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Kim Bo-eun

The European Union appears to be increasingly reaching out to economies in Asia, as the world’s largest trading bloc reassesses its economic ties with China and seeks greater engagement with the Indo-Pacific region.
The EU Council, composed of government ministers from each EU country, endorsed its Indo-Pacific strategy in October and has been accelerating moves to bolster ties with economies there.
In a time of escalating tensions between Washington and Beijing, Brussels is weighing the risks of relying so heavily on China in its supply chains.
EU alliances with Japan and South Korea have also been highlighted amid the protracted war in Ukraine, as they are among the few Asian nations to have slapped sanctions on Russia.
European companies look to pull investments out of ‘volatile’ China
Late last month, German Chancellor Olaf Scholz visited Japan, rather than top trading partner China, during his first official trip to the Asia-Pacific region.
Without explicitly referring to China, Scholz has flagged the risks of supply chains being concentrated in a single country.
The EU also has concerns about China’s stance on Russia’s invasion of Ukraine – Beijing has refused to condemn Moscow’s aggression.
President Xi Jinping and his Russian counterpart, Vladimir Putin, also issued a joint statement in February saying there was “no limit” to the friendship between their two countries. This subsequently set off alarms in the West following Russia’s invasion, as some feared it could result in China providing military aid to Russia, or might perhaps help it evade sanctions.


Beijing could face secondary sanctions if those situations come to fruition, but this would be equally damaging for its key trading partners, including the EU.
European Council President Charles Michel and Commission President Ursula von der Leyen are expected to visit Tokyo this week for an EU-Japan summit, and this would mark their first trip to East Asia since they assumed leadership of the EU before the outbreak of the coronavirus pandemic. Japan is the EU’s second-largest trading partner in Asia after China.
There have also been voices pointing to the need for Europe to strengthen ties with South Korea.
“It is no exaggeration to say the EU sees South Korea, together with Japan, as its most valued partner in Asia and the Indo-Pacific,” said a report published by the Brussels School of Governance last month.
Stay or go? South Korean firms ask if it’s still worth operating in China
The report referred to the fact that South Korea is the only country in Asia that has three key agreements covering politics, economic and security cooperation with the EU signed and in effect.
“Stronger South Korea-EU relations would help both partners manage the central geopolitical question of our time: how to address China’s rise and concomitant Sino–American rivalry,” it said.
Greater economic cooperation could follow. South Korea will reportedly provide five carriers’ worth of liquefied natural gas to Europe, where an energy crisis looms while the region seeks to cut dependency on Russia.
US President Joe Biden said his country was working with allies such as South Korea, Japan and Qatar to assist Europe with the energy shortage. The EU has largely depended on Russia for energy but is taking measures to cut supplies because of its invasion.


The Brussels School of Governance report proposed that South Korea and the EU develop a green partnership, promote digital cooperation and update their bilateral free-trade agreement that took effect in 2011. It was the EU’s first free-trade agreement in Asia.
For countries such as South Korea, there are uncertainties about how the formation of stronger ties with Europe will play out against the backdrop of the US-China power struggle. South Korea relies on the US for security, but on China for its economy, as China is by far its largest trade partner.
Korean president-elect Yoon Suk-yeol, who will be sworn in on Tuesday, has signalled that his government will boost its alliance with the US while seeking to reduce economic dependency on China by diversifying trade partners, including countries in Southeast Asia.
“Following the war in Ukraine, South Korea will continue to base its security arrangement on its alliance with the US, with a focus on expanding and strengthening economic and security cooperation with allies in the Asia-Pacific region in order to maintain peace and stability in the region,” Fei Xue, an Asia analyst with The Economist Intelligence Unit, told the Post.
‘No signs’ South Korea ditching China market, despite new ‘pro-US’ president
However, experts also note that diversifying trade partnerships will be a challenge for Seoul.
“Given that the roles of Europe, China and Southeast Asia in trade with South Korea are different, strengthening trade with Europe and being able to reduce reliance on China appear to be two different matters,” said Moon Jong-chol, a research fellow with the Korea Institute for Industrial Economics and Trade.
He noted that trade between Korea and the EU focuses largely on tech-intensive items and luxury consumer goods. Formerly, Korea relied heavily on China for labour-intensive production, but this has been shifting to countries in Southeast Asia, due to rising costs in China. Korea now mainly imports intermediate goods in electronics and raw materials from China.
India is another country Europe is increasingly turning to. UK Prime Minister Boris Johnson visited India last month to discuss trade and security, and the EU is seeking a free-trade agreement with India.
Meanwhile, the US is eyeing greater influence in the Indo-Pacific region to counter China’s clout there, via the Indo-Pacific Economic Framework. The region accounts for about half of the world’s population, economic output and trade.


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German Chancellor Olaf Scholz (in black mask) visited Japan last month, rather than top trading partner China, during his first official trip to the Asia-Pacific region. Photo: DPA

German Chancellor Olaf Scholz visited Japan last month, rather than top trading partner China, during his first official trip to the Asia-Pacific region. Photo: Bloomberg

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China’s ambassador to the United States, Qin Gang, has played up the prospects of trade cooperation between the two countries, given their “highly complementary” economies. Photo: Shutterstock 

China’s ambassador to the United States, Qin Gang, has played up the prospects of trade cooperation between the two countries, given their “highly complementary” economies. Photo: Xinhua

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Capital outflows coupled with growing depreciation pressure on the yuan are stoking concern in Beijing about the stability of the domestic financial market. Illustration: Lau Ka-kuen

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China submitted a formal application to join the CPTPP in September last year.
Photo: Xinhua

China submitted a formal application to join the CPTPP in September last year.
Photo: AFP

Ministry of Commerce spokesman Gao Feng says China’s aspirations to join the Pacific Rim trade pact are consistent with efforts to reform and open up the economy. Photo: AP

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Tensions between the West and China have forced a reassessment of global supply chains, and the European Union sees promising opportunities in Indo-Pacific region
‘It’s no exaggeration to say the EU sees South Korea, together with Japan, as its most valued partner in Asia and the Indo-Pacific,’ recent report says



Tensions between the West and China have forced a reassessment of global supply chains, and the European Union sees promising opportunities in the Indo-Pacific region.
