Bridging US-EU interests and action for the Indo-Pacific and China
This essay is part of the report “Transatlantic horizons: A collaborative US-EU policy agenda for 2025 and beyond,” which outlines an agenda for common action for the next US administration and European Commission.
The bottom line
Europe and the United States need greater clarity in defining their common interests and policies on China. The next US administration can build on the current transatlantic agenda and benefit from some impetus in the European Commission to better frame the US-EU agenda on China and with Indo-Pacific countries.
State of play
The past five years have seriously altered thinking toward China in Europe. For the European Union (EU), it has resulted in policy changes in an increasing number of fields beyond the traditional areas of trade and the regulation of the single market. Instead, Europe is starting to think more in terms of geopolitics, geoeconomics, sovereignty, and security, translating this into a growing appetite for action and credibility.
Developments inside the EU specifically paint a picture of institution-wide change. The bloc’s 2019 EU-China strategic outlook labels China as a three-part partner, competitor, and rival, which formed the basis of the bloc’s position toward Beijing. However, as early as 2021, the European Parliament, among others, was calling for a more assertive update. While the triptych remains valid with respect to carving out space for dialogue and cooperation but also China’s undermining of the international rule of law, aggressive diplomacy, and asymmetries in the relationship, the outlook fails to account for the evolution in the bloc’s thinking toward China because of China’s behavior in relation to the COVID-19 pandemic and its weaponization of interdependencies.
The March 2023 framework put forward by European Commission President Ursula von der Leyen to “de-risk” the relationship with China represents an effort to remedy that imbalance by providing the bloc an array of defensive tools it needs to protect its economic interests while it continues trading with China. This shift has played out with the gradual launch of probes into unfair subsidies in several energy and transportation sectors, as well as with the imposition of provisional tariffs on imports of certain Chinese electric vehicles (EVs) over the summer. The commission even drew up the legal basis to launch the probe that led to the EV tariffs for the first time in 2023. However, the de-risking effort is still a work in progress with internal divergences remaining on finalizing the framework, including disagreements over the remit of the commission’s actions. This is exemplified by Germany’s last-ditch effort to lower the EU’s EV tariffs and the broad debate across the bloc about whether to align with US policy on China.
The measures taken by the EU and member states also depend on China’s deepening partnership with Russia. US-EU alignment on their strategy towards Russia will be crucial as well. NATO allies have labeled China a “decisive enabler” of Russia’s war in Ukraine. Von der Leyen warned Chinese officials of the detrimental effects of the partnership with Russia during the 2023 EU-China Summit, and the EU has been more explicitly targeting China with its sanctions regime. In June 2024, the EU sanctioned another nineteen Chinese entities, including financial services firms, for their support to Russia.
Meanwhile, China has tried to evade new rules, push back against de-risking, and repair relations on the continent. Attempts to restore relations with the EU and its members to pre-COVID levels have so far not yielded success, except in Hungary. However, China continues to try to generate leverage. Despite little success in 2024 in France, Xi more recently was able to convince Spain to reverse its initial position supporting the EV tariffs. But other attempts by China to make inroads with individual states and impose contending narratives have been set back, most evident by the departure of the three Baltic states from the “17+1” format and Italy’s departure from the Belt and Road Initiative. Further, members across the bloc have gradually reduced Chinese leverage, even if the degree of de-risking varies. It was reported that the Czech central bank liquidated its renminbi bond holdings, and Romania canceled a contract with China to build one of its nuclear reactors. But Europe is a single market, and Germany’s vulnerabilities are also Lithuania’s, as exemplified by the use of secondary sanctions by China over the opening of a “Taiwan” rather than “Taipei” office in Vilnius in 2021.
