The EU should treat China strictly, according to the U.S. However, Europe cannot afford it

Despite calling China a "strategic adversary" on several occasions, the European Union is taking a different tack than the United States.

China was the third-largest consumer of European goods and the most significant market for imported EU goods in 2021, according to data from Europe's statistics agency.

When China's economy is suffering as a result of Russia's invasion of Ukraine, the role of China as a market for Europe becomes even more pertinent.

Presidents of the United States Joe Biden and France's Emmanuel Macron met there. Bloomberg | Getty Images

The United States wants Europe to join them in their harsh rhetoric against China. However, the bloc cannot exactly afford to act similarly.

Since President Joe Biden's election, the U.S. administration has placed a special emphasis on China, making it the main issue of international discourse.

Recently, there has been an increase in remarks and acts. For instance, U.S. Commerce Secretary Gina Raimondo stated on Wednesday that Beijing has grown to be a threat to American businesses.

In Europe, this message has been spread and embraced. According to reports, American officials advised their European colleagues to think about imposing export controls on China. When reached by CNBC on Thursday, the U.S. Commerce Department was not immediately available for comment. In October, the United States imposed limitations on Chinese access to a specific technology that was produced there.

However, while calling China a "strategic adversary" on several occasions, the European Union is taking a different tack than the United States.

"The EU is attempting to develop a unique China policy that is different from the American approach. According to Anna Rosenberg, head of geopolitics at Amundi Asset Management, this strategy aims to "de-risk" the partnership rather than "de-couple" it, she told CNBC on Thursday.

The term "de-coupling" describes the severing of the two superpowers' economic links. However, the EU does not have an interest in this.

China was the third-largest consumer of European goods and the most significant market for imported EU goods in 2021, according to data from Europe's statistics agency. When China's economy is suffering as a result of Russia's invasion of Ukraine, the role of China as a market for Europe becomes even more pertinent.

The EU is eager to retain economic relations with China, whilst the U.S. is attempting to sway the EU in its direction in order to separate itself from China. The economic effects of the war, which will have a more noticeable impact on European countries next year, have a tendency to intensify such desires, according to Rosenberg.

The stringent Covid-19 policy in China has resulted in "a lot of stalled demand," according to Hosuk Lee-Makiyama, director of the think tank European Centre for International Political Economy, who also told CNBC that "Europe doesn't have many markets" to cope with.

According to him, Charles Michel, the president of the European Council, traveled to China on Thursday in an effort to negotiate to be "first in line" when Beijing further relaxes its Covid regulations.

Early in November, German Chancellor Olaf Scholz also visited China.

In the short term, Rosenberg added, "We see the EU-China relationship genuinely improving, and Michel's current trip, coming so soon after Scholz's visit to China, is proof for this.

This occurs at a time when tensions between the EU and the US are beginning to rise. The transatlantic relationship is at its weakest point in 20 years, according to Lee-Makiyama.

European government representatives have expressed displeasure with the state subsidies being proposed by the American administration to encourage the use of electric vehicles. The EU said that this violates international trade laws and poses a risk to European businesses.

On Thursday, Biden and French President Emmanuel Macron conducted meetings in an effort to iron out some of these differences and avert a fresh trade conflict.

Source: CNBC