President Xi in Europe: what to expect

From ancient times, China’s international relationship philosophy revolved around two elements: shared prosperity and a relationship-based approach. Confucius described sharing prosperity as the best policy for international relationships. He believed it could ensure peaceful coexistence, lasting influence and respect for each other.

Along the road of history, China learned relationship-based diplomacy can answer the questions of difficult times. It deploys a transformative relationship approach, which means if you are an enemy, try to become neutral; if you are neutral, try to become friend; if you are friend, try to become a brother and carry on further strengthening the relationship. China is using a win-win formula for benefits.

China’s policy and strategy towards Europe mirror its broader international approach. Many European countries did not establish diplomatic relationships with China until 1970s (except a few, like France and Hungary), but China kept its doors open for engagement and diplomatic relationships. After establishing relations, both sides put efforts into building strong and dynamic cooperation in the fields of economy, trade and investment.

The concerted efforts yielded positive results, with both sides cultivating robust relationships. Official data reveals China-EU trade in 2023 amounted to $783 billion, a figure slightly lower than the previous year, and makes EU China’s second-largest trading partner. Investment is another area of mutual growth. In 2023, European Union invested some $10.6 billion in China, while China’s investment in Europe reached $8.2 billion. Since establishing relations, total investment from China to Europe and vice versa has reached $230 billion mark in 2023.

Moreover, many companies, such as BMW, Volkswagen, Stellantis, BASF, EDF, Ceva, etc., have shown strong intent to further enhance their presence and investment in China. These companies are cognizant of Chinese market’s strengths and want to benefit from its future expansion. It has been predicted 300 million people will graduate into the middle class by 2030, which is only a few million less than the total population of the US.

Besides, BRI also lures the private sector. It is an open initiative to all, without any discrimination. It has more than 152 member countries and many international agencies. Presently, European Union countries are not members of BRI (except a few), but they know the potential of BRI. The private sector is keenly aware by investing in China they can tap into 152 BRI markets, a prospect that holds great promise for their future growth and success.

Therefore, European companies are investing in China and are asking their governments to normalise their relationship with it. The private sector is also pushing their governments to finalise the Comprehensive Agreement for Investment.

The relationship is facing challenges since 2019, after the release of strategic outlook document. In the outlook, the EU marked China as a cooperation partner, market competitor and system rival. The systematic rival status is a bone of tension, and the relationship started to become complicated. European Union members are making it part of future strategy for interaction with China.

Systemic rival is a very strong term, meaning EU considers China a threat to their system. Independent experts believe the cooperation and competition era has entered the realm of ideological rivalry. China does not subscribe to system rival terminology. The private sector from the EU also did not give much attention and was busy exploring new market opportunities.

Many scholars and policymakers believe the EU’s strategic outlook is the result of pressure from the US. It is an open secret US is running a campaign and pushing its allies to act against Beijing. China does not agree with this conclusion, and is working on its philosophy of international relations to normalise the relationship to a win-win proposition.

In pursuance of this philosophy, China opened its doors to European leaders. China thinks continuous communication among the leaders is important to find a way forward. European leadership responded positively, and many of them have visited China. Most recently, the German Chancellor spent three days in China.

President Xi is carrying the same message to European countries such as France, Hungary and Serbia. The visit to France is very important, as it is happening one year after President Macron’s visit and on the 60th anniversary of bilateral relations. France was the first major power of the West to establish diplomatic relations with China in 1964. President Charles de Gaulle established relations by saying, “China is gigantic. To live as if it didn’t exist would be to be blind”. Since establishing diplomatic relations, economic linkages, trade and investment between them have improved substantially. According to 2023 data, trade between China and France increased from $100 million in 1964 to $78.9 billion in 2023.

Now, more than 7,000 French companies are working in China. To improve cultural and people-to-people linkages, China established 18 Confucius institutes in France, and France set up 14 Alliances Française centres in China. Both the countries are also celebrating their 60th anniversary of relationship by organising joint cultural events.

President Xi will visit Hungary to celebrate 75th anniversary of bilateral relations and explore further ways to strengthen the relationship. China and Hungary enjoy a good relationship history in diverse fields, including economy, trade, culture and people-to-people connections. Bilateral trade between them was $14.5 billion in 2023, mainly in motors, electrical equipment and parts, boilers, mechanical equipment and parts, vehicles and parts, optical, photographic, and medical equipment, and parts. Hungary was the first CEE country where China established the RMB clearing bank and issued Panda bonds.

Hungary joined BRI in 2015 and was the first country to attend the China International Import Expo (CIIE). Regarding cultural and people-to-people contact, Hungary established a Hungarian-Chinese bilingual school and the China Tourist Office, among other initiatives.

Serbia will be another destination for President Xi. The country has emerged as one of China’s most vocal partners in Europe. Both the countries are working to strengthen their relations further. Trade between the two is increasing steadily, and has reached $3.55 billion in 2023. They also signed an FTA to strengthen their economic, trade and investment linkages. Cultural exchanges are exhibiting a rising trend.

We can expect two outcomes. First, President Xi’s visit will open new avenues of working together and strengthen bilateral cooperation between China and France, Serbia and Hungary. Second, the visit can contribute to lowering tension between China and EU, and France. Being a major power of EU, France can play a role here. It can take guidance from President De Gaulle’s policy and wisdom for that purpose. It is required in the context of contemporary multifaceted challenges, including food insecurity, poverty, health of out-of-school children, energy and climate change.