An Unraveling: How Europe Lost Its Way in the China Challenge

An Anatomy of Strategic Drift and the Quest for European Autonomy

The conference room in Brussels felt unusually tense that spring morning in 2019 when European Commission officials gathered to finalize a document that would fundamentally alter the trajectory of EU-China relations. The communication they were drafting would redefine China not merely as a “cooperation partner” but as both an “economic competitor” and a “systemic rival.” Few present understood they were witnessing the crystallization of Europe’s most consequential strategic miscalculation of the 21st century.

This shift, captured in stark detail by a recently published French National Assembly report authored by Deputy Sophia Chikirou, represents more than diplomatic recalibration. It signals Europe’s surrender of strategic autonomy to an Atlantic framework that serves neither European interests nor global stability. The report, based on extensive fieldwork including visits to Beijing, Shanghai, and Canton, offers a devastating critique of European policy drift and a roadmap toward what Chikirou terms “protective solidarity.”

The “rapport d’information” (17th of June 2025), on the topic of “the relations between the EU and China”

The Mirage of Managed Competition

The European Union’s relationship with China had evolved organically over five decades since formal diplomatic recognition in 1975. Trade volumes exploded following China’s WTO accession in 2001, reaching €586 billion by 2020 and establishing China as Europe’s second-largest trading partner. European multinationals invested heavily in Chinese manufacturing, viewing the country as both a production base and an emerging consumer market.

Yet by 2019, this economic integration had produced unexpected consequences. China’s rapid ascent challenged European assumptions about development trajectories and technological hierarchies. The comfortable narrative of Western innovation leadership began fracturing as Chinese companies advanced from assembly operations to cutting-edge research in artificial intelligence, renewable energy, and space technology. BYD’s electric vehicles competed directly with European manufacturers, while Huawei’s telecommunications infrastructure challenged Western technological supremacy.

European policymakers, trained in post-Cold War triumphalism, struggled to conceptualize China’s rise outside binary frameworks of cooperation or confrontation. The 2019 trilateral designation attempted to square this circle by acknowledging China simultaneously as partner, competitor, and rival. This cognitive framework, however, proved internally contradictory and strategically paralyzing.

The designation reflected deeper European anxieties about relative decline and technological dependence. Commission officials interviewed for the report expressed persistent concerns about Chinese “opacity” and “duplicity” in commercial negotiations. These characterizations, Chikirou argues, reveal more about European psychological adjustment to multipolarity than Chinese behavior patterns. They reflect an inability to accept that Europe no longer monopolizes the definition of global economic rules.

The Atlantic Straightjacket

The timing of Europe’s strategic reorientation toward China coincided suspiciously with intensifying American pressure. The 2021 G7 summit in Carbis Bay marked a watershed moment when European leaders explicitly aligned with President Biden’s framework of “democratic solidarity” against authoritarian challengers. This convergence represented the triumph of Atlantic reflexes over European interests.

Donald Trump’s return to the presidency in 2025 exposed the futility of European Atlantic faith. His characterization of the European Union as “nastier than China” and threats of 50% tariffs on European goods demolished illusions about trans-Atlantic partnership. Yet European institutions continue privileging American strategic priorities over autonomous policy development. The contradiction appears stark: Europe treats China as a systemic rival while accepting systematic American economic coercion.

This asymmetry extends beyond trade policy into technological sovereignty. European companies remain subject to American extraterritorial legislation through the Cloud Act and ITAR regulations, effectively subordinating European data sovereignty to American intelligence priorities. Meanwhile, European officials express alarm about potential Chinese access to European information systems. The double standard reveals the depth of European strategic confusion.

The Indo-Pacific strategy adopted by the EU in 2021 exemplifies this pattern. Crafted initially by American strategic planners to contain Chinese regional influence, the framework commits European resources to managing tensions in regions where Europe lacks vital interests. French nuclear submarines patrol the South China Sea while European infrastructure crumbles and industrial capacity migrates to Asia. This geographic displacement of European strategic attention serves American containment objectives while neglecting European developmental priorities.

The Failure of Economic Warfare

European defensive trade measures against China have produced results precisely opposite to their intended effects. The imposition of anti-dumping duties on Chinese electric vehicles triggered immediate Chinese retaliation against European cognac and brandy exports, devastating French producers. Mme Magali Cesana from the French Ministry of Economy reported immediate layoffs and 60% volume declines in cognac exports following Chinese countermeasures.

