To China or not to China, that is the question (Part II.)

8 min read

In the previous part I dwelled into the EU-China trade relations, providing some background and trying to draw attention to the fact that every European country is interested in a strong (economic) cooperation with China. It also stipulated that Chinese-European relations could become more balanced if the EU countries, especially Germany, would be ready to diversify their supply chains, decreasing their exposure.

Now I’m venturing into the murky waters of domestic and international politics, in a semi-haphazard way (since you could fill libraries with this issue).

Analysing Germany

If Germany is to achieve a united front within Europe, it has to define its own way first.

It would seem that the German government will have the easiest job on its home front, convincing people on the necessity of more cooperation with China and the importance of the Leipzig Summit. At least according to a survey (PEW Global Attitudes) that states that only 39 percent of the population is considering that the US is more important partner than China. 34 percent of the same population said that they’d prefer stronger ties with Beijing. The gap of five percentage points was one of the lowest in Europe. It compared to gaps of fifteen points in France, nineteen points in the UK, and twenty-five points in Italy.

But statistics are far from unambigious.

Another survey (ECFR, 2019) suggest Germans, like their government, would prefer not to take sides in the clash between Washington and Beijing. Some 73 percent said Germany should remain neutral, 6 percent favored China, while just 10 percent said they should side with the United States—far below the levels reported in France, Italy, Spain, and major countries in Eastern and Northern Europe. To complicate things a little bit, there’s another survey (from approximately the same period), carried out by London based Retfield & Wilton Strategies) that states something different. When it comes to COVID-19, Germans tend not to have such a good opinion on China with most of them (77 percent) actually thinking the country bears some blame for the pandemic, and 34 percent saying China was significantly to blame. Only a mere percent of the respondents wanted closer relations with Beijing, while 33 percent would prefer some distance and percent wanting to maintain relations.

All in all, it looks like the unpredictability of US foreign policy under President Trump took its toll, but so did the COVID-19, so Germans are having hard time to decide where to lean to. This might actually be a good basis for a balancing act.

German politicians also lack a unified approach when it comes to China.

Some urge the government to strengthen international cooperation also with challenging partners like China. Others, like the Greens however, accuse the government of turning a blind eye to Chinese human rights violations. In their view “Germany should use its weight within the 27-member bloc to broach China’s systematic human rights abuses, repression, total surveillance and censorship.” Gyde Jensen (Free Democrats) said that Chancellor Merkel must make it clear that “for the EU human rights are not negotiable.” Critical voices were to be heard from the Social Democratic Party, the coalition partner of the Chancellor, too. Nils Schimd (foreign policy spokeperson for SPD) accused the chancellor of having an outdated idea of China as an economic partner above all, and underestimating the threat posed by Beijing.

The EU between Scylla and Charybdis

In Homer’s Odyssey the hero had to maneuver his ship between two sea monsters in a strait on his way home. The trick was that the strait was so narrow that if sailors tried to avoid one of the monsters, they ended up in reach of the other.

No one, not even the brilliant Odysseus managed to get through without a sacrifice, in fact most who tried ended up dead. But following the instructions of Circe, the Greek sailors held their course tight against the cliffs of Scylla’s lair. This saved them from Charybdis yet enabled Scylla to gobble up 6 of Odysseus’s men.

The EU needs to balance crucial security and normative cooperation with Washington, and its economic interests to China. Thus, the China-US rivalry creates the perfect Scylla and Charybdis moment for the EU. Whichever direction Brussels or national capitals choose, there’ll be some casualties.

As Henry Kissinger said, without the transatlantic relationship Europe would be at the mercy of China, a mere “appendage” of Eurasia.

Ironically, it is now Washington that puts the future of transatlantic relations in doubt. Also, the US’s apparent resignation upon multilateralism kinda forces the EU to cooperate with Beijing in the field of environmental protection. Especially as China is at least seemingly willing to work in a multilateral format (the sincerity of this intention is questionable, though). This doesn’t mean, however, that leaders of the Old Continent don’t share some/much of Washington’s suspicions towards China or its policies (like the Belt and Road Initiative).

