As China and the U.S. redefine geopolitics, Europe faces a win-win situation

As the United States look astatine disengaging from China, Europe could soon find itself successful a saccharine spot.

U.S. President Joe Biden has, for astir of his word truthful far, adopted a harsh code connected China, calling the world's second-largest system the most superior competitor to America. Diplomatic dialog betwixt the 2 deed a rockier spot earlier this twelvemonth erstwhile Washington accused Beijing of utilizing a spy balloon to get quality from U.S. subject sites.

"The U.S.' hawkish argumentation stance towards China means that China needs to amended relations with Europe to mitigate the interaction of export controls. Therefore, China has an inducement to enactment hard connected improving EU relations," Anna Rosenberg, caput of geopolitics astatine Amundi Institute, told CNBC via email.

Officials successful Europe person adopted a somewhat antithetic attack from the Biden administration, preferring to instrumentality a softer stance with Beijing, recognizing its value to the European economy. Data from Europe's statistic bureau shows that China was the 3rd largest purchaser of European goods during 2021.

"The EU is successful a precise antithetic concern than the U.S., which is intelligibly pursuing policy-led disengagement with China," Jacob Kirkegaard, a nonresident elder chap astatine the Peterson Institute for International Economics, said via email.

"Viewed from China, the EU is the astir important high-income marketplace that it inactive has mostly unfettered entree to. This successful crook makes it acold little apt that China volition actively effort to bounds commercialized with the EU," helium said, adding China "has rather a batch to suffer from a commercialized warfare with the EU."

European Commission President Ursula von der Leyen has, successful caller months, pushed for a argumentation of de-risking from Beijing — reducing dependency connected the state successful captious sectors specified arsenic earthy materials and semiconductors. However, European officials aren't anyplace adjacent supporting a full breakup successful economical and diplomatic ties.

"The governmental request to de-risk the EU-China narration is wholly antithetic from US-China relations. In a satellite characterized by U.S.-China rivalry, the EU is the astir important economical spouse for some — this gives the EU important governmental benefits versus some Beijing and Washington," Kirkegaard besides said.

The EU's azygous market, wherever goods and services determination freely crossed borders, is location to 23 cardinal companies and implicit 450 cardinal consumers, according to information from the European Council.

"We don't privation to provender the U.S.-China rivalry," an EU official, who did not privation to beryllium named owed to the delicate quality of situation, told CNBC. "We similar to calm things down ... without being naïve," the aforesaid authoritative said.

The American rhetoric toward China eased somewhat pursuing a gathering of G7 leaders implicit the weekend, with Biden warming to the conception of de-risking, alternatively than wholly detaching the 2 largest economies successful the world.

Beijing wouldn't person relished the thought of G7 leaders coming unneurotic to knock China's policies. In the aftermath of the gathering, China imposed a prohibition connected its companies buying from American chipmaker Micron.

Alicia García-Herrero, a elder chap astatine European thinktank Bruegel, said Europe mightiness not find itself successful an casual presumption amid these U.S.-China tensions.

"I really precise overmuch uncertainty that volition happen," she said regarding the imaginable of Washington and Beijing some looking to Europe for its economical ties.

"China is taking a batch of retaliation enactment against Europe successful galore ways and the consciousness that Europe is progressively babelike connected China — this benignant of strategical dependence for greenish vigor is becoming progressively clear," she said, noting Beijing is alert of the leverage it holds arsenic Europe looks to make a much sustainable economy. China is the largest supplier of respective captious earthy materials successful the world, according to a survey published by the European Commission, which are utilized successful products similar electrical vehicles.