Profiling European countries' resilience towards China

As part of the project “China Horizons – Dealing with a Resurgent China” funded through the Horizon Europe research and innovation program, MERICS has developed an assessment of 11 European countries’ vulnerabilities and resilience towards China. This Europe-China Resilience Audit is built on a database of 98 indicators covering the areas of economy, politics, security and society.

This quantitative exercise is complemented by a series of dedicated qualitative assessments of each country’s specific conditions and level of China resilience. These country profiles summarize the main trends identified in the database, and were reviewed by top China experts from each country. They include updated as well as new analyses, and they cover the following countries (in alphabetical order): Czechia, France, Germany, Italy, Hungary, Lithuania, Netherlands, Poland, Spain, Sweden and the United Kingdom.

Context 

Czechia’s China policy is among Europe’s most assertive. Reasons include China’s support for Russia and tensions amid Prague’s robust, if at times struggling, engagement with Taipei, but disillusionment with Beijing dates back further.

The China engagement strategy of former President Miloš Zeman did not deliver economically and was mired in scandal.  The CEFC corporation was the main conduit for Chinese investments. In 2018, CEFC chairman Ye Jianming, who doubled as a Zeman economic advisor, was detained in China and CEFC’s shares in Czech businesses were transferred to state-owned CITIC with overall Chinese investments into the country drying up. 

These shocks, paired with the Covid-19 pandemic, were among the key factors that prompted Czechia’s next government to develop robust ties with Taiwan and build up resilience measures towards China early on. 

In 2018, the Czech National Cyber and Information Security Agency issued a public warning on China-related cybersecurity risks. Czechia has since developed one of the strictest FDI screening mechanisms and significant cybersecurity capabilities. It is working on responses to foreign information manipulation and interference.

Key challenges

• Czechia has the highest dependence on Chinese imports as a share of GDP and share of overall imports of the countries analyzed. Yet, there are no public indications of Prague conducting a dedicated dependency assessment on China.
• Czechia had the highest dependence on tourists from China based on the share of overall tourism and tourism’s share of GDP before the pandemic compared to other analyzed countries (2.77 percent in 2019). But the numbers have fallen significantly since the severing of Prague’s city agreements with Beijing and Shanghai, halting direct flights connections, and the pandemic. Besides, Czechia is pursuing a tourism diversification strategy.
• As of 2022, Huawei equipment was not in use in Czechia’s 5G infrastructure, but Prague has yet to release 5G regulations allowing restrictions on high-risk equipment providers.

What makes it stand out

Like many Central and Eastern European countries, Czechia has relatively limited structural and economic ties with China. Its China policies are driven by the initiative of political groups or individuals, for instance ex-president Zeman. Abrupt policy changes are therefore possible at times of power transition. A thorough China assessment and broad strategy, which reportedly is in the works, are needed to build lasting consensus and protect resilience-building.

Czechia’s 2021 FDI screening mechanism is one of the strictest among the countries analyzed and a potential reference point for other EU member states. It covers both critical infrastructure and the media sector, setting low thresholds for investment notifications, and requires companies to seek approval of investments in military, selected dual-use and critical infrastructure sectors. It also considers the ultimate beneficial owners from non-EU countries. The legislation can serve as a reference point for other member states with less strict systems.

Czechia stands out for its cybersecurity measures, including numerous Computer Emergency Response Teams and regulations restricting the use of Chinese phones, equipment and applications by officials, offering a model to other countries.

Context 

France has long advocated for taking measures to address vulnerabilities vis-à-vis China at the national and European levels. It has made progress turning this goal into concrete action. However, progress does not equate to full success. Topics still to be addressed include knowledge and technology transfers, vulnerabilities in critical infrastructure, especially in logistics and telecommunications, and economic vulnerabilities. 

The 2024 French parliamentary elections displayed the differences between political parties on foreign policy, for instance on the Middle East. However, despite some divergences in their stance on China, there is consensus around the general principles of building a resilient country and fostering strategic autonomy, meaning the capacity for Europe to choose its dependencies. Contested policies towards China between the political parties will revolve around human rights and values; technological entanglement with China; Taiwan; and the best way to ‘de-risk’ the French economy by removing or easing economic dependencies on China and diversifying markets. France’s current political fragmentation will also diminish its position as a leader in European derisking initiatives.