China’s relations with most of the European states are ambiguous, at best. They seemed to improve for a few years, but started to deteriorate long before COVID-19 swept over the world. This included the realization that China is actually a rival both in economic and political terms, or the occasional accusations of spying, but until early 2019, the overall feeling was that of hope.

Many hoped that via cooperation, Beijing can be changed and made to accept Western norms, let European firms enter its market, etc. This was doubtful even before, but now, with the COVID-19 pandemic and its economic shock having serious effects on the world, including China, it is questionable whether the limited opening of its market that China might offer, will be able to deliver the changes the EU demands. after years of trying, China is still not the country you cooperate with because of its human rights records or high democratic standards.

Then, COVID-19 and its management, combined with the disinformation campaign brought once more into the spotlight the reality that China is also a “systemic rival promoting alternative models of governance”, not just an attractive money resource. Since March, China has not only been accused of covering up the pandemic, but also of pitting EU member states (and non EU-member Europeans) against each other by providing aid to hard-hit countries (see below).

The coronavirus crisis, though originating from China, didn’t make it easier for Berlin or the EU to cooperate with the US. Anxiety and uncertainty lingers on about the future of NATO, trade relationship or the viability of mutual defense. Unilateral moves from the side of Washington (ordering a travel ban, for example) and suspicion of interfereing with medical supplies, combined with Trump’s move to try to buy the company developing COVID-19 vaccine, only deepened the rift.

In the meantime, in Paris the emphasis is on “rebalancing” European-Chinese relations. This should mean reciprocal market access and more cooperation in environmental protection. Paris is also reluctant to venture into more confrontation over human rights, as was clearly shown when the French foreign ministry only quoted the very neutral EU statement (attaching great importance to the preservation of Hong Kong’s authority) instead of criticizing China.

If it is willing to step up its game, Europe could become a “strong middle partner”, an important link between Washington and China. This would enable the EU to position itself as a stronger global player. (What could/should be done, how this would work deserves an analysis on its own.)

The reality behind the relative success of the “face-mask diplomacy”

CEE countries learned the hard way that it is not always easy to cooperate with China due to significant cultural differences (among others). Not much has been actually achieved despite of the regular meetings. And none of them was particularily eager to cooperate with China up until 2009. Why the sudden repivoting?

Well, this is a lesson from the past the EU should learn. (And the French-German proposal might actually suggest that at least in those two capitals, this lesson was learned, if a little belatedly.)

After the previous crisis hit in 2009, the EU (Germany and the Frugal Four, but the latter no so fiercely as now) was reluctant to provide sufficient aid to the CEE countries, and Greece for that matter. They’ve basically forced them to diversify their economic ties and turn to whoever was willing to offer resources. That savior became China. There were far less sticks attached (think austerity measures) and the alternative was going down the drain, anyway. The 16+1 format, so irritating for Paris and Berlin, wasn’t a coincidence; its origins can be traced back to 2009.

Now, with COVID-19, something similar happened. The initial reaction was a very instinctive “my nation first” chaos, with borders closed, shipments of medical supplies halted and alike. Once more, the countries in need of help turned where they could: China.

Beijing happily stepped in to provide the necessary equipment. There’s nothing to marvel at Italians thinking positively of a country that stood on their side in their darkest hour while their supposed friends in Amsterdam or Vienna repeatedly refused to do so. Never mind, that at the end France and Germany sent more masks to Italy than China. Never mind that the help was actually reciprocal, that during the early days of the pandemic in China, European countries shipped approximately the same amount of medical supplies to Wuhan. First impressions matter.

Wait. You didn’t know this? It is something I’ve also learned only after starting to do research for this article. Yes. Large shipments of masks and medical equipment were sent to China, but, on the request of Beijing, it was done largely under the radar. Well, it turned out that those supplies were needed in Europe, too. Beijing was ready to offer help and send back aid, a true “friend and brother in need”. (Even if large portions of it were useless, as Dutch or French hospitals reported.)

Was it wrong to send those supplies to China? No.

Was it wrong to accept aid from China? No.

Was it wrong that Beijing advertised its help while trying to hide the European offers? Well, it is against Western ethics, but it’s not illegal. Politics and propaganda were never really about ethics, anyways, furthermore China is not a Western country.

