This week’s visit to Beijing by Russian President Vladimir Putin, just days after that of U.S. President Donald Trump, is a reminder of China’s ambition to position itself as a central pillar in an increasingly multipolar world. As its global confidence grows, China will continue to shape its relationship with the United States while strengthening ties with a neighbor (the two sides share a 4,300-km border) that historically has been an adversary more than an ally.
What does this mean for Europe? How best should it engage with China, classified variously by European countries as an economic partner, a strategic competitor, a systemic rival—and sometimes all three? In Brussels, the European Union (EU) is conflicted. On the one hand, it sees the benefit of closer economic engagement—as do some EU members (e.g., Spain, Hungary) who have already welcomed joint ventures with Chinese companies—as the U.S. administration continues to dismantle the 80-year-old transatlantic alliance. On the other hand, it fears a growing trade deficit with China and the threat of becoming economically dependent on an influential global power whose partners include the likes of Russia, North Korea and Iran.
Reflecting the increased weaponization of international trade, this dilemma has led to protective regulations such as the Anti-Coercion Instrument (ACI), a somewhat blunt instrument which has not yet been used but which allows the EU to subject third countries to harsh countermeasures in response to economic coercion. Early this year the EU also proposed the Industrial Accelerator Act (IAA), intended to promote indigenous manufacturing in strategic sectors such as electric vehicles (EVs), batteries and renewable energy by restricting foreign investment in critical national infrastructure and requiring local content.
Yet China too is at a crossroads with regards to its Europe policy. For nearly two decades it has pursued a divide-and-conquer policy of building partnerships with central and eastern European (CEE) countries. These countries are typically smaller economies and (in some cases) less aligned with the liberal democracies of western and northern Europe. Beijing’s creation of the China-CEE initiative in 2012 (known at different times as the “17+1,” “16+1” and “14+1” as its membership ebbed and flowed) was the vehicle for this engagement. The initiative expanded China’s Europe relations beyond the hitherto dominant German relationship with China under then German Chancellor Angela Merkel, enabling it to promote key programmes such as the Belt and Road Initiative (BRI) from 2013. Chinese infrastructure investment flowed into CEE countries such as Hungary, Poland, Croatia and Slovakia as a result, accumulating to over USD 24 billion in slightly over a decade.
Chancellor Merkel is long gone, followed this year by longtime Hungarian President Victor Orban following national elections in April. While new Hungarian President Peter Magyar will also support Chinese investment because of its importance to the domestic economy, he is nonetheless firmly in the EU camp. Orban’s departure raises questions about the longer-term efficacy of China’s European policy. By continuing to engage predominantly with CEE countries (where China’s investment in Hungary alone went from less than 1% of that for Europe to more than 40% at its peak in 2023), China is restricting its economic opportunities in Europe: total CEE GDP made up less than 20% of total EU GDP in 2025. And while the initiative may have won friends in these countries, China’s policy has alienated larger and politically more significant EU member states, some of which regard Beijing’s consolidation of political influence and economic dependence as an attempt to undermine EU policies and weaken European integrity.
Current U.S. policy towards Europe presents China with a unique opportunity to strengthen trading links with the world’s second largest economic bloc. Regardless of ideological or political differences, China should see itself as a natural partner to the EU’s major economies—particularly given that China’s high-quality, tech-driven products can now command the higher prices that wealthier consumers in the bloc’s biggest economies are prepared to pay.
Corporate China already understands this reality. While Chinese EV and battery makers may have initially set up manufacturing hubs in CEE countries, their targets are the wealthy consumers of western and northern Europe—Chinese products are already winning over consumers in Europe and the UK, leading monthly sales in the automotive industry.
Four years on from Russia’s invasion of Ukraine, the optics in Europe of President Putin’s latest visit to China are far from comfortable. While it is understandable that Beijing seeks to maintain a stable relationship with a major neighbor that provides clear economic benefits, the price to pay may be a strong economic partnership with one of the world’s largest trading blocs. A more calibrated and transparent engagement with the EU could help reassure policymakers in Brussels and ease concerns among member states, particularly at a time when the bilateral relationship is increasingly strained.
For Chinese businesses operating in Europe, shifting the narrative towards pragmatic economic cooperation will be essential, but will not be straightforward. Although competitively priced, high-quality Chinese products may appeal to European consumers facing a rising cost of living, their impact on public opinion towards China is likely to be moderated by wider concerns around market fairness, industrial policy, heightened debates on European sovereignty and strategic dependencies. As such, rebuilding trust will require more than economic attractiveness alone, and will depend on sustained efforts to address structural and political frictions in the relationship.
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