Xi’s European Visit Unlikely to Strengthen Ties with EU

If there were any lingering doubts about Xi Jinping’s divide-and-conquer motives in dealing with the West, the Chinese president’s six-day excursion to Europe last week would have laid them to rest. 

In France, Hungary and Serbia, Xi sought to sow intra-European and trans-Atlantic divisions and present China as an alternative to leadership from Washington, the European Union and NATO. Instead, the trip served largely to highlight China’s shaky grasp on intra-European relations and European foreign policy. 

Chinese leaders were delighted when French President Emanuel Macron told Politico in April 2023 of France’s desire to maintain “strategic autonomy” and avoid fanning the flames in the Sino-US dispute over Taiwan.

“The worse thing would be to think that we Europeans must become followers on this topic and take our cue from the US agenda and a Chinese overreaction,” he said. 

But French foreign policy positions often run contrary to those of the United States, and it is difficult to envisage any scenario in which Taiwan might be considered a French strategic interest. While Beijing was delighted with these comments, the Biden administration was unperturbed. 

On an even more pressing concern for the Transatlantic Alliance, Russia’s invasion of Ukraine, the positions of Washington, Paris and Brussels are much more closely aligned. Xi got an earful from President Macron and European Union Commission President Ursula Von der Leyen about China’s supplying Russia with parts, components and finished products that have fueled Vladimir Putin’s war machine. 

Xi told his hosts that China is not selling weapons to Russia and that it was not involved in the conflict. But a report issued last month  refers to China as “the most important country enabling Russia’s war effort.”

US and EU interests merge as well on the question of China’s huge manufacturing output of products like electric vehicles, steel and solar panels. Brussels and Washington are working to develop a joint approach to steel trade which would restrict heavily subsidized Chinese imports. The US has taken a more aggressive approach on EVs and solar panels, keeping them out of the market through a variety of import duties. Last year the EU launched an investigation into Chinese subsidies for electric vehicles. A decision is likely in the coming days and duties could be as high as 30%. 

But the Rhodium Group, the New York-based research group, says this might not be enough to stem the flow European imports of Chinese EVs  which surged from $1.6 billion in 2020 to $11.5 billion in 2023, 37% of all EU electric car imports. 

Von der Leyen, who has taken a tough line on the issue made clear to Xi that Europe will defend its producers. But the Communist Party controlled People’s Daily cited him as having told her and Macron that there is “no such thing as China’s overcapacity problem.”

But even if the EU does slap stiff countervailing duties on imports of subsidized Chinese EV’s, Xi has an ace up his sleeve – Hungary. The Chinese EV producer BYD announced plans last year to build its first European factory in Hungary, scheduled to begin production of electric cars and hybrids by 2026. 

Xi’s appreciation of Hungarian Prime Minister Viktor Orban extends beyond electric vehicles. Ahead of his arrival in Budapest he praised Orban’s “independent” foreign policy in pushing back against NATO’s support for Ukraine and for his friendliness to China. 

Rewarding Orban with a visit and further pledges of investment may have pleased the Hungarian leader but elsewhere it has played badly. Orban’s clampdown on the Hungarian judiciary and media led Brussels to withhold tens of billions of euros in payments to Hungary. In recent months, Orban has encountered his most serious domestic political threat since coming to power in 2010. Long suspected of engaging in corrupt practices for the benefit of himself and his family, Orban now is linked to the cover up of a child abuse scandal at a rural orphanage. 

A charismatic former government official, Peter Magyar, has given vast troves of evidence to Hungarian law enforcement and has posted much of it online. The scandal, which involved associates of Orban, led to the resignation of both former President Katalin Novak and former Justice Minister Judit Varga to whom Magyar was once married. Varga provided Magyar with details of the case which he has in turn made public. Public outrage at the scandal has fuelled the big anti-government rallies Magyar has led in Budapest and in the countryside. 

If Hungary is seen as an outlier in the European political sphere, then Serbia is an outcast. The country is not a member of the EU nor of the World Trade Organization and prospects for joining either anytime soon are bleak. But Xi has a special reason for going to Belgrade. In 1999, during the Kosovo war, American planes accidentally bombed the Chinese embassy in Belgrade, killing three people. Washington apologized and has paid compensation. 

Xi is not ready to let bygones be bygones. An event from 25 years ago enables the Chinese leader to cast NATO as something other than a force for good. 

Clearly grateful for the presence in Belgrade of the leader of superpower, Serbian President Aleksandar Vučić last week expressed appreciation for China’s help in solving his country’s many problems. The two leaders celebrated their bilateral free trade agreement which takes force this summer and the completion this year of a Chinese-built high speed rail line between Belgrade and Budapest. 

As welcome as Chinese investment is in Hungary and Serbia, the China brand has clearly lost some of its luster. 

Last year, Italian Prime Minister Giorgia Meloni told Beijing her country was pulling out of the flagship Chinese infrastructure project, the $1 trillion Belt and Road Initiative. Sold as a gateway to economic vitality through closer links with China, the BRI project was a disappointment for Italians.  The promised €20 billion in investment never came through. What did materialize though was a 220% increase from 2019-2022 in Italy’s bilateral trade deficit with China, which made it a bit easier for Meloni to bid arrivederci to the BRI. 

Xi’s decision to include Hungary and Serbia as destinations for his first visit to Europe in five years may strike some as strange. But at time when China faces growing suspicion and resentment in Europe, it seems Xi is not too selective when it comes to choosing his friends.