The EU must continue to send a clear message about the serious negative impact of Chinese circumventions of sanctions and Russian war efforts on EU-China relationships, it added.

According to draft new EU Sanctions on the Ukraine War, which are also being discussed, this support has already begun.

The proposed sanctions identified eight Chinese companies as “involved” in “the circumvention of [EU] Trade restrictions” are imposed in certain areas, such as microelectronics used for Russian missile guidance systems.

The proposed EU ban on the sale of dual-use technology to Hong-Kong-based firms would be the second European sanction ever against Beijing.

The first blacklisting was in 2021, when four Chinese officials were blacklisted for persecuting Uighur minorities in China. This led China to blacklist MEPs as well as EU officials.

The strategy paper also said that Europe would have to respond strongly if China attacked Taiwan.

The EU must be prepared for scenarios where tensions rise significantly, it said.

In an accompanying letter, EU Foreign Affairs Chief Josep Borrell made reference to Taiwan and said that dialogue with Beijing could only continue “so long” as “the irreparable has not been committed.”

Borrell’s research showed that EU sanctions on China would have a far lesser effect than on Russia. Russia is now facing a wide-ranging Western trade embargo and more than 1,600 EU blacklisted individuals and entities.

“The China issue has a much greater complexity than the Russia problem.” “Unlike Russia, China has a real systemic player,” his letter warned.

“A Russian victory in Ukraine will not derail China’s trajectory.” China will be able to take geopolitical benefit from it,” he said, making the Ukraine conflict look like a sideshow compared to the larger and longer-term developments in the world.

The strategy paper stated that “China’s trajectory is the end of’reform-and-opening’ period… key trends include more control at home, more party state steering in the economy and a more assertive projection of power combined with global leadership aspirations.”

Borrell’s letter continued, “China’s ambitions are clear: to build a world order with China at its centre and become the world’s dominant power, symbolically by 2049, which marks the centenary of China’s People’s Republic.”

He said that it was already a key player in Afghanistan, South China Sea and the Middle East.

In the Middle East it was “edging-out the’spent force’ that is the US”, by “brokering an agreement diplomatically on the normalisation relations between Saudi Arabian and Iran”, according to his strategy paper.

In the last year, EU countries have struggled with decoupling themselves from Russian gas and oil.

The abyss

Borrell’s research showed that if China and Europe ever locked themselves in a sanctions conflict of the same kind, the impact on Europe could be exponentially greater.

He said that China’s “systemic importance” to Europe’s economic system was of a higher order.

He said that the EU’s trade gap with China had already become “abysmal” and grew 58 percent last year to EUR396bn.

His report stated that “critical dependence” on China “leaves us vulnerable to weaponisation” and coercion in high-tech fields such as renewable energy and communication technologies, raw materials and vaccines.

It said that China’s military had become sanctions-proof thanks to a “high intensity self-reliance campaign”.

It also stated that Europe was facing fierce competition from China “in domains with unprecedented sensitivity, including certain semiconductors and quantum computing, as well as space technologies, Artificial Intelligence and biotechnologies.”

The Stockholm talks on Friday come amid a near collapse in US-China relationships.

The EU paper noted that there had been “an absence at the political level of communication since the balloon incident”, referring to the US’s February shooting down of a Chinese spy ballon.

The talks come at a time when the EU is split between France and its more China-friendly allies, including Lithuania and Poland.

When he visited Beijing in the last month, French President Emmanuel Macron warned that the EU should not become a “vassal” of the US in its confrontation with China.

Borrell echoed both the French and EU positions. He called for a “clear eyed” EU policy in regards to China’s “systemic competition”.

“Coordination with America will remain essential.” The EU should not believe that there is only one winner in a binary competition between the US and China, as stated in his strategy paper.

It said that the vast majority of China’s trade was “thriving and non-risky”.

The report stated that even though Beijing is listening less and less about Europe’s concerns on human rights and international laws, “this should not deter the EU to maintain open channels of communication and seek constructive cooperation.”

The EU and its members states should be firm, but not confrontational, it said.