The solar panel precedent from 2013 foreshadowed these dynamics. European anti-dumping measures against Chinese photovoltaic exports failed to revive European production while raising transition costs for European consumers. SolarPower Europe, the industry association, concluded that protection measures “led to a sharp decline in solar jobs, project investments and solar deployment, causing higher photovoltaic costs for customers and consumers.”

These failures reflect fundamental misunderstandings about contemporary global production networks. Chinese manufacturing advantages derive not merely from state subsidies but from integrated supply chains, technological advancement, and scale economies developed over decades. European measures targeting Chinese “overcapacity” ignore the reality that European companies increasingly depend on Chinese inputs for their own competitiveness.

The electric vehicle sector illustrates these interdependencies. While European officials denounce Chinese battery subsidies, European automakers rely heavily on Chinese battery technology and rare earth processing. Tesla’s Shanghai Gigafactory produces vehicles for European markets, while European manufacturers establish Chinese operations to access both technology and market opportunities. Volkswagen plans eleven new electric models specifically for Chinese consumers, recognizing that technological innovation increasingly flows from East to West.

The Innovation Inversion

Perhaps most damaging to European strategic thinking has been the persistent underestimation of Chinese technological capabilities. European officials interviewed for the report frequently characterized Chinese advancement as derivative or dependent on Western knowledge transfer. This perspective reflects outdated assumptions about innovation hierarchies and technological diffusion patterns.

Contemporary evidence contradicts these assumptions. China now produces more scientific publications than any other country and ranks second globally in highly cited researchers. Chinese companies filed 1.64 million patent applications in 2023, approaching half of global submissions. In artificial intelligence, Chinese firms like DeepSeek have achieved parity with American capabilities while European efforts lag significantly.

The space sector demonstrates Chinese autonomous innovation capacity. The CFOSAT and SVOM missions, joint Franco-Chinese projects, showcase Chinese technological sophistication and reliability as a scientific partner. Chinese lunar missions and Mars exploration proceed independently of Western cooperation, while Europe struggles to maintain launch capabilities amid budget constraints and industrial fragmentation.

European technological dependence extends beyond Chinese capabilities to American platforms and infrastructure. European data flows through American cloud services subject to extraterritorial surveillance, while European research institutions struggle with funding constraints and brain drain to Silicon Valley. The criticism of Chinese technological advancement appears particularly hollow given European subordination to American digital monopolies.

The Cognac Crisis and Beyond

The ongoing cognac dispute encapsulates European strategic confusion. French producers built their Chinese market presence over decades, achieving €1.7 billion in annual sales with 25% market share. This success reflected careful brand development, cultural engagement, and quality positioning rather than predatory pricing or unfair trade practices. Chinese retaliation against cognac imports responds directly to European electric vehicle tariffs, demonstrating how sectoral trade measures trigger unpredictable spillover effects.

European Commission officials acknowledge their inability to measure the effectiveness of defensive trade measures against China. Meanwhile, Chinese counter-retaliation produces immediate and measurable damage to European exporters. The asymmetry suggests that Europe lacks both the economic leverage and strategic coherence necessary for successful trade confrontation with China.

The cognac sector’s vulnerability reflects broader patterns in European industrial strategy. France’s luxury goods exports, while profitable, represent narrow specialization in high-end consumer products rather than broad-based technological competitiveness. Chinese retaliation exposes the fragility of European export positions and the inadequacy of niche market strategies in an era of systemic economic competition.

French officials’ emergency diplomatic missions to Beijing following Chinese retaliation revealed the diplomatic costs of economic confrontation. Minister Jean-Noël Barrot’s March 2025 visit secured temporary suspension of Chinese measures but highlighted European dependence on Chinese market access for economic stability. The episode demonstrated that escalation serves neither European nor Chinese interests while benefiting American strategic objectives.

The Path Not Taken

Chikirou’s report identifies alternative approaches that European leaders have systematically ignored. Germany’s pragmatic engagement with China, despite official rhetoric about systemic rivalry, has preserved crucial economic relationships and technological cooperation. Chancellor Olaf Scholz’s 2022 Beijing visit, accompanied by German business leaders, secured continued market access and investment opportunities that benefit German industrial competitiveness.

