Buckle up folks. The coming months could be the most consequential for Europe’s relationship with China in years, perhaps decades. It is a near certainty at this point – even if Beijing were to make last-minute concessions in its ongoing talks with Brussels – that the EU will begin rolling out a series of new trade measures targeting China next month. This could quickly devolve into a full-blown trade war if Beijing responds with brute force. Still, the determination to act has never been higher in Europe.
This is because of a fundamental shift in how Germany has come to view the costs and benefits of economic engagement with China. In the span of a few months, the German chancellor, the CEO of Volkswagen, and Germany’s biggest union IG Metall have all called publicly for more robust trade measures against China. The fear of Chinese retaliation, in governments and boardrooms, is still there. But it is not the crippling fear of years past. In Berlin and many other European capitals, the cost of inaction is now judged to be higher than the cost of action.