Chinese President Xi Jinping’s visits to France, Hungary, and Serbia this week will seek to signal China’s increased influence in Europe, showcasing Beijing’s economic and geopolitical ambitions through extensive public diplomacy efforts. This visit is regarded as a defining moment for China-EU relations, coming on the heels of German Chancellor Olaf Scholz’s visit to China last month. Xi’s selected destinations in Europe carry a strong narrative significance.
Given China’s prominent position on the transatlantic agenda, Xi’s tour in Europe after five years may seek to identify avenues to weaken Europe-U.S. coordination, with the hope that the European Union could act as a counterweight to perceived American “hostility” toward China. In this respect, Beijing tweaks its diplomatic relations with the EU and its member states using trade and market openness as its main levers.
China-France Relations: Macron’s Agenda
Upon his arrival in France on May 6, Xi lauded Sino-French relations as “a model for the international community of peaceful coexistence and win-win cooperation between countries with different social systems,” tapping on last year’s declaration of a China-France “global strategic partnership.” Beijing has encouraged the idea of European strategic autonomy in an effort to sow divisions within the transatlantic community.
Xi’s host, French President Emmanuel Macron, reiterated in his recent speech at the Sorbonne that the EU’s survival depends on achieving “strategic autonomy,” fostering military resilience to reframe “Europe as a power,” and opting to eliminate “strategic dependencies” in critical sectors, ranging from semiconductors to essential raw materials.
For Macron, the two issues on the agenda during Xi’s visit centered on trade disagreements, and diplomatic initiatives concerning Ukraine. The issue of fair competition was critical in Macron’s recent speech as he talked about the idea of launching “reciprocity strategies” in trade agreements, and the focus on “Made in Europe” as “always better for the planet.” However, when it comes to trade rules, he put China and the United States in the same basket, stating that “the two leading international powers have decided to stop respecting the rules of trade.”
He continued later: “We want trade that benefits us, but with many others who are starting to change the rules of the game, who are over-subsidizing, from China to the United States.”
Regarding trade issues, the primary challenges revolve around addressing overcapacity to “rebalance” European trade with China, scrutinizing subsidies (particularly given France’s pivotal role in the EU Commission’s investigations into Chinese electric vehicles), ensuring more equal market access for French companies, and building resilient supply chains. More specifically France’s so-called Cognac diplomacy revolves around a Chinese anti-dumping investigation into European brandy, mainly the French Cognac.
This bilateral visit also has a visible European dimension, considering Macron’s prior consultations with Scholz and the participation of the president of the European Commission, Ursula von der Leyen, in the trilateral meeting. However, expectations for concessions from Xi should not be high. In the case of Germany, he lifted restrictions on imports of beef and apples, but he refused to budge on the overcapacity issue, justifying that Chinese green tech exports have “enriched global supply and alleviated inflationary pressure, but also contributed greatly to the response to climate change.”
Trade relations between China and the EU have increased by 900 percent since 2001 when China was invited to join the World Trade Organization, reaching $927 billion in 2022. At the same time, the EU’s trade deficit with China has increased 930 percent from $46 billion in 2001 to $429 billion in 2022. Chinese foreign direct investment in the EU is primarily concentrated in three countries: France, Germany, and Hungary. More specifically, Chinese exports to France have increased from less than $4 billion in 2001 to $42 billion in 2022, while French exports to China have reached $25 billion.
The second most important issue on the agenda was to enlist Xi’s support for a peace solution in Ukraine as Macron aims to focus on partnering with China “on global issues.” The Sino-Russian friendship pact has galvanized concerns in Europe about China’s strategic ambitions, its refusal to condemn Russia’s war in Ukraine, and its enabling economic stance toward Russia.