German willingness to approve Chinese investment in Hamburg port facilities, despite security concerns, reflects recognition that economic interdependence requires mutual accommodation. Similarly, German resistance to European proposals for local content requirements acknowledges that global supply chains resist political manipulation. These positions reflect German understanding that economic sovereignty requires selective engagement rather than comprehensive decoupling.

The French approach to space cooperation with China offers another model for productive engagement. The CNES-CNSA partnership has produced successful scientific missions while maintaining appropriate technology transfer controls. French officials emphasize that cooperation does not require alignment on political systems or strategic objectives. Instead, it reflects shared interests in scientific advancement and space exploration that transcend geopolitical tensions.

These examples suggest that European engagement with China requires abandoning binary frameworks of cooperation or confrontation in favor of selective partnership based on mutual benefit. This approach demands institutional flexibility and strategic patience rather than the reactive measures that have characterized recent European policy.

The first part of this analysis reveals a European Union trapped between declining Atlantic relevance and rising Asian significance. European leaders’ inability to navigate this transition reflects deeper problems of strategic imagination and institutional capacity. The second part will examine how Europe might escape this trap through what Chikirou terms “protective solidarity” and renewed engagement with Chinese development priorities that align with European interests in climate action, technological cooperation, and global governance reform.

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Pathways to Protective Solidarity and Strategic Autonomy

The laboratories of Shanghai’s E2P2L research facility hum with quiet intensity as French and Chinese scientists collaborate on sustainable chemistry processes that could reshape industrial production. Here, removed from the rhetorical warfare of Brussels and Washington, researchers work together on catalysts that promise cleaner manufacturing and reduced environmental impact. Their partnership embodies possibilities that European policymakers have systematically ignored in favor of confrontational posturing that serves neither scientific advancement nor economic prosperity.

This collaboration represents more than academic cooperation. It signals potential pathways toward what Deputy Chikirou terms “protective solidarity” - a framework that protects European interests while engaging constructively with Chinese capabilities that Europe cannot replicate or replace. The concept challenges both free-trade orthodoxy and trade war logic by proposing negotiated frameworks that secure mutual benefit while preserving strategic autonomy.

The Climate Imperative

China’s renewable energy dominance presents European leaders with an uncomfortable reality: the ecological transition cannot proceed without Chinese technology and manufacturing capacity. Chinese companies now produce 70% of global solar panels, dominate wind turbine manufacturing, and control 90% of rare earth processing essential for green technology. European climate targets depend fundamentally on Chinese industrial capacity.

Yet European policy treats this dependence as a strategic vulnerability rather than an opportunity for productive engagement. The Carbon Border Adjustment Mechanism, while conceptually sound, penalizes developing country exports without providing technology transfer or financial assistance that would enable emission reductions. This approach reinforces global inequalities while failing to address the systemic changes necessary for climate stabilization.

Chinese climate commitments, meanwhile, have exceeded international expectations. The country achieved its 2030 peak emissions target early, with CO2 emissions declining 1.6% in the first quarter of 2025. Renewable energy installations reached 300 GW in 2024, exceeding the capacity additions of all other countries combined. For the first time in its industrial history, China generated more electricity from low-carbon sources than from coal.

These achievements reflect planning capabilities that European institutions struggle to match. Chinese five-year plans integrate climate targets with industrial policy, technological development, and social objectives through mechanisms that European fragmentation renders impossible. The 14th Five-Year Plan allocated massive resources to renewable energy, electric vehicles, and energy storage while coordinating provincial implementation across the world’s largest manufacturing economy.

European climate policy, by contrast, remains hostage to market orthodoxy and institutional fragmentation. Member states pursue contradictory energy strategies while Brussels issues regulations that lack implementation mechanisms. Germany simultaneously expands renewable capacity and restarts coal plants, while France champions nuclear energy that other members reject. This incoherence undermines European credibility in international climate negotiations and delays necessary emission reductions.

Productive climate cooperation requires abandoning competitive frameworks in favor of collaborative technology development and deployment. The Franco-Chinese space collaboration that produced CFOSAT demonstrates how joint missions can advance scientific understanding while preserving technological sovereignty. Similar partnerships in renewable energy research, grid integration, and energy storage could accelerate global emission reductions while strengthening European technological capabilities.