Key challenges

• France is among Europe’s most deindustrialized countries, with significant economic dependency on China. France’s limited manufacturing capacities will pose a challenge as it balances between economic dependency and de-risking and reindustrialization efforts focused on the green and digital transitions. Although French companies are broadly supportive of these goals, there has been little tangible progress on competitiveness and reindustrialization.
• France is vulnerable on knowledge security, technology and arms transfers. France, for example, is the largest exporter of arms and other items with military uses to China among all the countries covered in this study. Transfers of knowledge and technology may well increase due to growing Chinese investments in France related to technologies and Chinese firms turning to France in reaction to their exclusion from the US economic eco-system. 
• France’s critical infrastructure has vulnerabilities, despite legislation to regulate China’s footprint and increased capacity to address this issue at national and local levels. Notable sectors where more needs to be done include telecommunications infrastructure and logistical hubs; Chinese firms also have substantial stakes France’s three most important ports.

What makes it stand out

France presents a unique case in building resilience of its society. The French society shows one of the highest levels of vulnerability. China’s penetration of the French media landscape, the high number of overseas police bureaus (four police stations, making France the country with the third most bureaus in this study) and several law enforcement cooperation agreements contribute to increasing vulnerabilities at the level of society.  

But while more efforts need to be deployed to boost resilience, the French government has already equipped itself with a legal framework aimed at protecting press freedom and has invested in building China capacity, deploying China experts in French government bodies and European institutions. It has also increased its capacity to tackle disinformation, and to fund China-related research. France has also passed due diligence and anti-forced labor legislations. This means that in the social sphere, France displays both high levels of vulnerability and a strong commitment to adopting resilience building measures.

Context

Germany’s discourse on China has shifted from faith in closer alignment through trade (“Wandel durch Handel”) towards an awareness that the deep economic ties between the two countries imply growing risks and challenges. In 2023, Germany published its first national “Strategy on China”. It provides a clear-eyed analysis of China related challenges, but lacks clear guidelines on building resilience. 

Europe’s largest economy is struggling to balance business and politics as well as national and European approaches. Leading politicians have divergent sensitivities to the warnings of Germany’s big corporates not to further complicate their already difficult business relations with China. There is little political will to pay a significant price for more resilience. But growing public skepticism towards China, the trajectory in Brussels and pressure from the US will keep the resilience debate high on the agenda. 

Key challenges

• Europe’s largest economy feels particularly vulnerable to disruptions in bilateral trade or business relations with China. Almost 7 percent of German exports go to China. For the large corporates, as well as medium sized technology providers, China is a key market – and increasingly a competitor.
• Germany is one of only three countries analyzed (the others being France and the UK) that still engages in high-level security and defense dialogues with China. 
• China regularly publishes English-language readouts of meetings with German counterparts, but Germany rarely publishes readouts in English. This enables China to shape the narrative and risks damage to Germany’s image and reputation as well as incorrect assessments of the German position by partner countries.

What makes it stand out

Germany is by far the most vulnerable European country to export-related issues, and among those with the most FDI in China as a share of GDP (2.61 percent).  However, many policymakers strongly believe in the importance of free markets for Germany’s export-oriented economy and are convinced that it is the country’s responsibility to resist any protectionist tendencies. All of this translates into hard struggles to reconcile national and European interests, as seen in Berlin’s recent opposition to European tariffs against highly subsidized Chinese electric vehicles.

To build up resilience, Germany seeks to diversify its political and economic relations in Asia. It has published both a China strategy and Indo-Pacific guidelines. All four major democratic political parties (SPD, CDU, Greens, FDP) have formulated positions on China, showing China’s importance across the democratic spectrum. However, while all parties agree on the importance of China, their approaches to existing and future potential challenges differ widely. The result is friction within the coalition government and more generally, which impedes increasing Germany’s resilience. 

Context

Hungary has the most consistently pro-Beijing policy of any EU country. In 2024, Beijing and Budapest signed an “All-Weather Comprehensive Strategic Partnership for the New Era”, one of China’s highest partnership levels. Only Russia has a higher one. Hungary itself lacks a formal China strategy, and it still operates under its 2010 “Eastern Opening” policy.

Prime Minister Viktor Orbán’s administration uses pro-Beijing gestures for economic gain, international leverage and to validate its domestic narratives of having alternative partners outside of the EU, which Budapest has been at odds with. 