Finally, the EU has recognized that stability in the Indo-Pacific is vital to Europe’s interests. It drafted its first strategy toward the Indo-Pacific in 2021, further endorsed in the 2022 Strategic Compass. The EU’s interest in the Indo-Pacific is not just tied to trade. Rather, it recognizes concerns about great-power competition as well as security. “The display of force and increasing tensions in regional hotspots such as in the South and East China Sea and the Taiwan Strait may have a direct impact on European security and prosperity,” it acknowledges. Von der Leyen has also shown greater willingness to call out more explicitly China’s unilateral changing of the status quo in and around the Taiwan Strait. Rhetoric is matched with action. The new security and defense partnerships aim to elevate the EU’s security cooperation in the region, including with Japan and South Korea. France was a precursor before the EU, and Germany, the Netherlands, the Czech Republic, Lithuania, and Sweden have since published their own national strategies on the Indo-Pacific or China.
This shift in Europe has all unfolded while Washington has taken similar actions toward China, including the Biden administration’s tariffs against Chinese EVs, the recent proposed ban of Chinese-developed software from internet-connected cars, and work to secure high-tech supply chains. The White House even endorsed von der Leyen’s “de-risking” framework. And Washington has been eager to partner with the EU on issues relating to China, primarily through the US-EU Trade and Technology Council. Should this endorsement fail to last in the next administration, negative effects on partners and allies would make a collaborative demarche more difficult.
However, the US approach is still primarily one of national security, while in Europe, institutional designs and divides between Brussels and member states can create separations between national security and economic affairs. Yet, the EU has a role to play. The bloc can leverage funding, know-how, and capabilities and has tools to impose political, economic, and reputational costs to respond to malign actors impacting its interests, including by preventing the flow of dual-use or defense technologies. A clear transatlantic agenda has yet to appear in finding ways to bridge both approaches—even if coordination exists.
The strategic imperative
Europe and the United States need each other for a functional policy on China. The US focus on China relies on Europe adopting aligned de-risking policies. From the perspective of the current US administration, China still has it both ways in terms of enhancing its partnership with Russia while managing to keep accessing EU economies and technologies, as expressed by US National Security Advisor Jake Sullivan on the margins of the NATO Summit in Washington in July.
Europe cannot act on the premise that it can entirely carve out space to function outside of US-China competition. The EU’s room for maneuvering is highly dependent on the United States’ tariff policies, extraterritorial sanctions, or entity-based export controls, for example. Further, Washington’s actions will greatly affect Europe, as shown by the Inflation Reduction Act’s impact on European industries’ competitiveness.
At the same time, it is in the EU’s interest to keep seeking a “differentiated, targeted approach,” in von der Leyen’s terms. Europe should not sit idly inside the high-fenced yard, to use the metaphor employed by Sullivan to outline the US economic approach. Europe can use issues related to China as leverage with the United States to ensure that policies are framed from the outset within the framework of transatlantic cooperation, rather than as an afterthought.
There are many aspects beyond competitiveness and trade where transatlantic cooperation could make a positive difference. Chinese leadership has showcased its ability to act against European critical infrastructure, as exemplified by a Chinese commercial vessel’s suspected rupture of the Balticconnector cable. Critical infrastructure, where some allies have discussed taking action to reclaim some Chinese-owned infrastructure projects in Europe should a wider conflict with Russia break out, is a domain that would directly concern the EU and NATO. China has also shown that it can create dilemmas around Europe’s borders and in its neighborhood by undermining policies oriented toward the rule of law and democracy. China’s growing footprint in the High North, the Mediterranean, and its partnership with Serbia, as well as its instrumentalization of the Balkan countries to bypass EU restrictions, are well documented.
There is also no space for neutrality in acknowledging that Europe needs to account for China and Russia’s joint goal of contesting democracies from the outside and weakening them from the inside. Europe’s societies, as much as the United States, will continue to be targets themselves of China and other competitors. Europe’s democracies are fragile and under strain from populism and foreign interference. They cannot be taken for granted. Transatlantic relations should serve to strengthen our societies. In a July 2024 speech, von der Leyen called for a “European Democracy Shield,” referring to a renewed prevalence of “cases of spying, cyber-attacks, corruption and disinformation by foreign actors, in particular the Russians and Chinese.”