Von der Leyen took a strong stance during the summit in Beijing in December 2023, calling China’s response to the “Russian war of aggression against Ukraine” the defining issue for the EU in its bilateral relationship with China and threatening that the EU could impose sanctions on Chinese entities considered to be sending dual-use items to Russia. China’s subsequent vote in favor of a U.N. resolution that explicitly acknowledges the “aggression by the Russian Federation against Ukraine” – although it was a broader resolution that called for closer cooperation between the U.N. and the Council of Europe – was a diplomatic change. Although symbolic, it underscored adjustments in Beijing’s course aimed at maintaining favorable relations with EU institutions.
Hungary and Serbia: Beijing’s Strategic Partners in Eastern Europe
Hungary and Serbia are China’s strategic partners and the frontrunners in terms of economic, social, and diplomatic relations, in the framework of the former “16+1” initiative. Hungary sealed a “comprehensive strategic partnership” with China in 2017 and was the first European country to sign on to the Belt and Road Initiative. Trade between China and Hungary has almost doubled since 2012, from $7 billion to $13 billion in 2022, but Hungary’s trade deficit vis-a-vis China is much higher, rising from $3.6 billion to $8.5 billion in 2022.
In terms of cumulative investment, Hungary hosts by far the highest amount of Chinese FDI in Central and Eastern Europe. According to Hungarian official sources, in 2023, Hungary was able to attract a total of $14 billion in foreign direct investment, of which about $9 billion came from Chinese investments, including investment in battery factories and electric vehicles. Xi’s visit to Hungary will be celebrated to showcase the Chinese success story in Central Europe, considering the country also hosts the largest concentration of ethnic Chinese in Central Europe.
A potential concern is the bilateralization of relations with individual EU members, affecting the internal cohesion of the union, and interfering in EU decision-making processes regarding China matters. We have seen this in the past, as Hungary has blocked an EU statement after an international tribunal’s ruling on the South China Sea, criticism of China over Hong Kong, and criticism of the BRI.
Xi’s visit to Serbia, the second in eight years, carries a strong political message as it coincides with the 25th anniversary of the mistaken NATO bombing of the Chinese embassy in Belgrade during NATO intervention in former Yugoslavia. Certainly, this occasion will be used to denounce the West and more specifically NATO as a problem for other countries, and emphasize the need to reshape the global governance system.
For Serbian President Alexander Vucic the visit itself will be a big deliverable considering the Western criticism regarding relations with Kosovo. It will be a chance to reiterate Beijing’s support for the territorial integrity of Serbia and clear political alignment with the Serbian government in disputing the territorial integrity of Kosovo.
China is attracted to the Western Balkans for its geostrategic location and proximity to the EU markets, viewing Serbia as a strategic European transportation hub. With 61 Chinese projects valued at more than $21 billion in the Balkans, the most significant is the upgrade of the Belgrade-Budapest high-speed railway. Trade between China and Serbia has increased from less than $450 million in 2012 to more than $4 billion in 2023. Serbian exports to China have increased from less than $400 million in 2020 to $1.3 billion in 2023.
Relations between Belgrade and Beijing extend beyond economic ties, as Serbia has signed a $3 billion package of economic support and military purchases that has boosted the Chinese influence in the country. The Huawei-led installation of smart surveillance cameras in Belgrade raised concerns over compatibility with EU standards on privacy and data protection, with Serbia 10 years into negotiations to join the bloc. The special bond between the two countries was further strengthened during the COVID-19 crisis, where the Chinese vaccine gave an important boost to the government of Serbia as it struggled to deal with the pandemic. Today, 85 percent of people in Serbia have a favorable opinion of China.
While we are seeing a trend toward transatlantic convergence on China in recent months, Europe is not really united when it comes to future strategies on China. European approaches depend on the economic relations that individual countries have with China, the extent of technological dependencies, as well as leadership and public attitudes toward China.
Since March 2019, the mantra of EU relations with China, driven by the European Commission, has focused on finding a balance of “negotiating partnership,” “economic competition for technological leadership,” and “systemic rivalry of models of governance.” Xi Jinping’s visit this week will show which of these pillars of the European strategy will take precedence.