Technological Symbiosis

The electric vehicle sector reveals both the opportunities and challenges of European-Chinese technological integration. Chinese companies like BYD have achieved cost advantages through vertical integration and scale economies that European manufacturers cannot match. Rather than futile attempts to exclude Chinese competition, European strategy should focus on capturing value through joint ventures, technology sharing, and collaborative research.

The Renault-WeRide partnership exemplifies this approach. Their autonomous shuttle project combines Renault’s automotive expertise with WeRide’s artificial intelligence capabilities to produce vehicles manufactured in France for European markets. The collaboration creates European employment while accessing Chinese technological leadership in autonomous systems. Similar partnerships could revitalize European automotive production while advancing transportation decarbonization.

Chinese electric vehicle success reflects systematic industrial policy rather than unfair trade practices. State support for battery research, charging infrastructure, and consumer incentives created demand conditions that encouraged private innovation and investment. European criticism of Chinese “overcapacity” ignores the reality that rapid scaling was necessary to achieve cost reductions that make electric vehicles affordable for mass markets.

European industrial policy, constrained by state aid regulations and free market ideology, has failed to create similar innovation ecosystems. The Inflation Reduction Act demonstrated American willingness to use subsidies and procurement to drive technological development, while European institutions continue privileging market mechanisms over strategic objectives. This institutional timidity explains European technological lag across multiple sectors from semiconductors to artificial intelligence.

Joint ventures offer mechanisms for technology transfer that benefit both European and Chinese companies. The Franco-Chinese approach should require Chinese partners to establish significant European production facilities while providing European companies access to Chinese research capabilities and market opportunities. These arrangements must include explicit technology sharing provisions and local content requirements that ensure mutual benefit.

The hydrogen sector presents particular opportunities for collaborative development. European expertise in fuel cell technology and industrial applications complements Chinese manufacturing capabilities and market scale. Joint research initiatives in hydrogen production, storage, and distribution could accelerate deployment while creating intellectual property frameworks that protect European innovations.

Financial Architecture Reform

The global financial system’s dollar dependence creates vulnerabilities that both Europe and China seek to address through different mechanisms. American extraterritorial financial regulations provide Washington with coercive capabilities that undermine both European and Chinese economic sovereignty. The exclusion of Russian banks from SWIFT demonstrated how financial weaponization can disrupt international commerce regardless of legal frameworks.

China’s response has involved developing alternative payment systems and promoting bilateral currency agreements that reduce dollar dependence. The CIPS system provides clearing capabilities that bypass American oversight, while swap agreements with central banks create liquidity mechanisms independent of Federal Reserve policies. These initiatives reflect Chinese recognition that financial sovereignty requires institutional alternatives to American-dominated systems.

European responses have been more tentative despite similar vulnerabilities. The European Payments Initiative attempts to create autonomous payment systems, while INSTEX provided limited sanctions circumvention capabilities. However, European financial institutions remain heavily exposed to American regulatory interference through correspondent banking relationships and dollar clearing requirements.

Collaborative financial architecture development could serve both European and Chinese interests in reducing American coercive capabilities. Joint investment in alternative clearing systems, expanded currency swap agreements, and coordinated reserve diversification could create more resilient international monetary arrangements. The European Central Bank’s digital euro project could integrate with Chinese digital currency initiatives to facilitate bilateral trade settlement.

The debt sustainability challenges facing developing countries present another area for productive cooperation. Chinese lending through Belt and Road Initiative projects has created debt burdens that require multilateral resolution. European expertise in debt restructuring and development finance could complement Chinese infrastructure investment to create more sustainable development models.

Institutional Innovation

The United Nations system requires reform to reflect contemporary global power distributions and address transnational challenges that existing institutions handle inadequately. China’s growing UN contributions and its support for multilateral climate initiatives demonstrate engagement with international law despite American attempts to portray Chinese development as inherently destabilizing.

The expansion of BRICS membership to include Saudi Arabia, Ethiopia, and Egypt reflects developing country demand for alternatives to Western-dominated institutions. European resistance to these developments ignores the reality that global governance must accommodate emerging economies or risk institutional irrelevance. French support for Global South representation in international financial institutions suggests recognition of these dynamics.

Ocean governance presents opportunities for innovative institutional arrangements that transcend geopolitical competition. The recent UN Ocean Conference in Nice achieved Chinese participation in marine protection initiatives despite broader diplomatic tensions. Joint European-Chinese research expeditions and conservation programs could advance scientific understanding while demonstrating cooperative possibilities.

