Russia factor puts further strain on China-EU ties

Significance

EU-China relations will be among the most significant factors shaping the global balance of power for the foreseeable future. The two sides are one another’s largest trading partners and have various common interests. However, competitive pressures are increasing and the environment for EU businesses in China is deteriorating.

Impacts

• The EU and individual member states will introduce further measures that constrain Chinese investment and R&D activity.
• The EU will develop additional tools for leverage against Beijing, such as an 'anti-coercion' instrument.
• The EU will develop alternative partnerships, such as with India, but these are unlikely to substitute for exchanges with China.
• EU-China tension will negatively affect cooperation in fields of mutual interest, such as international data transfers and climate change.
• Trade and R&D interdependencies, and China’s role in emerging technologies, will impede EU efforts to circumscribe exchanges in these areas.