Recently, Europeans have found themselves entangled in a trade vortex with the CCP, a trade that will only promote moral decay and hasten self-destruction. Under the leadership of Germany and France, Europe is focusing solely on short-term economic needs, neglecting long-term economic strength, let alone international peace and security. It seems only the United States can intervene to help resolve this issue.
At the same time, European companies profiting in China are justifying their actions with various excuses. According to the Wall Street Journal, these companies are defending their business in China by citing reasons such as the war in Ukraine, economic downturn in Europe, and the prospect of Trump’s possible return to the presidency. They delude themselves into believing that these issues somehow indicate the need to re-engage with their East “Most Dangerous Nation” trade partner.
On April 14, German Chancellor Olaf Scholz, together with three cabinet ministers and several CEOs, flew to China and met with Xi Jinping in Beijing. Chancellor Scholz vigorously promoted the 5000 active German businesses in China, even harshly denigrating EU tariffs on China as potential “protectionism.” EU tariffs are crucial for reducing supply chain risks, diversifying Europe’s industrial base, which is vital for Europe’s economic and military strength.
In the past, the CCP regime has utilized its economic gatekeeper status – such as controlling global exports of rare earth elements – to achieve its authoritarian political goals. While Chancellor Scholz has apparently compromised on the EU tariff issue, CCP leader Xi Jinping has not relented on the Ukraine issue. Despite Chancellor Scholz’s efforts, Xi Jinping has not agreed to attend the international peace conference on the Ukraine issue in June or to halt providing dual-use military products to Russia.
In 2022, Germany saw a record high in foreign direct investment (FDI) in China. The CCP demands such investment as the cost of selling products in the Chinese market. Once invested in China and reliant on income within China, German companies like Mercedes-Benz, BMW, and BASF become political leverage for the CCP regime in Berlin to push its policies. The executives of these companies all took part in this visit to China.
According to the Beijing-based CarNewsChina website, BMW, Mercedes-Benz, Lexus, Porsche, and Audi were the top five luxury imported car brands in China in 2023, with all except Lexus being German auto brands. If they want to sell in China, they must produce in China. The CCP is attempting to exploit this “local production for local sales” requirement, not only increasing job opportunities in China but also establishing a foothold for its car companies in Europe. This will open up the European automotive market, bolster Beijing’s political influence with thousands of future European workers, and make it easier for Chinese engineers to access European technology.
Companies under the CCP, along with Chinese automakers, scientists, and dictators, should be off-limits to self-respecting democratic nations. However, French President Emmanuel Macron is also scheduled to shake hands with Xi Jinping in Paris next month.
On April 9, the French Ambassador to China gave an interview to Hong Kong’s South China Morning Post. The ambassador Bertrand Lortholary, known by his han name Bai Yutang, used pro-China rhetoric and supported increasing student visas, indicating to what extent Paris is yielding to the CCP.
“From the outset, people-to-people exchanges have always been at the core of our relationship, that is our shared wish,” emphasized the ambassador in the interview, “The number of Chinese students in France has basically recovered to the level of 2019, exceeding 25,000.” He pointed out that France is extending visa validity for Chinese students since they serve as cultural ambassadors between countries. He also noted that for universities facing funding shortages, Chinese students are a vital funding source and a crucial pathway for technology transfer back to China.
Meanwhile, Beijing is attempting to drive a wedge between the EU and its ally, the United States. Besides Germany and France, some other European countries have also been ensnared. While the CCP does not allow visa-free entry for Americans to China, they have been allowing personnel from the top five European economies to enter without visas since November. These happen to be the five European countries with the most political influence. Recently, the CCP included six more European countries in the visa-free list. In January, the CCP lifted bans on Irish beef and Belgian pork. If a country counters the CCP, such as supporting EU tariff escalation, these privileges can be revoked at any time. These countries are well aware of this, hence leaning towards praise rather than criticism of the CCP regime.
In contrast, the EU’s stance towards the CCP is somewhat tougher than that of its member states. For instance, the EU has initiated various investigations into China’s green industry subsidies and encouraged EU enterprises to reduce supply chain risks over the past year.
However, by offering benefits to individual European countries rather than the entire EU, the CCP regime attempts to undermine European unity. EU sanctions against the CCP, like most EU actions, require unanimous agreement. Hungary has vetoed sanctions against the CCP and Russia before. In return, the CCP regime tries to offer special treatment to Hungary, such as referring to it as the “hub” for Chinese investment in Europe and providing security collaboration.
Fragmenting Europe’s trade power, diluting NATO’s security agreements with its member states, and splitting the EU from the United States all make coordinated sanctions by the world’s two largest economies less likely, sanctions that could compel the CCP regime to choose between improving domestic human rights and international behavior and reducing trade with developing countries. Joint US-EU sanctions would significantly reduce the CCP’s international trade and access to technology, thereby diminishing its defense budget and military capabilities.
Russia’s war on Ukraine provides a fragile excuse to increase Sino-European trade. Mainstream media and companies that continue business with the CCP often overlook how such trade effectively supports the CCP, boosts its technological development, and indirectly aids its partner Russia. Trading with the CCP will enable Beijing to diplomatically support Iran, invade Taiwan, and surpass the US, Europe, Japan, and other G7 allied nations in industry.
This presents dire consequences for the US, as we will increasingly face the dilemma of choosing between further subsidizing European defense beyond what we already do, amidst massive national debt, or risking a black swan event and losing Europe to Russia’s powerful military or influence. Given the threats the US faces and the lack of coordination between democratic countries, which leads allies to harm each other for short-term gains, similar to Chancellor Scholz’s actions in Beijing, the US needs to take the necessary steps to ensure allies and companies worldwide tread a path away from war and authoritarianism.
Appeasement will not achieve this as it only strengthens our adversaries. To achieve this goal, concrete measures to reinforce unity among democratic nations should be taken. For example, ensuring any country’s companies face secondary sanctions from the US if they bolster an opponent’s strength. Recent examples call for sanctions against German and French companies that absolve themselves of responsibility for engaging in bloody trade with the CCP under false pretenses.
Anders Corr, who holds a Bachelor’s and Master’s degree in Political Science from Yale University in 2001 and a Doctorate in Government Management from Harvard University in 2008. He is the publisher of the Journal of Political Risk and President of Corr Analytics Inc., with research spanning North America, Europe, and Asia, among others. His recent works include “The Concentration of Power: Institutionalization, Hierarchy, and Hegemony” (2021) and “Great Powers, Grand Strategies: the New Game in the South China Sea” (2018).