In 2023, Hungary attracted 44 percent of Chinese FDI in Europe, mainly in EV investments. The 2024 memorandum of understanding on the peaceful uses of nuclear energy paves the way for China’s involvement in future nuclear power plants. Yet, China-linked projects like the Belgrade-Budapest railway or Fudan University’s Budapest campus (which remains dormant since 2021) face financial misconduct allegations.

Budapest criticizes the EU’s de-risking and resilience measures, and it echoes Chinese denials of overcapacity issues and Moscow’s views on Ukraine. It seems to plan to use Hungary's EU presidency (July-December 2024) to push for closer ties between Budapest and Beijing.

Key challenges

• Hungary has the highest FDI from China as a share of the country’s GDP (over 2 percent as of 2021) of the countries surveyed. The value likely more than doubled by 2022 with some estimations showing that Chinese FDI may amount to 10-15 percent of Hungarian GDP by 2026 once the major investments concentrated in EVs and batteries are concluded. This offers a clear pressure point for Beijing.
• Hungary’s critical infrastructure is open to Chinese actors, despite strong FDI screening legislation. At least 53 percent of 5G networks run on Huawei equipment (there is no 5G legislation restricting high-risk vendors) and Chinese involvement in future nuclear energy infrastructure is probable. Notably, the 5G networks were developed by European companies like Deutsche Telekom, Vodafone and Yettel.
• Despite 61 percent of the public holding unfavorable views of China, Hungary has the highest percentage of cities with subnational links to China (70.59 percent of cities over 50,000 people). This suggests a disconnect between official ambitions and overall public sentiment.
• Hungary signed a dedicated law enforcement cooperation and joint patrols agreement with China in February 2024 (details remain undisclosed) which raises concerns it could become a base for Chinese actions across the Schengen area and put the Chinese diaspora at greater risk.

What makes it stand out

Hungary has several policy instruments to build national resilience, such as FDI screening with low thresholds for mandatory notification, national due diligence regulations, and a ban on foreign funding of political parties. 

These tools lack impact, however, as the government’s priority is expanding relations with Beijing. Merely introducing such measures is insufficient and cannot be treated as the only benchmark of success in resilience-building.

For instance, Budapest frequently releases readouts in English of engagements with China. Yet, joint statements from high-level dialogues show it embracing key CCP concepts such as the “great rejuvenation of the Chinese nation”, “one-China principle” and Beijing’s Global Development, Security and Civilization Initiatives. 

Such stances undermine the EU’s coherence and the diplomatic leverage required for building resilience. Hungary vetoed six EU statements critical of China between 2016-2022. Hungary’s radical pro-China stance risks diverting attention away from less blatant yet still problematic positions within the EU27 that can also undermine resilience building. 

Context

Italy lags behind other countries surveyed in building resilience towards China, but Prime Minister Giorgia Meloni’s government has continued with the work in this space initiated by previous administrations. Although China is still not a foreign policy priority for Italy, since she took office, Italy has adopted a more European and trans-Atlanticist approach and taken a few top-down decisions to reduce dependencies on China.

Italy, for example, opted not to renew its official participation in China’s Belt and Road Initiative (BRI), letting the memorandum of understanding lapse in late 2023. Meloni’s government said BRI membership had failed to narrow Italy’s trade deficit with China. Rome has successfully managed to avoid Chinese retaliation as a response, and it is currently seeking to attract Chinese investments into the country’s automobile industry.

However, attention to resilience risks being temporary, given Italy’s limited cross-party consensus and lack of any clear strategy towards China. The populist Five Star Movement and parts of the center-left Democratic Party are traditionally more China-friendly, and some Italian companies still see the Chinese market as a source of opportunities, so business interests or political changes could hinder any future progress.

Key challenges

• Italy’s foreign investment screening mechanism adequately covers critical infrastructure, yet Chinese companies are still relevant players in the country’s seaports and electricity and gas grids, with some of their investments predating the strengthening of the Golden Powers legislation, which gives the Italian government the power to limit or veto foreign direct investments or transactions involving strategic assets. (No other country in this study has Chinese investment in its electrical grid.) There is a need to build political consensus across parties and the business sector on China-relations and vulnerability assessments. Without political will, legal instruments alone are not enough to tackle vulnerabilities. 
• Neither Italy’s government nor parliament focus much on China. Italy does not have a formal China – or even Indo-Pacific – strategy. The lower house of parliament had the lowest number of votes and interventions on China of all countries surveyed here for which data is available. 
• Italy has one of the highest economic dependencies on Chinese tourists, with Chinese tourism revenue equal to around 2.4 percent of its GDP in 2019 (prior to the disruptions caused by Covid-19). Italy has not developed strategies to diversify visitors’ countries of origin.

