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China - a fragile power ? : how Europe can use its economic leverage over Beijing / by Alicia Garcia-Herrero and Tim Rühlig

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China - a fragile power ? : how Europe can use its economic leverage over Beijing / by Alicia Garcia-Herrero and Tim Rühlig

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China looks strong. Its factories dominate global supply chains, its firms set technological standards and its leaders speak the language of great power rivalry. Yet beneath this display of power lies a growing fragility. This Chaillot Paper argues that China's foreign policy is now shaped as much by domestic economic weakness as by external ambition. Slowing growth, a rapidly ageing population, a debt-ridden property sector and shrinking fiscal space are eroding the 'growth dividend' that long sustained the Chinese Communist Party's legitimacy. As prosperity stalls, Beijing is tightening party control at home and pursuing economic and technological self-reliance, even at the cost of further distortion. To deflect attention from domestic economic pressures, China is also engaging in more forceful nationalist rhetoric and increasingly confrontational diplomacy. Its international clout rests less on attraction than on coercive power: industrial overcapacity, technological lock-in and the creation of strategic chokepoints. For the EU, China's economic fragility is no cause for complacency. It signals greater risk - and potential leverage. Europe must de-risk faster, strengthen its own assets and approach Beijing with greater confidence and resolve.

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