European Union and China on the brink of conflict over Russia: A clash that could also affect the Balkans

By Armin Sijamić

EU's announcements that it will sanction Chinese companies for trading with Russia in areas that can help the Kremlin wage war against Ukraine have not gone unanswered. Beijing has stated that it is ready to protect its companies and introduce countermeasures. Thus, Brussels, in its intention to punish Russia and help Ukraine, could punish its own and Chinese companies.

This week in Brussels, EU officials and European governments are discussing a new round of sanctions against Russia. The proposal for sanctions, which must be supported by all member states of the union to enter into force, also includes punishing all companies that supply Russia with equipment that can be used in the war against Ukraine. This does not only concern weapons, but also various means used in industry, such as high technologies, i.e., goods of "dual use". Eight Chinese companies are also on the list of sanctioned companies.

With this move, which is supported above all by Germany and its Minister of Foreign Affairs Annalena Baerbock, the EU wants to adopt a stance similar to that of the United States. The administration of Joseph Biden seems ready to punish anyone who violates the sanctions imposed on Russia. Baerbock is ready to "push" this policy within the EU, which would increase the effect of the sanctions. The imposition of sanctions by the world's first (US) and fourth (German) economies speaks to the proportions of damage that could affect the sanctioned companies.

China's Response

The time ahead suggests that we will increasingly see China not backing down from Western warnings. Since the war in Ukraine, China has openly protected its interests by announcing counter-sanctions. Beijing began to use this tool during its confrontation with Donald Trump, who imposed various sanctions on China. At that time, China responded with measures that affected the US, but not to the extent that they would provoke anger in the White House, especially not while the unpredictable Trump was there. However, the EU is not as important to China as the US, and the EU does not have the strength of the US.

Three days ago, Chinese Foreign Minister Qin Gang openly warned the EU not to impose sanctions on Beijing, stating that it is for "normal exchange and cooperation" and that it will "protect" its companies and interests. He promised that Beijing would retaliate against EU sanctions, adding that China does not sell weapons to Russia and advocates for dialogue between Moscow and Kyiv to achieve peace. China's stance on dialogue, peace, and free trade is not surprising, as it is clear that this suits its interests more than any armed conflict. China's economy has found a recipe for success in recent decades and wants to continue on that path. But what is surprising, and likely shocking to Europe, is China's announcement that it will immediately respond to sanctions.

Trends and Announcements

The slowness of EU bureaucracy is well known, and it seems that only crises can force it to work faster. Complex decision-making mechanisms and internal consultations complicate work. However, in the case of China, it could be said that an exception is being made, as Germany's decision to confront China has accelerated things. Many European countries are not as tied to China as many states were, for example, to Russian energy resources. Brussels' decision to strike back at China, i.e., to curb its influence on its own territory, is a story that is about 18 months old.

In December 2021, the EU took an important step towards curbing Chinese influence on the European continent and in parts of Africa and Asia. By adopting the "Global Gateway" initiative, the EU decided to counter the "Belt and Road" initiative. The EU will invest $300 billion in its initiative, which, combined with similar initiatives from the US and the United Kingdom, will be enough to counter China. The initiative offers countries in Africa, Asia, and the Western Balkans €300 billion by 2027 for infrastructure development, digital industry development, combating climate change, investing in clean energy, education, science, research, and health, while promoting the values that the EU advocates (democracy, workers' rights, sustainable development). €145 billion will be provided by European institutions, and the rest by private investors.

The document does not mention China, but it is clear that it is the target. Immediately after the presentation of the document, European Commission President Ursula von der Leyen said that "countries that have experience with Chinese investments and with us know that we are different. They know that there are no traps or debts behind our investments. We have the private sector behind us, which is not the case with China." In other words, Brussels intends to offer partnership and money in exchange for freedom from Chinese presence.

Balkan Front

Pushing China out of Europe will be very difficult if Brussels engages in an open confrontation with Beijing. It will also be difficult within EU member states, such as Greece and Hungary, and even more difficult outside the EU and outside the continent, especially in Africa, in countries that are committed to partnership with China. In some countries, China has taken control of strategically important infrastructure facilities. In Greece, for example, the Chinese have bought the largest shipping port. The Chinese company Cosco has a 51% stake in the port of Valencia and a 90% stake in Zeebrugge (Belgium).

The Chinese have also entered the market of the so-called Western Balkans, i.e., Bosnia and Herzegovina, Montenegro, Serbia, North Macedonia, and Albania, with the exception of Kosovo, which Beijing does not recognize as an independent state. Chinese presence is particularly visible in Serbia. Serbian President Aleksandar Vučić calls the Chinese "brothers" and has allowed them to invest in various sectors of the economy, including roads and railways, mines, energy, and industrial production.

The approximately three billion dollars that the Chinese have invested or intend to invest in BiH and one billion in Montenegro in the last ten years testify to Beijing's increased presence in this part of the world. One of the reasons for Chinese investment in the Western Balkans also lies in the fact that their investments are not conditioned in any way, and governments have gladly accepted them. Therefore, if relations between Beijing and Brussels become strained, this part of Europe, which has been put on hold by all major geopolitical players in the world, could pay the price.

German Determination

Germany and Minister Baerbock are particularly harsh in their intention to show teeth to China. She publicly clashed in Beijing with Minister Qin Gang, who a few days earlier could have rejoiced over the positions of Emmanuel Macron, who stated that the EU should not take sides in the US-China conflict over Taiwan. Baerbock then acted like an expeditionary force that had to repair Macron's performance. She directly asked Beijing to pressure Russia to achieve peace in Ukraine, to respect human rights, and not to use force against Taiwan.

Such a German approach is not good news for China, as Europe's largest economy is an important partner for Chinese companies, and the volume of trade between the two countries last year was 236 billion euros, of which German imports amounted to 120 billion euros. In addition, Germany, under Angela Merkel, was against the EU following all US sanctions imposed on China and others. Olaf Scholz's government has clearly abandoned that approach.

Although China has stated that it will retaliate against possible European sanctions, this is not a favorable time for a possible clash with the EU, and there are several reasons for this. First, the sanctions that the EU has imposed on Russia, which have harmed European countries, indicate Brussels' readiness to act. Second, China has an economic surplus in trade with the EU of 395 billion euros for 2022. Third, the war in Ukraine could halt China's "Belt and Road" initiative in Moscow and Minsk and disrupt further economic integration with wealthy Europe. Although Beijing did not seek conflict, it has no choice but to await the decision of the West, which has been closing ranks since the beginning of the war in Ukraine. Thus, China could also pay the price for Russia's war in Ukraine.