INTERESTS BEYOND POLITICS

It appears that as the major Western countries are increasingly critical of Türkiye, their interest in cooperation with the Middle Kingdom is also growing. While the West is discussing the increasing threat from Beijing and the emerging "axis of evil" Russia-Iran-China, Chinese President Xi Jinping made his first European tour in five years in early May, visiting Paris, Belgrade, and Budapest. German Chancellor Olaf Scholz also embarked on a three-day tour of China in mid-April, marking his second visit to the country in less than two years, highlighting the genuine interest of European capitals in collaborating with Beijing.

A year ago, French President Emmanuel Macron, Spanish Prime Minister Pedro Sanchez, and European Commission chief Ursula von der Leyen paid a visit to China. In December, von der Leyen revisited the Chinese capital alongside the President of the European Council, Charles Michel. Italian Prime Minister Giorgi Meloni is set to visit China in June this year. Western tabloids indicate that the primary focus during these meetings was to refrain from aiding Russia, yet the outcomes underscored the emphasis on enhancing trade and economic relations.

Economy Is Priority

China stands as the EU's second-largest trade and economic partner following the United States. In 2023, China's trade turnover with the EU amounted to $782.9 billion, despite a nearly 8% decline, which remains notably higher than many other countries.

For France, China is a pivotal trade and economic partner, with trade turnover in 2023 setting a historical record surpassing $100 billion. Following discussions, the Chinese President emphasized strengthening the strategic stability of bilateral relations with Paris. The summit led to the signing of 18 agreements spanning high technology and green energy sectors.

Regarding Germany, grappling with a deep recession from the lingering effects of the energy crisis impacting Europe in 2022-2023, China stands as one of its most promising economic partners for eight consecutive years. Trade turnover between the two nations reached 254 billion euros last year (slightly exceeding figures with the United States). Germany's direct investments in China hit nearly 12 billion euros in 2023, contributing to a significant increase in Germany's foreign trade surplus. Chancellor Olaf Scholz engaged in productive discussions with key figures in Chinese industry to reinforce this positive trend.

Upon assuming office in 2021, Chancellor Scholz aimed to reduce dependence on China; however, three years later, the focus shifted to advocating for equal market access for foreign companies. President Macron echoed similar sentiments during discussions with Chinese delegates and European Commission head von der Leyen. France has been working towards opening up the Chinese market for its agricultural exports while China has hinted at potential orders for Airbus aircraft.

During Chancellor Scholz's visit to China, CEOs of leading multinational companies accompanied him on his three-day tour, underscoring the significance of economic ties between Germany and China. Among them, notable CEOs include those from BASF, Siemens, Mercedes-Benz, and BMW. These companies oversee significant operations in China, aiming not only to sustain but also expand their presence. Chancellor Scholz commenced his visit to China in Chongqing, renowned as the hub of Chinese engineering. Recently, the major German automotive conglomerate Mercedes-Benz announced plans to sell all 80 German dealerships, including the Stuttgart headquarters, and relocate to China. Joint car assembly ventures with Geely and Foton Motor are set to be established in China. With rising production costs in Germany, German automakers are increasingly eyeing the Chinese market for more profitable manufacturing and export opportunities.

In Shanghai, Chancellor Scholz advocated for the EU to open its market to Chinese cars, drawing a parallel to past concerns over Japanese and Korean car imports into Europe. Emphasizing the need for fair competition to prevent dumping, overproduction, and copyright violations, the German Chancellor underlined the importance of maintaining market integrity.

In Search For Balance

Navigating between export demands of the domestic economy and calls for protectionist measures against Chinese car companies from allies posed a delicate challenge for Chancellor Scholz during his visit to China. The European Commission's investigation into the affordability of Chinese cars in the EU highlighted concerns over state subsidies distorting the European market. With approximately 5,000 German companies operating in China, serving both local and European markets, resistance towards EU protectionist measures against China is expected.

Discussions on reducing European economic reliance on China are ongoing; however, experts suggest that significant changes in this aspect will require decades for German manufacturers. Global value chains have been established over decades, making swift transformations unrealistic. Despite challenges faced by the Chinese economy due to crises in property and mortgage lending markets, projections lean towards heightened geopolitical assertiveness from China amidst strained relations with the US and its allies.

US-Chinese Tensions

As China bolsters its geopolitical and geo-economic influence with increased investments and military capabilities, the US responds by strengthening military alliances in the Indo-Pacific region. Western nations are also intensifying efforts to curb Beijing through tighter protection measures and limitations on Chinese investments.

China possesses economic leverage that significantly impacts its relations with the West. For instance, it has the capability to prohibit the export of vital minerals like cobalt, lithium, and magnesium to Western nations, including the United States. These minerals play a pivotal role in driving innovation and development in high-tech, renewable energy, and defense sectors. Imposing such export bans could result in global shortages, adversely affecting economies of countries reliant on these resources with limited alternative sources. Hence, despite ongoing economic challenges, China remains a crucial market for numerous multinational corporations, subject to potential restrictions or complications by Beijing.

Moreover, as the world's second-largest economy edges towards monetary autonomy, there are implications for the current international monetary framework. However, this transition will be gradual. Despite the yuan's strengthening position in recent years, its global usage still falls short compared to China's trade influence. While the yuan has surpassed the Japanese yen in recent times, ongoing developments and deepening ties with major global economies are fostering conditions for bolstering the Chinese currency's significance.

A recurring theme in discussions of bilateral cooperation at the highest levels involves mentions of Ukraine and specifically China's support for Russia. However, amidst efforts to address pressing economic matters between the parties, it is plausible that the Ukrainian issue does not hold the primary focus on the bilateral agenda of China and Western nations, contrary to media portrayals.