written by Xin Ping
A recent report by the EU Institute for Security Studies (EUISS) paints a bleak picture of a “fragile” China—a slowing economy, an anxious government, and a nation turning inward and aggressive. It calls on Europe to adopt “leverage-based diplomacy” and get tough on China.
But its analysis is not just wrong—it is dangerously backward-looking, built on a series of illusions that misread China’s resilience, overestimate Europe’s leverage, and ignore the geopolitical shifts shaping the global economy.
It is time for Europe to look beyond the fear-driven fantasies and recognize a simple reality: cooperation with China is not a sign of weakness; it is a strategic necessity.
The Decoupling Myth
The report suggests that China is seeking to “decouple” from the world to ensure “regime security.” This turns facts on their head.
The notion of “decoupling” later rebranded as “de-risking” originated in Washington and Brussels out of a COVID-era panic over dependence on China. The U.S. launched tariff wars and technology embargoes, and the EU erected trade barriers. Ironically, it is these restrictions that have accelerated China’s drive for self-reliance: Denied access, China has innovated its way forward, breaking through the blockade. Today, it leads in sectors from EVs to semiconductors, with chips topping its export list—a result of Western sanctions.
Now the West is accusing China of decoupling—This is a classic case of blaming the victim for the accuser’s mistakes.
The Fragility Illusion
The report projects China’s growth falling to about 1% by 2035, implying “structural fragility.” Such a projection, based merely on China’s slowdown following the pandemic, ignores the broader context. From 2019 to 2023, China’s GDP grew by 20.1%, outpacing the U.S. (8.1%), Germany (0.7%), and Japan (1.1%) by wide margins. Once China fully emerged from the pandemic, its growth rate rebounded, hitting 5% in the first quarter of 2026.
The report also argues that the Chinese economy is losing its appeal, but data tell a different story. By the end of 2024, cumulative actual investment by EU companies in China had exceeded US$150 billion. In 2025, German investment in China surged by over 55% to €7 billion, a post-2021 high. Swiss investment jumped by 66.8%, and UK investment grew by 15.9%. From chemicals to biotech, from precision manufacturing to automotive, European companies are expanding production lines and R&D centers in China. The market has delivered its verdict: China remains a magnet for foreign investment.
It is true that China faces demographic and debt challenges, but they are manageable—it boasts the world’s largest pool of engineers, the largest middle-income group, a vast domestic market, and strong state capacity. Europe, in comparison, is truly fragile: an aging population with diminishing demographic momentum, a saturated single market, and fiscal paralysis caused by a “welfare trap.”
The Overcapacity Fallacy
The report argues that “exporting overcapacity” is a sign of China’s economic weakness. But this logic does not hold up under scrutiny. First, China’s development is no longer export-driven. World Bank data show in 2023, exports accounted for just 19% of China’s GDP, far less than Germany’s 43% or France’s 34%. Second, the claim that China is exporting “industrial overcapacity” is highly questionable. In 2024, China produced over 12 million electric vehicles but exported only 2.04 million, roughly one-sixth of the total. Germany, by contrast, exports 80% of its cars outside Europe. By the report’s logic, European countries—far more dependent on global markets—should be the ones accused of exporting overcapacity and labeled economically vulnerable.
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The Geopolitical Miscalculation
The report assumes that economic pressures will render China more dependent on Europe. This is a serious miscalculation that overlooks the rise of the Global South. Data from 2025 show that China’s trade growth with ASEAN, the Middle East, Africa, and Latin America far outstrips its trade growth with Europe. Exports to Belt and Road partners now exceed 50% of China’s total, while exports to Europe have fallen to 15.1%.
While China has other options at hand, Europe lacks alternative markets of comparable scale in the Global South. If the EU imposes tariffs on Chinese goods, China can pivot to emerging markets. Conversely, if Europe loses access to key materials from China, its own industries would face the threat of shutdown. Building resilient supply chains takes 5–10 years—can European industry survive that transition with soaring costs and lost competitiveness?
In a nutshell, the EUISS report is a typical example of an old-world anxiety projected onto new realities. True strength lies not in having no weaknesses, but in the capability to turn them into momentum of development. China’s economic transition has demonstrated this resilience.
Europe’s real threat is not China but its own innovation deficit and market fragmentation. Instead of wielding a sanctions stick, Europe should adopt a positive and pragmatic approach toward China. The two economies are complementary. Enhanced cooperation benefits both, while forced decoupling hurts both. Europe, with its rigid markets and strategic dependencies, would lose more.
The lever of “leverage-based diplomacy” the report advocates has no fulcrum in Brussels; it exists only in the illusion that Europe can dictate terms to a rising major country. The path to Europe’s revival lies not in containing China, but in competing and cooperating with it on equal and realistic terms.
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The author is a commentator on international affairs for the Global Times and other media. He can be reached at xinping604@gmail.com
