Can Europe afford to stand up to China?

Encyclopedia of Opinion

Question: Can Europe afford to stand up to China?
Position‹2 of 2: No, Europe cannot afford to stand up to China
Argument1 of 7›: Fear of economic retaliation

China's position as a global economic powerhouse means it has substantial leverage to retaliate against European interests, from tariffs to restricting access to its massive market.

The argument

European governments have watched China punish smaller economies for political defiance, and the lesson has not been lost on them. When Seoul deployed an American missile-defence system in 2017, Beijing curtailed Chinese tourism to South Korea and squeezed Korean firms operating in China until the retailer Lotte was effectively forced out of the market. When Australia called for an independent inquiry into the origins of Covid-19 in 2020, China responded with tariffs on Australian barley and wine and informal bans on coal and other exports. When Lithuania allowed Taiwan to open a representative office under its own name in 2021, Lithuanian goods began disappearing from Chinese customs systems, and multinationals were pressured to purge Lithuanian components from their supply chains. Europe's exposure to the same treatment is far larger. China is one of the European Union's biggest trading partners, German carmakers earn a substantial share of their profits in the Chinese market, and European manufacturing depends on Chinese inputs from rare earths to batteries and pharmaceutical ingredients. A serious confrontation — over Taiwan, human rights or market access — would invite retaliation against precisely these dependencies, and the pain would fall unevenly across member states, straining the unity any common policy requires. That fear already shapes European behaviour. Governments soften language, delay measures and lobby Brussels against escalation to protect national commercial interests. An actor that flinches in anticipation of economic punishment cannot credibly threaten to impose costs on Beijing. The fear of retaliation, on this argument, means Europe cannot afford to stand up to China.

Premises

[P1]China has repeatedly used trade restrictions to punish states that defied it politically, as South Korea, Australia and Lithuania experienced. [P2] Europe's largest economies depend heavily on Chinese markets and supply chains, so equivalent retaliation against Europe would be far more costly. [P3] The anticipation of that pain already makes European governments soften their positions and resist acting in unison against Beijing. [C] Therefore, fear of economic retaliation means Europe cannot afford to stand up to China.

Counter-arguments

The dependency runs in both directions. China relies heavily on the European market for its exports and on European technology, capital goods and expertise, so retaliation is costly to Beijing too and has practical limits. The cited cases cut the other way as well: Australia absorbed the coercion, redirected much of its trade and saw exports largely recover, while coordinated EU action would spread any cost across the bloc rather than isolating one state. Fear shaping behaviour is not the same as inability to act; Europe choosing not to stand up is a political decision, not an economic impossibility.

Rejecting the premises

[Rejecting P2] China's own reliance on European markets and technology means equivalent retaliation would be costly to Beijing, limiting how far it can push. [Rejecting P3] That governments currently soften their positions reflects political choice, not a demonstrated inability to bear the cost of acting together.