Looking ahead
Europe and the United States need to be more united on China, and efforts are underway to institutionalize frameworks. This is possible if the United States approaches Europe as a partner through the EU, in addition to NATO. As US Deputy Secretary of State Kurt Campbell aims to “institutionalize” the links between the Euro-Atlantic and Indo-Pacific regions, building EU-NATO and US-EU consultation frameworks on China will be key. Some frameworks for EU-US consultations on China are already in place.
Given von der Leyen’s role as a driving force behind Europe’s tougher turn on China and also greater engagement with the United States during her first mandate, her renewed term is good news for Washington and specifically puts transatlantic coordination on China in a relatively good position. Von der Leyen will be joined by Kaja Kallas, the former prime minister of Estonia, who is known for her tough stance on Russia and China, as the EU’s top diplomat.
The difficulties of the coming years are also of a more political nature. Transatlantic unity could be challenged by an evolution of US policy toward Russia that could leave Ukraine and Europe weakened. European unity is made particularly fragile by the Hungarian initiative toward Russia and China, and the current German government’s support of the bloc’s approach to mitigate Chinese economic imbalances remains ambivalent. Most importantly, the outcome of the US presidential election in November will be the defining development for any future transatlantic policy on China.
Policy recommendations
- Expand coordination on China as Europe expands its China policies starting with the most aligned sectors. As Europe’s de-risking framework is crafted, transatlantic coordination will be necessary in an increasing number of domains. These include critical infrastructure, hybrid threats, and defense supply chains, but also quantum computing, biotechnology, and artificial intelligence, where the United States is looking to develop mini-lateral groupings. Europe needs a predictable and reliable Washington on domains and segments where the Europeans can have a differentiating effect given competing systems and leverage.
- Continue to pursue innovative defensive economic tools. Tariffs themselves may not be enough. An increasing number of observers point to the need for a more systemic and offensive response by pushing new regulations on cyber, labor, science and technology, or sustainability, and even more drastic policies of industrial cocooning. Taking into consideration the risk malign actors pose is made difficult by the absence of an investigative or economic intelligence unit, and Washington should support a push for such measures and information sharing with it.
- Counter Chinese influence and interference together with Russia’s. As Europe must account for the increased sophistication of Chinese influence operations, especially through the United Front, its ability to coordinate transatlantic de-risking policies will depend on the implementation of tools to enhance resilience.
- Push de-risking to new heights with third-party partnerships. Washington and Brussels could continue to leverage existing free trade agreements and investment and trade partnerships with third countries to further the designs of their respective de-risking strategies against China. Friendshoring and leveraging manufacturing capabilities with emerging economies will be especially important, especially when it comes to dual-use technologies such as submarine cables. The next European Commission should push a greater geopolitical framing around its Global Gateway to support global infrastructure projects in key countries and coordinate with the US effort at the Group of Seven.
- Invest in Europe’s neighborhood to compete. China’s ability to create dilemmas in Europe’s neighborhood, in coordination with Russia, has direct consequences for Europe—and will impact the United States. NATO and EU neighborhood policies in the High North, Mediterranean, Balkans, and Central Asia should also account for growing Chinese influence.
- Engage in a discussion over crisis scenarios in the Indo-Pacific. In case of a gray-zone conflict or escalation in Asia, European states need to agree on measures to take and engage in discussion with the United States to avoid a transatlantic crisis. Coordination with the United States—and among European states—on the impact of a Taiwan Strait crisis should happen at the working level and pull in all strands of policymaking.
- Coordinate outreach to partners in the Indo-Pacific. In the Indo-Pacific, the EU is redefining its bilateral relations with partners through new negotiated security and defense partnerships with Japan, India, Australia, South Korea, and other states. It is also doing so within the multilateral EU-Indo-Pacific Ministerial Forum. Washington is doing much of the same.
Léonie Allard is a visiting fellow at the Atlantic Council’s Europe Center. She previously served at the French Ministry of Armed Forces.
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Image: Flags of the European Union and China are pictured during the EU-ChinaSsummit at the Great Hall of the People in Beijing, China, July 12, 2016. REUTERS/Jason Lee.