How Could the EU and China Compete and Coordinate to Achieve Ambitious Climate Protection?

Research Context

The European Union (EU) and China are the world’s two largest emitters of greenhouse gases and key actors in global climate governance. Since the EU labeled China a partner, competitor, and systemic rival in 2019, climate cooperation has become closely intertwined with trade, foreign policy, and energy security. The paper analyzes how the relationship balances competition (in green technology, markets, and resources) with cooperation (in renewable energy, emissions trading, and sustainable finance), against the backdrop of COVID-19 recovery and Russia’s war in Ukraine.

Key Findings

• Institutional Gaps: EU cooperation with China has been inconsistent due to fragmentation among EU member states and rotating leadership within EU institutions.

• Competition:

  • China dominates critical raw materials (rare earths, lithium, polysilicon) and manufactures 80% of global solar panels.

  • EU measures such as the Carbon Border Adjustment Mechanism (CBAM) and the Net-Zero Industry Act (NZIA) are reshaping trade dynamics, sometimes triggering disputes.

• Cooperation:

  • Joint initiatives include the Clean Development Mechanism (CDM), pilot emissions trading schemes, and the International Platform on Sustainable Finance (IPSF) with the Common Ground Taxonomy for green investment.

  • Both sides share interests in scaling renewable energy and improving transparency in climate finance.

• Geopolitical Pressures:

  • COVID-19 shifted China’s focus to “new infrastructure” (5G, EV charging) while the EU emphasized “green investment.”

  • The Ukraine war exposed Europe’s fossil fuel vulnerabilities, pushing short-term reliance on coal while undermining climate neutrality goals.

Policy Recommendations

1. Common Standards: Establish benchmarks for emissions reduction, halt new coal investments, and harmonize rules for green finance and investment.

2. Innovative Finance: Mobilize private capital through joint EU-China funding, common standards for green bonds, and greater transparency in financial markets.

3. EU Institutional Capacity: Strengthen coherence across EU member states, integrate climate priorities into trade/foreign policy, and create bilateral dispute-settlement mechanisms.

4. Support for Third Countries: Coordinate contributions to climate finance and “loss and damage” funds, link China’s Belt and Road Initiative (BRI) with EU sustainable standards, and expand south-south cooperation for climate adaptation.

Conclusion

The EU–China climate relationship is marked by both strategic rivalry and mutual dependence. Effective cooperation requires building trust, aligning financial and technological standards, and ensuring both actors take responsibility not only for their own transitions but also for enabling greener pathways in developing countries.