What makes it stand out

Beyond the economic sphere, Italy’s work on de-risking vis-à-vis China is only just starting. The process has been largely led by successive governments, with little institutionalization – so far – of objectives or approaches. Italy lacks a China strategy or a publicly available national security strategy. With Italy’s ever-changing governments, there is a limit to how much the small number of bureaucrats who deal with China officially can do to maintain a stable approach to China. 

Italy has low dependence on Chinese imports, exports and investment so could de-risk trade and finance ties without jeopardizing economic stability. But the focus on maintaining positive economic ties with China, while attracting Chinese investments into the country and hopefully reducing Italy’s trade deficit with China – which was in 2023 the fourth largest in the EU, standing at over EUR 28.4 billion – could hamper these efforts.

Context 

Lithuania is one of the least China-vulnerable countries surveyed. This stems largely from a deterioration of bilateral relations since 2021. China’s footprint shriveled after Beijing imposed economic and political measures to pressure Lithuania to revert its decision to withdraw from the regional format China-CEE 17+1 grouping (now 14+1) and to open a Taiwanese representation office in Vilnius.

But in 2023, Vilnius indicated that China’s economic coercion had subsided and expressed a desire to normalize relations with Beijing. Following the October 2024 elections, which brought the Lithuanian Social Democratic Party to power, this direction appears increasingly likely, with polling suggesting that stabilizing relations with China could be popular among the public. A 2024 study from the Lithuanian think tank Eastern Europe Studies Centre found that 59.4 percent of those questioned said good relations with China would benefit Lithuania. The country’s vulnerability towards China could easily increase as it arises from frosty bilateral relations that are yet to spur into robust domestic resilience measures. 

China-Lithuania relations are not yet on a positive trajectory, despite Vilnius’ will to normalize the relations signaled already in 2023. The EU-China WTO case over trade discrimination and coercion remains open but suspended. The Chinese mission in Vilnius has stopped issuing visas and prior to the October elections there were fears of Chinese interference. Taiwan remains a divisive question for Lithuania, as it has invested in a relationship with the island hoping for economic or strategic benefits that are now closely scrutinized, but major shifts in Vilnius-Taipei dynamics remain unlikely. 

Key challenges 

• Number of China experts in academic institutions, think tanks and government bodies appears very limited. Improving this situation should be seen as a priority to foster resilience and would help shape public China debate in a more nuanced way.  
• Chinese investment in Lithuania is low, at 0.07 percent of GDP. Lithuania has yet to equip itself with an FDI screening mechanism that is adequate to deal with potential growing Chinese investments in future. The existing mechanism does not cover all critical infrastructure sectors under the EU’s definition and sets a high threshold to review investments to acquire above 20 percent of a company.
• The future trajectory for Lithuania’s relationship with China following 2021 spat requires deep discussion across the political spectrum to develop a long-term strategy that can be sustainable. All major political parties are represented in the commission dedicated to China in Lithuania’s parliament and four of the top five parties mention China in their most recent election manifestos. 

What makes it stand out

Lithuania has the lowest degree of China-related vulnerabilities for unique reasons, rooted in the deterioration of the bilateral relationship since 2021. 

However, a low degree of vulnerability does not equal to a high degree of resilience and measures in place. The value of some legacy agreements such as the Memorandum of Understanding on the Belt and Road Initiative (BRI) and extradition treaty with China could be subjected to review. Lithuania should use its unique experience of Chinese economic coercion and its impact on the public opinion to build domestic resilient mechanisms, especially if bilateral relations were to change.  Furthering the discussion on Chinese economic coercion at the European level could also foster debate on derisking in other European capitals. 

Context  

The Netherlands has pushed for EU resilience-building efforts and Dutch national debate on resilience is closely linked to the European approach. The national intelligence service AIVD’s 2023 report called China the “biggest state threat” besides Russia. National economic security policies are mostly country-agnostic, but China is top of mind. Political awareness is also relatively high: all major parties’ manifestos for the 2023 elections discussed China, except for the Party for Freedom (PVV), which became the largest party in the House of Representatives in 2023.

