Ian Bond / Nov 2025
Image: Shutterstock
For some years, European governments and the EU have had China policies designed to reflect a balanced approach to Beijing – neither too confrontational nor too deferential. China’s behaviour is making that balance much harder to maintain. China has become the source of more threats than opportunities for Europe. And to complicate the situation, Europe can no longer rely on the erratically-led United States as an ally in dealing with Beijing. Europe must develop policies that protect its own interests, and find partners with which to work, particularly democracies in China’s neighbourhood.
At present, the EU’s 2019 ‘Strategic Outlook’ describes China as a partner in some areas, a competitor in others and “a systemic rival promoting alternative models of governance”. EU member states like Germany have used similar phrases to describe the mix of positive and negative interactions they have with China. Likewise, the UK Labour Party’s pre-election manifesto in 2024 said that in relations with China a Labour government would “co-operate where we can, compete where we need to, and challenge where we must”.
The problem for the EU and European states is that their strategies for dealing with China are vague about ends and even vaguer about means. Europeans want to maintain as good relations as possible with China, while mitigating the risks that it poses. There is too much focus among European policy-makers on developing co-operation with China – often more theoretical than real – on issues such as climate change or global health; and too little on competition, still less rivalry. They do not want to discuss how to defend European models of governance against China’s alternatives, or what it will take to challenge China successfully in advanced technologies.
To rebalance its policy mixture, there are three priority areas in which Europe needs to recalibrate its approach to China: trade; technology; and geopolitics.
Trade between Europe (including the UK) and China accounts for about one-third of total global trade. The balance is overwhelmingly and increasingly in China’s favour. In 2007, after an EU-China summit meeting, the then holder of the EU’s rotating presidency, the Portuguese prime minister, José Sócrates, said that the level of China’s surplus was “at unsustainable levels right now”. Since then, it has more than doubled. China exported almost two and a half times as much to the EU as it imported from it in 2024; and in the UK’s case, Chinese exports were almost four times Chinese imports.
China’s economic policy choices – essentially, to invest rather than consume, and then export surplus production – have resulted in immense industrial over-capacity. European manufacturers are increasingly losing out to lower-cost Chinese producers, both in Europe and in export markets – including in China itself. European lobbying for China to buy more from Europe to reduce the imbalances is achieving nothing.
Europeans are also becoming dangerously dependent on China for critical raw materials such as rare earth elements, components such as magnets for wind-turbines, and finished goods including electric vehicles and solar panels. China has shown that it is willing to weaponise these dependencies for economic or political ends – for instance, forcing the US to reduce threatened tariffs by imposing export controls on rare earth elements and items containing them, for which the US (like Europe) currently has no alternative source of supply.
China’s trade dominance is increasingly matched by its technological edge in key areas such as advanced materials and sensors. In 2023, China was responsible for almost half of all patent applications filed worldwide; Europe was responsible for around 10 per cent. Chinese R and D spending as a percentage of GDP overtook Europe’s in 2019, and is growing by more than 8 per cent a year; European R and D spending is growing by less than 2 per cent a year.
Apart from the economic consequences for Europe of China’s technological advances, Beijing is also focussed on applying civilian technology in the military sphere – a policy known as ‘military-civil fusion’. Some of its new technology is purely indigenous; some (for example, for air defence or submarines) is acquired as part of China’s close relationship with Russia; and some is developed with European help, by Chinese students and researchers from universities and research institutes with close ties to the military studying at European institutions, occasionally even with EU funding.
There would be less reason to worry about China’s trade and technological pre-eminence if Europe’s geopolitical position were less precarious. The UK and the EU should keep four things in mind as they formulate their policies towards China: Beijing’s support for Russia; the impact of China’s growing military power on European partners in the Indo-Pacific region; China’s growing economic and political influence in the global south and even in Europe itself; and US relations with China.
China and Russia do not see eye-to-eye on everything, but for the moment their partnership brings benefits to both. China is helping to keep the Russian economy afloat by buying oil and gas and supplying consumer goods, and it is giving significant support to the Russian military industrial complex, supplying it with components and machine tools (and acquiring technology in return).
China is dramatically increasing its military capability. In 2005 the Chinese navy had 221 ships; by 2030, based on current rates of ship-building, it is forecast to have 435 ships. Its nuclear warhead stockpile has more than doubled since 2019. Its air force has grown and modernised. These developments are making European partners in the Indo-Pacific region, such as Australia and Japan, extremely nervous. Although European governments, including the UK’s, are very reluctant to label China a potential adversary, they are stepping up defence and security co-operation with democratic governments in the region.
In the global south, the heyday of the Belt and Road Initiative and major infrastructure projects funded by Chinese loans may be in the past, but China continues to play a major role as an investor, at a time when Western development aid is falling. Through programmes such as the ‘Digital Silk Road’, China is not only supplying countries in Africa, the Middle East and Latin America with Chinese goods and services; it is tying them to Chinese technical standards and exporting the surveillance state and China’s brand of techno-authoritarianism.
In the past, Europe would certainly have sought to respond to the challenge of China as far as possible in co-ordination with the US. That has become much harder with Donald Trump in the White House. Trump has often talked tough about China, but his policies have been erratic. Tariffs have gone up and down, and some have been announced but then withdrawn before they could be implemented. Trump imposed controls on the export to China Nvidia chips for AI applications on national security grounds, but then lifted the bans in return for the US government getting a share of the resultant revenues. His administration does not speak with one voice on China policy, leaving Europe guessing as to what it might do next.
What can Europe do? First, it needs to ensure that it understands what China is doing. Networks of China watchers in Europe need more support, and there needs to be more funding for the study of Chinese language, the Chinese economy and Chinese foreign policy, both inside governments and in academia. Europeans also need to strengthen their ties to democratic countries in the Indo-Pacific region, both to benefit from their insights into the regional hegemon, and to be able to co-ordinate policy where possible.
Second, Europe needs to intensify work to reduce its dependencies on China. European countries and the EU will have to accept that China is not playing by the rules of free trade and the free market, and protect their own economies accordingly. The EU and European countries have a variety of tools for this, in terms of ensuring Europe’s economic security, protecting intellectual property and diversifying supply chains. They are often not used in a co-ordinated way, however, even when there are obvious advantages in acting at the EU level rather than nationally, for example to secure access to critical raw materials. The EU has critical minerals partnerships with more than a dozen countries or territories, but the bulk of the raw materials it can obtain still have to be processed in China; changing that situation, including by working with countries that already have processing and/or manufacturing capabilities, should be a high priority.
Third, it needs to step up both its own research and development spending (a longstanding EU goal) and protect its intellectual property better – including by paying much closer attention to the possible military or defence industry connections of Chinese researchers seeking to study sensitive technologies in Europe.
Finally, it must compete more effectively with Chinese soft power, both within Europe and in the global south. Shrinking aid budgets, the retreat of Western broadcasters like the BBC World Service, tough European visa policies and unwelcoming attitudes to students and researchers from many parts of the global south have given China an opening to promote itself as a better partner. In reality, Europe’s political and economic system still has much more to offer than Chinese state capitalism and the rule of the Chinese Communist Party. Europe needs to invest more in getting that message across.
