The European Union still lacks an adequate understanding of the China it is negotiating with and of the world in which it now has to compete.
Geopolitics and the Illusions of Power: Europe’s Refusal to Adapt
It is more likely that Beijing will regard the issue as one relating to European competitiveness and demand, not merely to Chinese “unfairness”.
That is to say, Brussels wishes for China to alter certain aspects of its economic behaviour. Beijing, on the other hand, wants Europe to look at its own competitiveness and refrain from imposing protectionist restrictions. These constitute very different negotiating positions.
China has brought about the elimination of poverty for approximately 800 million people and has developed the largest middle class and one of the largest consumer markets in the world. It has likewise achieved astonishing progress in the fields of technology and infrastructure.
According to the Australian Strategic Policy Institute’s Critical Technology Tracker, China now leads the world in high-impact research in 69 of the 74 critical technologies monitored by the latest 2026 update. The United States leads in only five, while the European Union, taken as a bloc, leads in just three: gravitational-force sensors, geoengineering, and extended reality, although TU Delft leads in quantum computing. Recently, Europe has lost its leading position in small satellites’ high-impact research.
The figures are striking: China is no longer simply the world’s manufacturing powerhouse. It has established a commanding research position across the technologies that will shape future economic, military and geopolitical power. Europe, meanwhile, is falling behind. Europe therefore has much to gain by keeping cordial, cooperative and mutually beneficial relations with China.
Europe needs China as a partner for new investments, not just as an opponent.
The present geopolitical situation is undergoing change, and it is no longer solely the military capabilities that determine absolute power but also technology, artificial intelligence, robotics, space and industrial capacity. China and the United States now hold a different position in this new landscape from that of Europe.
Europe should adjust itself to these geopolitical realities instead of hoping for a comeback of the once era of European colonial times that could impose China the Century of Humiliation.
From the outside it may seem that the EU would like to benefit from China what it has lost to the United States, but China has become the world’s factory while Europe has lost its competitiveness in key production areas.
The idea is not to place the blame on China.
Europe ought to focus on the areas in which it can compete, create new ones and restore its productive capacity. With the investments now being made available, the production of weaponry is becoming one of Europe’s new competitive, strategic priorities.
Yet military production alone cannot take the place of a clear industrial and economic strategy.
The problem is clear from the EU’s own way of speaking. In its Council of Foreign Affairs it talks about the international environment in which “revisionist powers” and ever more assertive actors are challenging European security, stability and prosperity.
The world is now not organised on the basis of an order established by the West for its own benefit in the aftermath of WWII.
Just because other major powers are rising, along with the Global South, doesn’t mean that Europe has to accept all of their policies. What it does mean is that Europe must acknowledge their existence and the fact that they have legitimate interest in altering the global order.
If Brussels does not accept this geopolitical transformation then its strategic position will continue to be confined to the past.
Leadership, Vision and the Incorrect Diagnosis
All countries have leverage. China possesses its vast domestic market, its control of critical raw materials and rare earths, its long-term planning and long-term vision, its capacity of implementation, its strong political leadership, and the capacity of the state to lead the market – and not the market command the state policies, as it is in most capitalist countries. What does Europe have apart from its own domestic market? Is regulation a leverage?
However, political leadership is urgently missing.
Europe is experiencing a failure in its political leadership, and this is one of the reasons why it lacks credibility as a negotiating power.
Does the EU have a clear idea of its future? If it does not, then stagnation will result. Since Brussels is occupied almost entirely with handling everyday matters, there is very little room left over for developing a serious long-term vision.
There’s also the diagnosis.
Should the diagnosis be poor, the European leaders will make poor decisions.
Ursula von der Leyen has recently stated that the European Union’s daily trade deficit with China of €1 billion has reached a “tipping point” and that it is leading to deindustrialisation. However, this is wrong because she misunderstood cause and effect.
Europe is not losing its industrial base merely due to the high level of Chinese imports. Chinese imports are so high mainly because Europe has become less competitive.
In order to increase their profits, European companies decided to set up their production in China.
After Europe had stopped purchasing cheap energy from Russia, energy prices became a barrier to European competitiveness, at the same time as Germany terminated its nuclear energy — a clear lack of leadership vision.
Sufficient transitional support was not always given to European industry when environmental policies were put into effect, and European car manufacturers, especially those in Germany, had underestimated the shift to electric vehicles and thus started their research after the Chinese competitors – again a lack of leadership vision.
Europe has become more and more trapped by its own regulatory responsibilities, whereas other places were innovating.
What results is a dangerous temptation to take the consequences of Europe’s competitiveness problems as proof that China is the fundamental cause. The diagnosis and the victimization strategy lead to incorrect treatment.
Conclusion: Time for Europe to Listen, Learn and Adapt
Europe ought to cease requiring that China should be economically and politically more similar to Europe.
China has created a market economy which is controlled by the state and, despite its political differences with Europe, has achieved tremendous economic growth, expanded industrial capacity, made progress in technology, infrastructure, increased welfare and reduced poverty in incomparable scales in human history.
The question should therefore be turned around.
Rather than considering how China can be altered so as to become more compatible with the European economic and political models, why not think about what China can teach Europe?
Long-term planning, coordination by the state together with market competition, innovation ecosystems, practical economic policy, opportunities for entrepreneurs, and the ability to give citizens a better future perspective are all important lessons.
One should not overlook China’s ability to innovate just because its political system is different from that of Europe.
To many Europeans, the inheritance of the Enlightenment has led to the idea that Europe should continue to act as a beacon for humanity; yet this belief may turn into a burden if it results in a sense of superiority.
There is nothing wrong with Europe learning from China. What is wrong is when Europe wants continuously give lessons, believing that it has nothing to learn.
The EU-China trade negotiations are therefore about much more than a €360 billion deficit. They are a test of whether Europe can recognise the changing balance of global power, distinguish between causes and consequences, and negotiate with a major civilisation without demanding that it first become something else.
Europe can continue trying to change China. Or it can finally start changing itself.
Ricardo Martins – Doctor of Sociology, specialist in European and international politics as well as geopolitics
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