The Europeans are slipping back into self-defeating and morally bankrupt trade with communist China. Led by Germany and France, Europe is putting its short-term economic needs ahead of long-term economic strength, not to mention international peace and security. But the United States can help fix the problem.
Beijing previously used its economic gatekeeper status—for example, control over Chinese exports of rare earth elements—for its authoritarian political purposes. While Mr. Scholz apparently gave ground on EU tariffs, Xi did not give ground on Ukraine. Despite Mr. Scholz’s attempts, Xi did not agree to attend a June peace conference on Ukraine, and neither did he agree to stop providing Russia with dual-use military components.
German foreign direct investment in China set a record in 2022. The Chinese Communist Party (CCP) requires such investment as the cost of selling products in the Chinese market. Once invested and dependent on Chinese revenues, German companies such as Mercedes-Benz, BMW, and BASF become political levers that Beijing could push to get its way in Berlin. Executives from these companies were on the trip.
China’s companies—along with its cars, scientists, and dictator—should be no-go zones for self-respecting democracies. However, French President Emmanuel Macron will also shake Xi’s hand in Paris next month.
“From the beginning, it has been a shared ambition for people-to-people exchanges to be at the core of our relationship,” Ambassador Bertrand Lortholary told the interviewer. “The number of Chinese students in France is already almost back to what it was in 2019, with more than 25,000 Chinese students in France.”
He noted that France is extending visa validity for “former Chinese students, for they are ambassadors of one country vis-à-vis the other.” He left out that they are a big source of money for cash-strapped universities and tech leakage back to China.
Meanwhile, Beijing is trying to split the European Union from its ally the United States. Some other European countries, besides Germany and France, have taken the bait. Although the CCP does not allow Americans to travel visa-free to China, it began allowing such travel for Europe’s five largest economies in November. These just happen to be the five most politically influential European countries. More recently, it added another six European countries to the visa-free group. In January, Beijing lifted bans on Irish beef and Belgian pork. These “privileges” can be removed for a country at any time if it counters the CCP, for example, by supporting stronger EU tariffs. They know this and so tend to praise rather than criticize Beijing.
The European Union is a little tougher on the CCP than its component countries. It initiated multiple investigations of China’s green industry subsidies, for example, and encouraged EU companies to derisk their supply chains over the past year.
Splitting up the European Union’s trade power, diluting NATO through security agreements with its members, and splitting the European Union from the United States defeats the potentiality of coordinated sanctions by the world’s two biggest economies that could actually force the CCP to choose between improved domestic human rights and international behavior on the one hand and relegation to far lesser trade with the developing world on the other. Combined U.S.–EU sanctions would sharply decrease China’s international trade and access to technology, thus decreasing its defense budget and military capabilities.
Russia’s war on Ukraine has served as a frail excuse to increase EU–China trade. Mainstream media and the companies that continue doing business with China tend to ignore that such trade supports the CCP, yields its technology, and indirectly supports its partner, Russia. Trade with China will enable Beijing to back Iran diplomatically, invade Taiwan, and industrially outcompete the United States, Europe, Japan, and other G7 allies.
This has dire consequences for the United States, in that we will increasingly face a choice between bad outcomes—for example, between further subsidizing Europe’s defense more than we already have, and with borrowed money, and risking a black swan event: losing Europe to Russian troops or influence. Given the threats to the United States and the lack of coordination among democracies that leads us to undermine each other for short-term gain, as Mr. Scholz did in Beijing, the United States needs to ensure that allies and companies around the world follow a path leading away from war and totalitarianism.
This cannot be accomplished through appeasement, which only strengthens our adversaries. It can be achieved through concrete steps that strengthen the unity of democracies, such as ensuring that any company in any country that strengthens adversaries are hit with U.S. secondary sanctions. This includes sanctions against companies in Germany and France that justify their blood money from communist China with the thinnest of excuses.
