With the European Parliament elections resulting in a marked shift to the right and a right-wing majority within the heads of states of the European Council, changes in numerous policy areas, including industrial policy, collective defense, and the Green Deal, are expected. European Commission President, Ursula von der Leyen, is currently receiving nominations for Commissioner posts, but the nominee for High Representative for Foreign Affairs and Security Policy has already been named. Kaja Kallas, who until recently served as the Prime Minister of Estonia, is expected to survive a grilling by the European Parliament and see her nomination confirmed. The results of the elections, as well as the pick of Kallas as Europe’s new foreign policy chief, raises interesting questions for the future of the Europe’s approach to China.

Although European foreign policy is still largely dictated by individual member states, the EU’s Common Foreign and Security Policy, alongside significant devolution in trade, allows Brussels to flex its muscles. With the Russian Invasion of Ukraine accelerating a push towards security and a perception that Europe has fallen behind in the global economy, the elections point to a confirmation of an emerging policymaking consensus: the newborn competitiveness agenda and Europe’s relationship with China go hand-in-hand.

European Commission President von der Leyen’s European People’s Party (EPP) was the winner of June’s elections in terms of seat share, and will likely hold a plurality of Commissioner posts in the College of Commissioners. Holding significant agenda-setting and legislative power, the EPP’s election manifesto mentions “China” more times than “Russia”, underscoring the former’s rapid rise as a political priority. Labelling China as “systemic competition”, the manifesto contextualizes its entire economic section on the outpacing of Europe’s share of world GDP by China, while making clear that “our general approach towards China is to de-risk, not decouple”.

But what does this latest buzzword really mean?

Von der Leyen coined the term “de-risking” in a January 2023 speech at the World Economic Forum, delineating Europe’s approach towards China in contrast to the more hardline ‘decoupling’ strategy of the United States. Yet it seems that this distinction is almost entirely cosmetic, rather than a reflection of tangible policy differences. Indeed US National Security Advisor, Jake Sullivan, adopted the phrase as soon as April 2023. De-risking is generally understood to mean a reduced reliance on a single supplier or market (i.e. China) for key strategic sectors, typically including semiconductors, biotech, AI, and green technologies. The scope of change in protectionist trade policy and industrial policy necessary to achieve such goals remains to be seen and continues to be a subject of debate, but the more conservative European Parliament is likely to call for an increasingly expansive use of trade instruments to counter strong Chinese competition.

However, the Commission’s recent decision to impose provisional duties of up to 37.6% on imports of electric vehicles from China, could end already up being the starter-gun for a wider China-EU trade war. Foreshadowing possible retaliation, China launched an anti-dumping investigation into European pork imports in June. The EV duties, which could become permanent, aim to entice Chinese carmakers to manufacture in Europe, bolstering industrial capacity and jobs, while luring European firms to reshore and ‘de-risk’ Europe’s production of EVs critical to the green transition.

This protectionist measure is unlikely to dent the rise of Chinese electric vehicle manufacturers such as BYD, who some say will emerge as a “relative winner” and could cut prices further to gain market share in Europe. De-risking as a wholesale strategy, however, has also been criticized, with an IMF analysis showing that lower-income economies, particularly in Asia, would suffer from “significant drag on growth […] even assuming no new trade restrictions”.

Meanwhile Kallas, who will set the tone for Europe’s foreign policy, is a well-known Russia hawk, but her stance towards China remains somewhat elusive. Although noting her relatively moderate approach to China as Prime Minister of Estonia, some have suggested that Kallas’ strong position against Russia will lead to a similarly confrontational approach to China. In the context of China’s renewed ties with Russia, frequently described as a “marriage of convenience”, Kallas could emerge as the loudest anti-China voice in the new Commission, perhaps contrasting with a more temperate and cordial von der Leyen, who holds drastically greater concrete policy influence.

Kallas’ predecessor, Josep Borrell, was known for having, at times public, disagreements with von der Leyen over various foreign policy issues, most notably on the Israel-Palestine conflict. As opposed to Borrell’s leftist instincts, with a nod from Berlaymont, Kallas could carve out a new, more combative space on the opposite side of von der Leyen’s usual foreign policy positions that also supplements the Commission President’s pro-transatlantic alliance lean.

Yet Europe is facing a dual economic challenge of not only China, but also a robust US economy fired by the Inflation Reduction Act and renewed protectionism. It may be wiser for Europe to play offense, instead of dealing defensive cards that provoke more powerful actors. As Mario Draghi’s upcoming report on European competitiveness is likely to outline, Europe needs a comprehensive industrial strategy to fuel public and private investment in critical sectors, which indeed may necessitate an increase of the EU’s budget. Such an approach would unleash Europe’s economic potential, while achieving a socially just Green Deal and keeping trade barriers down. Maintaining key relationships in an era of multipolarity could place Europe in a unique position of diplomatic equidistance, that could aid to bring peace to conflicts in desperate need of dialogue.

Notwithstanding, it seems likely that a more right-wing parliament, together with a more fervent voice against Putin’s aggression in the Commission, will only push Europe, at least rhetorically, towards a more inflammatory path in its relationship with China. The European Union is also at an economic crossroads and could embark on a journey of large-scale reindustrialization. Europe’s material China policy faces a more uncertain future, but it will be largely determined by its choice of economic strategy to either embrace a narrower industrial policy that revitalizes Europe’s economic base, or combine such ambitions with the same protectionism it worked so hard to rid the world of only last decade.