Dutch firm ASML’s advanced lithography devices hold a ‘choke-point’ position in the global advanced chip production supply chain, so The Hague has found itself under US pressure. It has put export restrictions on sales of advanced microchip manufacturing tools to China. The Hague passed new legislation  on screening foreign direct investment (FDI), mergers and acquisitions in 2022 and has an Economic Security Contact Point for Entrepreneurs. Its institutional framework on knowledge security means it is relatively well-positioned to deal with vulnerabilities in China-relations.

Key challenges  

• The Netherlands lags behind in building resilience around critical infrastructure: In 2022, Huawei participated in almost 75 percent of Dutch 5G infrastructure. So far, no regulation exists on the use of Chinese technology in institutional buildings. Chinese surveillance technology is in use, although Amsterdam recently pledged to remove Chinese-made cameras across the city.
• The Netherlands’ FDI in China as share of its GDP is 3.68 percent, the highest of all the countries surveyed.
• The Netherlands does not publish readouts of meetings with foreign, including Chinese, counterparts in English, whereas China does. This enables China to shape the narrative and risks damage to The Netherlands’ image and reputation as well as incorrect assessments of the Dutch position by partner countries.

What makes it stand out

The Netherlands is doing particularly well in resilience building connected to knowledge security. Besides the UK, it is the only country with both guidelines and a dedicated institution for national knowledge security; the National Contact Point for Knowledge Security, established in 2022.  

Considering its small population, Dutch government-affiliated think tanks have a comparatively high number of China experts and hence a knowledge-bank to formulate China policy. The Dutch China Knowledge Network (CKN) is also worth mentioning. It is a network to connect China experts and disseminate knowledge within government and beyond. It is a good example of pooling national human resources and could serve as inspiration for other European countries seeking to build up their China capacity. 

Context

China policy seems to be a consensus topic amid Poland’s divided politics and Warsaw’s approach to Beijing has been broadly maintained despite government transition in October 2023 election, which returned pro-EU, centrist prime minister Donald Tusk to power.  Warsaw’s China policy seeks to navigate between security concerns and economic hopes. President Andrzej Duda leads on diplomatic engagement whereas the resilience-building portfolio remains with prime minister Tusk’s administration.  

Poland has strategic security concerns, given Beijing’s support for Moscow, China’s joint-military exercises with Russia and Belarus, and China’s competition with the United States, Poland’s main security guarantor. But Warsaw sees economic potential in the logistics services and customs income from being the EU entry point for the China-Europe railway. It also hopes to boost its meat, dairy and fruit produce exports to China, as well as attract Chinese EV manufacturers, despite the underwhelming experience with the China-CEE framework (currently 14+1) that failed to bring export opportunities and investments that Warsaw hoped for.

China-related risk assessments may be taking place quietly, for instance on restricting Chinese investment in the port of Gdynia or evaluating Poland’s reliance on rare earth imports for its battery sector (it has 9 percent of global lithium battery production). However, Warsaw has not conducted publicly visible dependency assessments and lags also on other policy actions such as a 5G regulation or mentions of China in strategic documents.

Key challenges  

• Poland lacks official China or Indo-Pacific policies to set priorities in its relationships or participate in the development of EU China policy. It has the lowest number of references to China in its National Security Strategy among the countries analyzed that have a public document, scant parliamentary interest and limited public debate on China. However, comparatively, Poland has a strong bench of China expertise for state institutions to draw on.  
• Poland’s FDI screening mechanism does not cover all critical infrastructure sectors recommended by the European Commission, has high notification thresholds and overlooks the media sector. Warsaw has delayed the release of a high-risk 5G vendors regulation and has yet to release dependency assessments or plans for diversification of its imports and exports.
• Poland’s strong focus on expanding agricultural exports can undermine China-resilience as that sector has been most frequently exploited by China for economic coercion. Poland is among the least dependent on direct exports to China as a share of GDP and as a share of overall exports (0.57 and 1.03 percent respectively), second only to Lithuania. Yet, when it comes import dependence, Poland is among the most dependent countries both as a share of GDP and as a share of overall imports (6.28 and 12.13 percent respectively), second only to the Czech Republic.

What makes it stand out

Poland’s China policy navigates contradictory priorities without clear, strategic guidelines. Warsaw’s focus on boosting agricultural exports constrains its ability to coordinate credibly with the EU and other like-minded countries on countering China’s support for Russia’s war in Ukraine, a topic Warsaw has a strong stake in. The balancing act between economic opportunities and security creates political roadblocks to publicly visible resilience-building policies, as with the 5G regulation.  