So, an important lesson to learn: China always fills a gap, changing its tactics as often as needed.

No one is willing to invest in high risk countries? Here we come. Acquisitions or other equity investments becoming more difficult? Let’s start to cooperate on R&D projects. Single transactions to buy assets are less available? Let’s start greenfield investments.

It’s not that China creates those gaps. It only makes use of them. The stronger the European unity, solidarity and cooperation, less opportunities are coming up for Beijing. The more unified front European countries present towards China, the more balanced bilateral relations will be.

The EU needs to accept this fact. It must also raise awareness of upcoming possibilities/gaps (e.g. asset hunting by Chinese companies in the aftermath of COVID-19) and enhance information sharing mechanisms, export controls and monitoring tools. Europeans need to understand that China and Chinese people function differently: without this understanding, they’ll always be caught off guard.

A more united front, less dependence on China and more diversified supply chains may come from enhanced investment in manufacturing centers in CEE, revitalizing R&D and industrial competitiveness in this region. The joint French-German proposal is pushing for stronger European industrial defenses and reduced dependence on China, maintaining “technological sovereignty” and creating a bloc-wide strategic health care industry. It only needs to be ensured that everyone gets its faire share.

The need for common European investment protection regulations

The need for more unity when facing China was recognized a while ago. This is why French President Emmanuel Macron (declaring the end of an era of European naivety toward China) invited Angela Merkel and Jean-Claude Juncker to a quadrilateral meeting with Xi Jinping in 2019. However, the unity didn’t last long. In 2020, Germany refused to join London and Paris in publicly congratulating Taiwan’s President Tsai Ing-wen on her reelection.

Yet, a united front and a common mechanism needs to be found: one that guarantees that every European country has equal chances to win Chinese investment if it wants to do so and that the power of the EU is behind every country so it is not to be blackmailed by China.

The management of the 2009 crisis left a bad taste in CEE mouths, leading to the strengthening of euroskeptic voices. It might take a while and some effort to convince these countries that their freedom to cooperate with China will not be curbed unproportionally with the introduction of the new regulations. Clearly defined rules are needed, that make sure that the regulation is not discriminatory against any potential investor and won’t have any negative effect on their overall investment environment.

The EU needs transparent and reciprocal rules for investments, making sure that not only Chinese companies can invest in Europe under clear and stable rules, but also European companies have the same level of access to the Chinese market. Which is not the case right now, as Beijing often uses limited entry to its own market as a leverage (as it was the case just a few months ago when the Chinese ambassador to Germany hinted that market positions of German carmakers in China might be at risk if Berlin excludes Huawei from its 5G network development). This might help not only the giant multinational companies of Western Europe but also their much smaller counterparts in CEE or Southern Europe.

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Cooperation with China seems inevitable. But it shouldn’t mean closing the eyes or abandoning transatlantic relations. A delicate balancing act between the two great powers is as challenging as passing between Scylla and Charybdis. Yet it needs to be done. But it won’t work if European countries continue the blame game.

There are a few months left until the Leipzig summit (if it is going to take place). There’s enough time to come up with a comprehensive plan. It might not look like the great investment agreement Germany hoped for a year ago, but might still represent a significant step towards a more fruitful and balanced cooperation.

Let’s only hope that those on Twitter who predicted that the Möbius strip as a logo will only symbolize the endless negotiations that await the EU, were wrong.

Before you go….

  • So, what is your opinion?
  • The EU should enhance cooperation with China in every field.
  • The EU should enhance economic cooperation, yet should block Chinese advancement in international organizations and politics, balancing between the US and China.
  • The EU shouldn’t change its current China policy.
  • The EU should join the US in trying to counter China.
  • None of the above

One Reply to “To China or not to China, that is the…”

  1. The EU should join the US in trying to counter China
    Boycott All Chinese products
    re-develop EU green industries
    But the EU is headless and Merkel is useless, a coward
    she slept with the ennemy, Communist China for Money and so did Macron of France for 5G
    They are both traitors to democratic ideals and to their constitutions and to their Nation
    they did for econmics reasons and now theyr’re trapped and sorry
    Shame on both them but Shame on Communist China first !

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