Decision-making dilemma of EU

Accepting diversity and developing pragmatic cooperation with China are necessary not only in the present moment, but also for future generations

As the extraordinary year of 2025 has come to an end and the first quarter of the 21st century has concluded, the transition to 2026 is an opportunity to think about a year of significant progress.

The fourth plenary session of the 20th Central Committee of the Communist Party of China in October 2025 mapped out a blueprint for China’s development and governance in its recommendations for the 15th Five-Year Plan (2026-30) period, proposing the priorities and key elements for the next several years.

The recommendations put forward plans for future industries, aiming to create more high-tech industries in China over the next decade with emerging sectors driving future growth. This involves promoting quantum technology, biomanufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied artificial intelligence and sixth-generation mobile communications as new economic growth points.

The next five years will be critical as China works to reinforce its economic foundations and push ahead on all fronts toward basically achieving socialist modernization by 2035.

The 15th Five-Year Plan is to be implemented during a period in which the United States’ economic cold war against China will intensify and it is likely to remain a priority for the US for years to come. At the same time, the Global South is gaining increasing importance, not only in terms of global GDP production, but also in determining the technological future and regulating the use of AI.

Meanwhile, a highly volatile and unpredictable geopolitical situation is unfolding, in which the world order is transforming into a multipolar one, the outcome of which is still unforeseeable.

The current rules are becoming dysfunctional, but no new ones are in sight. The global economy has entered an era where structural slowdown is becoming the norm and previous growth recipes no longer work. The focus of some major countries is shifting from demand-side stimulus to capacity, innovation ecosystems and institutional resilience.

In the coming years, the decisive question will not be who can mobilize the most stimulus, but who is capable of making consistent, long-term strategic decisions.

Therefore, 2026 may not be the beginning of a new, rapid global recovery, but rather the start of a long cycle of adjustment.

This is precisely why there is so much uncertainty: economic actors are concerned about the erosion of old rules based on cooperation, the decline of global cooperation, the severing of competition, the resurgence of protectionism and increasing abuses of power. The world is already in a process of transformation; the economic hegemony of the US is being challenged, and China and other Global South countries are demanding more representation in the global governance bodies.

The global economy has entered a transitional period in which the validity of written and unwritten rules that have been in place for decades is not only being questioned, but some major players are disregarding them altogether, while the formulation of new rules has not yet begun. The dynamism of globalization has been broken, economic and technological competition between major powers has sharpened, and at the same time, more and more countries are turning to more protectionist economic models that promote strategic sovereignty.

The big question is what the European Union will do.

The EU’s current relationship with China is multidimensional, combining cooperation, competition, critical dialogue and structural concerns. Official EU policies are based on the concepts of strategic autonomy and managed interdependence. The EU should cooperate with China for common interests, but some EU members do not want to be completely dependent on it and give up their strategic interests.

The EU should realize that accepting diversity and developing pragmatic cooperation with China are necessary not only in the present moment, but also for future generations.

China’s strategy of technological self-sufficiency and industrial upgrading will be put into practice step by step over the next five years. The EU should take this into account, adjust its path toward strategic autonomy and consider China as a partner rather than a competitor.

The reinforcement of the “dual circulation” paradigm, a pattern of development that focuses on the domestic economy but also stresses a positive interplay between domestic and international economic flows, will increase China’s edge in regional trade, while increasing Chinese export pressure on the European market. Thus, the EU should manage to achieve significant productivity and, above all, technological and innovation turnaround.

Hungary is not a core country in this respect, but an export-driven, foreign direct investment-dependent economy deeply integrated into the German industrial value chain. This has been a competitive advantage so far, but in the new environment it also means vulnerability.

In the next five to 10 years, Hungary’s position will largely depend on whether it can move beyond a purely assembly-based, low-value-added growth model while maintaining its place at the heart of EU industry. Hungary may benefit from the geopolitical realignment in the short term, but in the longer term, Hungary can achieve sustainable development if it can leverage skills, capital and industrial upgrading capabilities from its cooperation with China, and apply these gains to national development.

The author is the president of the Hungarian-Chinese Chamber of Economy.

The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.