In the wake of Ursula von der Leyen's prescient speech on China, Europe finds itself at a crossroads. Three years ago, von der Leyen's wide-ranging address dissected the intricate and important EU-China relationship, warning of the economic risks and vulnerabilities inherent in the bloc's dependence on the Asian giant. While her analysis was clear-eyed and matter-of-fact, the subsequent reckoning has been anything but straightforward. The speech, delivered in March 2023, was a rare public intervention by an EU leader focused exclusively on China, a topic that was overshadowed by Russia's war on Ukraine at the time. Von der Leyen's main grievances lay on the economic front, highlighting China's distorting subsidies, unfair competition, coercive practices, growing imbalances, forced technology transfers, and monopoly over critical raw materials. She advocated for a brand-new approach: de-risking. These friction points are now at the center of a fast-moving reckoning inside the Commission as the glut of low-cost imports from China chokes the European economy, destroys jobs, and shuts down factories. The fear of de-industrialization is widespread across Europe, and von der Leyen's speech made the scope of the threat unequivocal. She warned of a push to make China less dependent on the world and the world more dependent on China, with the imperative for security and control trumping the logic of free markets and open trade. The speech was greeted with praise by analysts and commentators, who saw it as a clear-eyed analysis. However, Chinese officials denounced it as misleading and incoherent. Von der Leyen's core message, however, was aimed at the member states, who ultimately hold the cards. She urged them to respond collectively, but ironically, it was these very member states, caught up in their disagreements over Beijing, that did the most to undercut her core messages. Von der Leyen's plea to diversify trade was largely brushed off, and 2025 marked the first time on record that every single member of the bloc posted a trade deficit with Beijing. The member states' inability to agree on a common understanding of de-risking and their reluctance to foot the bill for moving away from China further exacerbated the situation. Von der Leyen's call for a 'bolder and faster' use of trade tools yielded mixed results. While the Commission succeeded in imposing extra tariffs on Chinese electric vehicles, the process was contentious and sharply divided member states. The Commission also unveiled initiatives to boost domestic production in certain sectors and exclude China's Huawei and ZTE from connectivity infrastructure. However, the Commission failed to convince member states to grant it greater powers to control sensitive exports, and its economic security strategy came and went amid political backlash. The Anti-Coercion Instrument, partially designed with China in mind, has yet to be triggered despite von der Leyen's accusations of blackmail. The disunity trap is a significant challenge. While some member states, like France and Belgium, have recently hardened their stance on China and urged stronger protective measures, the Commission is assessing the adequacy of existing trade weapons and the possibility of devising new ones. Von der Leyen, however, is well aware of the difficulties ahead. Beijing, as the world's second-largest economy, holds enormous sway over EU countries, with billions in goods, services, investments, and infrastructure projects at stake. The fear of painful reprisals from China looms large, casting a shadow over von der Leyen's grand vision. The EU is still reeling from the shock of last year's curbs on rare earth exports, and the prospect of tit-for-tat is the root cause of the intractable divisions among the 27 leaders. Although they all agree with von der Leyen's diagnosis, they are still reluctant to apply the medicine she prescribed. The fear of retaliation is such that leaders consistently avoid mentioning China by name in the joint conclusions of their regular summits. Instead, they tackle the topic as part of a wider point on geo-economics and competitiveness. The road ahead will be fraught with difficulties, and the Commission is working on a new concept that balances dialogue, fair competition, and access to the Chinese market with reciprocity. However, the disunity trap and the fear of retaliation remain significant obstacles. In my opinion, the key to breaking this cycle lies in the Commission's ability to orchestrate a carefully considered strategy that addresses the economic vulnerabilities and security risks inherent in the EU-China relationship while mitigating the fear of retaliation. This will require a delicate balance between assertiveness and pragmatism, and the Commission must navigate this tightrope act with skill and foresight.
