Europe hedges with China and BRICS

Europe’s China problem is turning into a Europe’s China necessity problem. That is the real story here. Brussels still talks about “de-risking,” and that language is not going away. But the economics underneath Europe’s industrial squeeze — high energy costs, fragile supply chains, weak domestic demand, and a much rougher relationship with Washington — are pushing parts of Europe toward a more pragmatic line with China and the wider BRICS world. The clearest signal came on April 14, when Spain’s Pedro Sánchez met Xi Jinping in Beijing and elevated bilateral political dialogue to a permanent strategic format. (lamoncloa.gob.es) ### What actually changed? The news is not that Europe suddenly loves China again. It is that more European governments are acting like total estrangement is too expensive. Sánchez’s Beijing visit was explicit about closer ties, fairer supply chains, and a more “balanced” economic relationship. Reuters noted he was one in a string of Western leaders visiting China this year, which tells you this is broader than Spain. (lamoncloa.gob.es) ### Why is energy the pressure point? Because Europe’s cost base is still structurally high. Bruegel put the 2024 gap in blunt terms — EU wholesale gas prices averaged nearly 5 times U.S. levels, and industrial electricity prices were roughly 2.5 times higher. ACER’s 2026 market review says the EU-US industrial electricity (lamoncloa.gob.es)etup for chemicals, metals, fertilizers, glass, and other energy-hungry industries. (bruegel.org) ### Didn’t the energy crisis already ease? Yes — but “eased” is not the same as “fixed.” The European Commission’s latest energy-cost review says prices fell from the 2022 extremes, yet the after-effects remain. The IEA adds that in 2025 higher natural-gas prices still depressed industrial gas demand in the EU. In plain English, some factories are still cutting back because the math does not work. (energy.ec.europa.eu) ### So why does that pull Europe toward China? Because China offers the things Europe needs most right now — scale, cheaper clean-tech supply chains, and a huge end market. That does not erase the fight over subsidies, overcapacity, or market access. But when your own industry is under cost pressure, cheap inputs start looking less like a threat(energy.ec.europa.eu)etitiveness hawks. (bruegel.org) ### Where do BRICS come in? BRICS matters less as a club Europe wants to join and more as a map of where trade and growth are moving. The European Parliament’s briefing says BRICS+ is now the EU’s main trading partner for goods. That is the part many people miss — Europe cannot talk about “strategic autonomy” while ignoring the bloc of markets that already absorbs and supplies a huge share of its trade. (europarl.europa.eu) ### Is Brussels abandoning de-risking? No. Basically, Europe is trying to do two contradictory things at once. It wants to shield strategic sectors from Chinese dependency while also keeping trade, investment, and industrial inputs flowing. That tension is obvious in the Commission’s tougher industrial-policy push and in Beijing’s threats to retaliate against “Made in Europe” rules. (euronews.com) ### Why does this feel bigger than one visit? Because the U.S. piece changed too. Europe has become more reliant on imported LNG, especially from the United States, and that creates a new dependency of its own. Once policymakers start seeing both Washington and Beijing as sources of leverage over Europe, hedging stops looking soft and starts looking rational. (bloomberg.com) ### Bottom line Europe is not choosing China over America. It is choosing optionality. The catch is that hedging works only if Europe can rebuild its own industrial base fast enough to bargain from strength rather than need. (bruegel.org)