The proposal for an international climate justice tribunal deserves European consideration despite Chinese skepticism about legal mechanisms. Environmental destruction increasingly requires accountability frameworks that transcend national jurisdictions. European legal expertise combined with Chinese implementation capabilities could create enforcement mechanisms that protect global commons while respecting sovereignty principles.

Digital governance represents perhaps the most urgent institutional challenge. American platform dominance and Chinese technological advancement leave European institutions managing regulatory frameworks they lack the capacity to enforce. Joint European-Chinese standards development could create alternative governance models that prioritize user privacy and democratic accountability over platform monopolization.

Strategic Autonomy Through Selective Engagement

The path toward European strategic autonomy requires abandoning binary frameworks of alignment or opposition in favor of selective engagement based on concrete interests. German automotive companies’ Chinese partnerships preserve technological access while maintaining European production capacity. French space cooperation with China advances scientific objectives while respecting technology transfer limitations.

These examples suggest principles for broader European engagement with China. Cooperation should focus on areas where Chinese capabilities complement European strengths rather than simply replacing European capacity. Technology transfer arrangements must ensure bidirectional benefit rather than one-sided extraction. Joint ventures should include explicit requirements for European production and employment.

The negotiation of sectoral agreements could replace the current system of unilateral measures and reactive retaliation. European access to Chinese markets should be conditioned on Chinese investment in European production facilities and technology development. Chinese access to European markets should include local content requirements and technology sharing provisions that benefit European competitiveness.

Educational and cultural exchange programs require substantial expansion to develop European understanding of Chinese society and governance systems. The current shortage of European students in Chinese universities reflects policy failures that leave European institutions dependent on American perspectives about Chinese development. Language education, academic partnerships, and professional exchange programs could create knowledge foundations for more sophisticated policy development.

The cognac crisis demonstrated the costs of allowing trade disputes to escalate through retaliatory cycles. Sectoral dialogue mechanisms could provide frameworks for managing commercial disagreements before they trigger broader economic confrontation. These arrangements should include dispute resolution procedures and compensation mechanisms that prevent individual sector problems from contaminating broader relationships.

Beyond the Atlantic Framework

European strategic autonomy ultimately requires psychological liberation from Atlantic frameworks that subordinate European interests to American strategic objectives. The Indo-Pacific strategy commits European resources to managing American-Chinese competition in regions where Europe lacks vital interests. These commitments drain attention and resources from European development priorities while increasing exposure to conflicts that Europe cannot influence or control.

French rejection of AUKUS submarine arrangements demonstrated possibilities for independent policy development that prioritizes European over Atlantic interests. Similar independence regarding Taiwan tensions could reduce European exposure to conflicts that risk escalating beyond diplomatic management. European support for peaceful resolution mechanisms serves global stability better than alignment with American containment strategies.

The climate emergency provides compelling justification for cooperative engagement that transcends geopolitical competition. Chinese renewable energy capabilities and European regulatory expertise could accelerate global emission reductions through collaborative frameworks that serve shared planetary interests. These partnerships require abandoning zero-sum competition in favor of positive-sum cooperation on existential challenges.

European industrial policy must prioritize technological sovereignty through selective partnerships rather than comprehensive decoupling that serves American strategic objectives. Joint research initiatives, coordinated standard development, and collaborative manufacturing arrangements could strengthen European capabilities while maintaining beneficial economic relationships with the world’s largest manufacturing economy.

The choice facing European leaders is not between American and Chinese alignment but between strategic autonomy and continued subordination to external frameworks that serve other powers’ interests. Protective solidarity offers pathways toward European agency in global affairs through selective engagement that advances European prosperity while contributing to international stability.

The Shanghai laboratories where French and Chinese scientists collaborate on sustainable chemistry point toward futures that current European policy makes impossible. Their partnership demonstrates that technological cooperation can transcend political disagreement when focused on shared challenges that require collaborative solutions. European leaders who choose confrontation over cooperation risk not only economic opportunity but also the possibility of contributing to solutions for humanity’s common challenges.

The path forward requires courage to abandon failed strategies and imagination to conceive new frameworks for international cooperation. European strategic autonomy depends fundamentally on this choice: continued Atlantic subordination or selective engagement that serves European interests while contributing to global stability and prosperity.