Xi Completes European Charm Offensive

The Lede: Chinese President Xi Jinping signed dozens of trade and other bilateral agreements on a tour of Europe in early May, his first European trip in five years. Focusing on European leaders that have maintained amicable relations with Beijing, his message included advocating for a multipolar world, increased trade and investment, and the Russia-Ukraine War.

What We Know:

●      Xi began his trip in Paris, meeting with French President Emmanuel Macron and European Commission President Ursula von der Leyen. Macron fêted Xi with French cognac, a perhaps not-so-subtle reference to China’s recent trade curbs on imported brandy from the EU. Von der Leyen stood firm on the EU’s measures to address the bloc’s trade imbalances and China’s alleged overcapacity. The two sides signed more than a dozen bilateral agreements in areas including green development, aviation, agrifood, commerce, and people-to-people exchanges.

●      Xi and Serbian President Aleksandar Vucic announced their countries would “deepen and elevate the comprehensive strategic partnership” to a “shared future.” Xi also marked the 25th anniversary of the NATO bombing of the Chinese embassy in Belgrade during the Kosovo War in 1999, which killed three Chinese journalists and soured relations between Beijing and Washington. Beijing and Belgrade signed 28 agreements during Xi’s trip in a variety of areas including infrastructure, energy, student exchange, and an extradition treaty that is seen by rights groups as a possible threat to freedom of speech and press in Serbia.

●      In meetings with Hungarian Prime Minister Viktor Orbán, Xi upgraded the two countries’ relationship to an “all-weather comprehensive strategic partnership for the new era” and charted a path of cooperation. The two countries signed 18 economic agreements on battery production, nuclear energy, and infrastructure projects including a cargo railway around the capital, a new high-speed rail between Budapest’s airport and city center, and an oil pipeline between Hungary and Serbia.

The Background: Trade tensions between China and the European Union have ramped up with the possibility of European tariffs and probes into Chinese subsidies for a range of industries. Target industries include electric vehicles to solar panels that officials argue negatively impact corresponding firms domestically. China began a trade investigation into imported French brandy in a move seen as retaliation for EU probes on Chinese industries. Macron and German Chancellor Olaf Scholz, who was not in attendance, have pursued more balanced trade relations with China compared to the EU’s pressure campaign of increasing subsidy probes. Hungary is expected to host several Chinese EV battery plants and hopes to transform itself into a global hub of lithium ion battery manufacturing. The country also is benefitting from a major Belt and Road Initiative railway project to connect it with the Chinese controlled Port of Piraeus, which is the main port of Athens.

Likely Outcomes:

●      Xi’s engagement with France stems from efforts to shape a more independent Europe among EU member states that does not always follow the lead of the United States and contributes to an increasingly multipolar world. France’s position as a major member of the EU puts it in a difficult position where it must juggle its desires to access the economic opportunities of China while staying on course with the EU’s policies on trade and security matters.

●      China’s elevation of its ties with Serbia to the level of a ‘shared future’ refers to Beijing’s growing vision of a more multipolar world with its partners operating more independently of U.S. leadership. Belgrade will likely face a tightrope ahead as it navigates the balancing act of such close relations with China while still acting as a member of the European community.

●      China certainly sees Hungary as its foot in the door to the EU as the member state with the most alignment of interests with Beijing. Yet, Hungary is seen as a pariah in the EU community as it deviates from the bloc’s norms on transparency, civil rights, democratic processes, and the Russian-Ukraine War among others. Hungary’s gap in these areas from EU benchmarks is likely wide enough to minimize the influence China would like for it to exert in the bloc's policy directions. Coincidentally, Hungary will take the rotating presidency of the Council of the EU in the second half of the year for six months.

●      The U.S. continues to hold decisive sway in European matters compared to China’s narrow rays of warmth in relations. The EU is unlikely to stray too far from the U.S. lead regarding geopolitical matters. However, with Serbia, Hungary, and parts of the Balkans, China may well be on its way to carving out a soft spot on the continent to pursue some of its interests there.

Quotables:

“Macron shares one vision in common with Xi, which is that the US hegemony – including the quest for Europe’s allegiance to the US’s foreign policy – must yield to a multipolar global order by accommodating the rising powers’ interests and concerns.” - Shirley Yu, political economist and senior fellow at the London School of Economics

"China increasingly counts on Hungary as its main ally within the EU and expects Hungary to act as a divisive force to uphold or veto potential anti-Beijing legislation in the European Parliament." - Sebestyen Hompot, a researcher in China's international relations at the Prague University of Economics and Business

“We caution all of our partners and all of our interlocutors to be very aware of China’s agenda in Europe and China’s agenda with regard to the European community.” - Gabriel Escobar, U.S. Special Representative to the Western Balkans

"The visits were meant to show that China still has friends in Europe who are willing to overlook its ties to Russia and its distortive economic policies, but Hungary and Serbia are not representative of the European consensus on China." - Noah Barkin, senior adviser at Rhodium Group

“As long as both Scholz and Macron are cozying up to Xi, trying to deepen economic relations and tone down criticism on geopolitical issues, the messages von der Leyen is delivering are not very credible.” - Ulrich Speck, foreign policy analyst

Good Reads:

China tests European unity through Xi Jinping’s trip (VOA)

Macron’s cognac — the only thing that went down smoothly with Xi (Politico)

Xi's Hungary trip sets stage for China to gain ground in Eastern Europe (Nikkei)

Key takeaways from China’s Xi European tour to France, Serbia and Hungary (Al Jazeera)

Xi’s visit exposes fault lines in European unity (Brookings)

Analysis: Is the West losing a battle with China for Serbia's heart? (VOA)

Hungary and China sign strategic cooperation agreement during visit by Chinese President Xi (AP)

Xi Jinping uses cold hard cash to keep Viktor Orbán close (Politico)

Serbian Deals With China On Extradition, Media Cooperation Could Have Lasting Impact (Radio Free Europe)

Xi Jinping upgrades China’s ties with Hungary to ‘all-weather’ partnership