Scant public debate on China in the media and parliament weakens safeguards on the country’s China policy and reduces prospects for whole-of-society resilience building (e.g. including civil society and NGOs).  

Yet, Poland has issued timely, clearly worded readouts from its engagements with Chinese officials on working level, and messages to Beijing on Russia’s war. For instance, during the visits of China’s Special Representative for Eurasian Affairs in May 2023 and March 2024, Poland’s foreign ministry insisted on the distinction between Russia as aggressor and Ukraine as victim and underlined its “disagreement with any attempts to justify aggression with so-called "legitimate security concerns". Such clear phrasing may not make Beijing change its own perspective but is helpful for messaging and signaling of European resolve which can affect Beijing’s cost-benefit calculations when it comes to supporting Moscow. 

Context  

Spain’s China and resilience policies often originate in Brussels. China is still not a priority in Spanish foreign policy. Madrid lacks a formal China strategy, a deep bench of China expertise within the administration, or strong public debate on China. Madrid’s core focus is on trade relations and narrowing the trade deficit, ideally by attracting Chinese battery- and car-making plants (hence its strong support for EU tariffs on Chinese EV imports).

Madrid seldom takes a leading role in Brussels on other China topics, though it tends to endorse EU decisions and implement them quickly. Hence, resilience building measures have been implemented in several policy areas despite the lack of national discussion. Spain has strengthened its investment screening mechanism since 2022, and – unusually – it has imposed unilateral export controls on dual-use technologies (quantum computing-related) that exceed the EU’s Dual-Use Regulation.

Spain has maintained a remarkably consistent China policy by following the EU’s lead, helped by a broad cross-party China consensus which is largely shared by the private sector.  

Key challenges  

• Spain has more law enforcement cooperation agreements with China and Hong Kong than any other country analyzed. None have been suspended since the 2020 suppression of protests and civil rights in Hong Kong (unlike in Germany, France, the Netherlands and the UK). Spain is also the only country in this study that has extradited Taiwanese nationals to the PRC.
• Spain has strengthened measures to increase resilience in its critical infrastructure. But earlier Chinese investments, especially in some of its biggest seaports like Barcelona or Valencia, still create vulnerabilities. A similar picture emerges from Spain’s significant imports of Chinese surveillance technology (second only to the UK in overall numbers), which presumably remains installed.
• Spain lags behind on issues of knowledge security, research collaboration and unwanted transfers of technology. No national-level regulation, guidelines or even sets of recommendations yet exist in this space.

What makes it stand out    

Spain has relatively low economic exposure to China, especially compared to other big EU member states. Exports to China make up only 0.71 percent of its GDP, and imports from China 2.92 percent. It also has very low levels of FDI in China and Chinese FDI in Spain is similarly low, partly because of Spain’s stringent foreign investment screening regulations, which set the lowest thresholds for mandatory transaction notifications of all countries analyzed, jointly with the Czech Republic. This has enabled Madrid to skirt some of the harder questions about economic resilience and de-risking which are contentious in other countries.  

Spain also stands out for its transparency. It is the country in this study with the most publicly available, official data on issues from dual-use exports to the number of government officials working in and on China.

Context  

Sweden’s views on resilience towards China are closely tied to EU debates. Sweden’s recent accession to NATO has sharpened its overall focus on security. However, Sweden shifted its perspective on security well before Russia’s full-scale invasion of Ukraine. In the context of Sweden-China relations, this was caused by several incidents, including the abduction of publisher Gui Minhai, a Swedish citizen, by Chinese agents in Thailand in 2015 and the year-long tensions between Ericsson and Huawei. In its 2023-2024 annual threat assessment, Sweden’s security service (Säpo) placed China – with Russia and Iran – among the “greatest threats to Sweden”. The most recent National Security Strategy of July 2024 calls for dialogue and trade with China, while emphasizing the need to strengthen Sweden’s economic security and resilience by reducing risks and dependencies on China.

Sweden has taken many measures to minimize its vulnerability towards China. It is now better positioned to deal with China frictions than most other countries analyzed here, at least in critical infrastructure protection and political decision-making.  

