Europe can’t read China anymore—and that’s the problem

For nearly 50 years, the European Union and China have maintained an often-fractious, but largely intelligible, relationship. While cultural, political, and ideological differences persisted, both sides could generally interpret each other’s motivations. China wanted recognition as a strategic global power—and hoped Europe would act as a balancing force against U.S. dominance. Europe, in turn, sought improved market access and trade liberalization. The resulting tensions were manageable, buffered by strong commercial interests and a shared interest in global stability.

That world is now gone.

As of mid-2025, the EU–China relationship has entered a phase that many seasoned observers call “strategically incoherent.” The old frameworks—liberal economic convergence, cautious diplomatic hedging, and quiet mutual benefit—no longer explain current behavior. Instead, both sides are acting with ambiguity, mistrust, and conflicting assumptions. And no one seems to have a map.

The clearest symptom of the crisis is that policymakers on both sides are increasingly flying blind. European leaders speak of “de-risking” without fully defining the scope of what that means. China, meanwhile, has dropped the pretense of seeking convergence with European rules or standards.

The EU–China Comprehensive Agreement on Investment (CAI), once touted as a landmark, is now functionally dead—frozen by mutual sanctions and shifting priorities. High-level summits are proceeding, but with little substance. Joint statements are carefully vague. Meetings end with platitudes rather than agreements. There is no agreed narrative. No shared strategic language. As one EU official put it: “We no longer know what China wants. And they clearly don’t know what we’re willing to offer.”

1. Russia’s War Changed the Lens

Beijing’s refusal to condemn Russia’s invasion of Ukraine—and its growing trade and energy ties with Moscow—have deeply damaged its credibility in Europe. What might have been dismissed as geopolitical posturing in the past is now seen as a values-level fracture. Europe no longer sees China as neutral or even pragmatically aligned on major global norms.

This isn't just political rhetoric. The war in Ukraine has fundamentally reshaped how Europe views security, energy dependence, and resilience. That mindset now extends to China.

2. The Rise of Strategic Industrial Policy

Both China and the EU are doubling down on self-reliance. China’s push for technological autonomy is clashing with Europe’s efforts to build its own capacity in areas like semiconductors, green tech, and critical minerals.

What used to be complementary trade flows are turning into rival industrial strategies. Europe is increasingly worried about overcapacity in Chinese EVs and solar panels. China is retaliating against European tech restrictions. This is more than a trade war—it’s structural divergence.

3. A Collapse of Political Imagination

During the 2000s and early 2010s, EU–China ties were animated by a shared optimism: that interdependence would encourage reform and moderation. Today, that idea feels naïve. Xi Jinping’s tightening control at home, paired with China’s assertive diplomacy abroad, has all but erased Europe’s previous hopes of nudging Beijing toward liberalization.

Meanwhile, Europe’s own political center is weakening. Far-right parties are gaining ground. Transatlantic coordination is inconsistent. The EU no longer speaks with a unified voice on China—and Beijing is exploiting that disarray.

Despite the political frost, trade volumes remain high. China remains a key market for German carmakers, French cosmetics companies, and European luxury brands. Likewise, Chinese firms are still investing in Eastern European logistics and Southern European energy infrastructure.

But boardrooms are uneasy. Risk assessments have shifted:

• Regulatory retaliation: European companies in China report more audits, license delays, and opaque policy shifts.
• Security scrutiny: Governments across Europe are tightening foreign investment screening, particularly in energy, infrastructure, and tech.
• Reputational risk: Consumers and shareholders are increasingly sensitive to ESG issues, including supply chain exposure to Xinjiang and tech transfers to Chinese military-linked firms.

Even the private sector, once a stabilizing force in the relationship, is now hedging.

What’s most striking is the absence of a forward-looking vision. Both Brussels and Beijing continue to speak in diplomatic clichés—“partnership,” “dialogue,” “mutual respect”—but these words ring hollow.

Instead, what we’re witnessing is a relationship running on institutional memory, not strategic intent. Summits happen because they’re on the calendar. Working groups meet because they always have. But few expect breakthroughs. Fewer still expect trust. This kind of drift is dangerous. It creates confusion for smaller EU states, many of which rely on clearer policy cues. It encourages opportunism from external actors—particularly the United States and Russia. And it breeds cynicism in the public, which undermines support for long-term engagement or resilience planning.

The implications of this unraveling are vast:

• Climate cooperation is at risk: EU–China climate engagement is critical for global targets. But trust is necessary for joint innovation, standard-setting, and carbon market alignment.
• Global trade governance could suffer: Without coordination between two of the world’s biggest economic blocs, the WTO and other trade mechanisms risk becoming irrelevant.
• Tech fragmentation is accelerating: Competing standards in AI, data regulation, and semiconductors are already emerging. Without strategic alignment, the bifurcation of the internet—and of innovation pipelines—will deepen.
• Security policy is destabilizing: As NATO increasingly factors China into its strategic planning, and China draws closer to Russia and Iran, a new Cold War architecture is forming.

In short: If the EU–China relationship can’t find a new operating model, it could reshape the global order in ways that few planned for—and fewer can manage.

To avoid further deterioration, Europe needs to recalibrate—not just rhetorically, but institutionally:

1. Clarify its China doctrine: “De-risking” is too vague. The EU should spell out sectoral red lines, cooperation thresholds, and investment priorities.
2. Strengthen internal alignment: A coherent EU-wide strategy is vital. France, Germany, Italy, and Central-Eastern Europe all have divergent interests. These must be reconciled if Europe wants negotiating power.
3. Invest in Asia beyond China: Europe’s Indo-Pacific strategy must be real, not symbolic. Diversifying trade, research ties, and supply chains is both strategic and stabilizing.
4. Hold ground on values: Europe cannot abandon its human rights commitments or tech sovereignty agenda. But it must frame them not just as moral stances—but as long-term risk management principles.

The EU–China relationship is drifting into strategic limbo. That’s not a crisis of trade—it’s a crisis of comprehension. For nearly half a century, Europe thought it could balance value and interest, criticism and commerce. Now, even the logic of that balancing act has disappeared. What’s left is mistrust without rupture, engagement without expectations. That’s not sustainable.

Europe must act—by asserting coherence at home, realism abroad, and clarity in its dealings with Beijing. For China, the choice is whether to remain knowable to its partners, or fully embrace unpredictability. In a world already fragile from war, climate stress, and economic shocks, that decision carries global consequences. If neither side chooses clarity soon, what’s at risk isn’t just diplomacy. It’s stability.