOLOGICAL ESCAPE
Following a visit to Europe, Zhao Long, Director of the Institute for International Strategic and Security Studies at the Shanghai Institutes for International Studies, observes in the Global Times (1 July) that European perception of China is somewhat stuck. He thinks that China serves as a scapegoat for Europe’s own homegrown problems.
Blaming others to form internal consensus: Zhao asserts that European protectionist measures represent a psychological escape from difficult European domestic reform. By blaming domestic economic failures to external threats, European policymakers create a political consensus around defensive trade policies that they know are ultimately detrimental to Europe’s long-term growth.
At the practical level, many European countries still tend to alleviate competitive pressure by raising tariffs, strengthening industrial subsidies, and setting market access restrictions. One perplexing reason given is: “The automotive industry is the foundation of European industry; it is too big to fail.” This line of thinking reflects a typical escapist mentality: admitting that problems come from within means having to advance difficult reforms, whereas emphasizing that problems come from the outside allows defensive policies to temporarily alleviate pressure. Compared to reforming oneself, restricting others is clearly easier to form a political consensus on at the EU level, even though Europeans themselves know that doing so is harmful rather than beneficial in the long run. In a sense, the so-called “China Shock 2.0” has become a psychological compensation narrative for Europe to evade its own root problems.
Slow psychological adjustment: Zhao sees signs that the “strategic community” in Europe is slowly adjusting its perception of China. He writes that during his discussions with European researchers, some acknowledged that China has valuable experience in various fields, including the green transition. However, Zhao believes that this psychological adjustment in Europe will take time.
However, when it comes to deepening cooperation with China—or even “learning from China”—Europe still harbors a certain degree of institutional bias and psychological resistance. For instance, when European companies entered the Chinese market years ago, they adopted a “market-for-technology” model and reaped substantial benefits. Now, there is internal debate in Europe about whether a similar model could be applied to importing Chinese technology. But for now, at least, many Europeans still find it psychologically difficult to accept. … Yet today, when some Chinese industries have begun to develop comparative advantages in technological innovation, industrial organization, and cost efficiency, “learning from China” has become a taboo topic that Europe finds hard to broach.
Stop blaming, seize opportunities: He believes that Europe is using misguided measures out of desperation (this includes “anxiety, unease, and even panic”), such as “emulating unilateralism, protectionism, or the over-securitization of issues”. Europe should stop “dressing up its own competitiveness problems as so-called ‘China shock’” and blame internal weakness on external factors.
The path that truly serves Europe’s long-term interests is not to erect walls, impose barriers, or sever industrial and supply chains, but to address shared concerns through dialogue and consultation and to pursue common development through pragmatic cooperation. For Europe’s strategic community, the real question that needs to be considered is how to move beyond anxiety, confront difficulties squarely, shed psychological barriers, and seize “China Opportunity 2.0.”
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.