Key challenges

• There is still no ban in place on foreign donations to political parties, but the government is investigating reform of this policy area in accordance with international recommendations.
• At 1.45 percent, Chinese FDI to Sweden (as share of GDP) is relatively high, and second only to Hungary compared to the other countries analyzed.
• Gui Minhai is still detained in China, making Sweden one of only a few countries in this study facing an ongoing, publicly known case of hostage diplomacy.  
• Unlike most others in this study, Sweden (along with Hungary and Czechia) does not have any transparency register on representation of third countries’ interests.  

What makes it stand out

Sweden is among Europe’s most successful countries in minimizing vulnerability in critical infrastructure. Huawei and ZTE investments and equipment have been banned from Sweden’s 5G network since 2020. China’s presence in Sweden’s energy sector is limited and imports of Chinese surveillance technology are low. A comprehensive FDI screening law covers “protection-worthy activities”, including the critical infrastructure sector.

In 2023, Sweden was the only country surveyed here besides Lithuania that did not have meetings or exchanges with China at foreign minister level or above, a situation that can reduce vulnerabilities or create risks from lack of dialogue.

Sweden has invested in a national knowledge center on China, the Swedish National China Centre, established in 2021. It has the highest number of China experts in government-affiliated think tanks of any country analyzed. Swedish municipalities and regions have terminated or paused most sister city agreements. All Confucius Institutes have been closed.  This on the one hand decreases vulnerability risks, but on the other also reduces low-level engagement opportunities between the Swedish and Chinese publics.

Context  

The UK-China bilateral relationship has undergone dramatic changes from the trade-focused ‘Golden Era’ of David Cameron’s premiership (2010-2016) to the current reappraisal of China as a systemic challenge. Beijing’s handling of Covid-19, its crackdown in Hong Kong and support for Russia in Ukraine have all contributed. In 2022, then-Prime Minister Rishi Sunak called for an end to the naïve idea that more trade would bring reform in China.

The UK has increased its China-related capacity-building and accelerated de-risking and resilience work, along similar lines to the EU. The UK has one of the highest levels of exposure to China, from the perspective of economy to academic and social exchanges.

The new Labour government, elected in July 2024, has committed to an audit of UK-China relations to identify the challenges China poses. The process is likely to increase the focus on risks and resilience and generate stronger cooperation with allies and partners on these issues. Prime Minister Keir Starmer, however, also communicated to Xi Jinping during their first call that he wished to continue exploring opportunities for economic collaboration.

Key challenges  

• The UK’s critical infrastructure has some of the highest rates of Chinese investment and involvement of all countries analyzed here. Huawei is still present in its 5G networks (although it must be removed by 2027), there is substantial Chinese investment in its biggest seaports, and Chinese firms in the energy sector, including nuclear power plants. The UK’s investment screening mechanism is one of the least stringent in this study in terms of mandatory notification thresholds and its coverage of critical infrastructure and other key sectors.  
• The UK ranks highest for research collaboration with China, with over 70,000 joint papers between British and Chinese institutions on critical technology-related topics between 2010 and 2023, carrying a heightened risk of unwanted technology and know-how transfers.
• The UK has one of the highest dependencies on China when it comes to imports. The UK has a dependency on China in 54.6 percent of its total imports from China. Levels of investment in China or from China are relatively low, but British investments in Hong Kong account for almost 3.5 percent of the UK’s GDP.  

What makes it stand out

The UK has not been bound by EU regulations since it left the EU, so its approach to resilience represents an interesting comparison case. The UK stands out from the 10 EU member states surveyed here for its government’s recent focus on tech and research security. It has full bans on the use of Chinese technology by government officials and in government buildings.

The UK has also put in place strong national-level knowledge security guidelines for academia in 2019 (through the National Protective Security Authority’s Trusted Research project) to tackle the potential risks of close research collaboration with China.  These guidelines have been expanded and updated multiple times since, and the government also set up a Research Collaboration Advice Team in 2022 as a first point of contact for academics seeking official advice on international research collaboration. Despite the non-binding nature of these guidelines, the UK is one of the only countries in this study with such a comprehensive approach in place. Yet research collaboration with China in critical technologies remains high, speaking to potential issues with implementation.

Similarly, the UK has launched a cross-government process (called the Criticalities Process) to collect data on its critical infrastructure and assess risks. No similar risk-focused process exists, at least publicly, in the other countries analyzed here.

This MERICS analysis is part of the project “Dealing with a Resurgent China” (DWARC) which has received funding from the European Union’s Horizon Europe research and innovation programme under grant agreement number 101061700.

Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union. Neither the European Union nor the granting authority can be held responsible for them.