Europe and China: Crucial Decisions

Chinese propaganda poster “Imperialism and all reactionaries are all paper tigers” 帝国主义和一切反动派都是纸老虎 Diguo zhuyi he yiqie fandongpai dou shi zhilaohu 1965, December, see https://chineseposters.net/posters/e15-615 © No copyright infringement intended. All rights belong to their respective copyright owners‘

24/10/2024_Since 2019 the EU has stuck to its mantra that the PRC is a partner, economic competitor and systemic rival.

In that same year I still expressed a bit of hope (though not much) that America & China would -against all odds- realize the value and importance of multilateralism and of working out new international agreements on nuclear weapons, trade, technology transfers and IP protection, cyber security, national security and privacy. I also had faint hope that Xi would finally be willing to quickly demonstrate his readiness to adhere to the international legal order and the principles of sovereignty, free trade, and peace to avoid American (and other Western) politicians would lose faith in China’s policies and intentions.

The opposite has happened. Xi has moved unabatedly forward with his plans to rebuild the international order to his liking, to challenge America’s power, to undermine democracies and to fulfill his utopian Marxist (or rather Stalinist-Fascist?) & ultra-nationalist ‘China dream’ by maximizing Party and State control. As a result the EU’s mantra sounds very outdated because its neglects the security threat China now constitutes for Europe via f.e. its continuous intimidation of Taiwan and complete militarization of the South China sea, its support for Russia’s invasion of Ukraine, its destabilization tactics in the Middle East, its economic coercion practices, daily cyber attacks and industrial espionage, its global misinformation campaigns and its suppression of anti-PRC voices around the globe, including in Europe.

In 2020 mijngroeve already concluded that the EU should anticipate a very likely scenario in which a long term confrontational relationship between the US and China, controlled by a form of managed competition to avoid conflict and to allow for limited cooperation, would be the maximum achievable outcome. This has indeed turned into the best case scenario anno 2024.

Irrespective of the outcome of the American Presidential elections, this will still be the best case scenario for the foreseeable future. In other words, it could get even much worse. The Sino-Russian ‘partnership without limits’ with Xi repeatedly claiming “it is a force for stability amid the most significant changes seen in a century” should be sufficient reason to be extremely concerned.

The rise and behavior of Xi’s China forces Europe to rethink its policies, assumptions, values and principles. In the US there is a wide consensus that the PRC presents the biggest threat for America’s security and national interests. In the meantime the geopolitical technology war is intensifying rapidly.

It again poses the question whether Europe is prepared for what is unfolding and ready to make some tough choices/decisions (see f.e. also https://www.mijngroeve.nl/history/holland-europe-china-strategic-questions/)

Below the key dilemma’s are highlighted.

Key dilemma’s

The overarching question is:

Does the EU agree that the rise and actions of Xi’s China form a security threat to Europe? If yes, what level of engagement & co-operation with China would the EU still like to pursue under this premise? What does each EU member state and the EU itself want to protect in its encounter/ relationship with China, in terms of (economic) security, values, cultural tradition or otherwise? How is Europe going to increase public awareness of these security threats without alienating part of its (business/academic) community that prefers business as usual with the PRC? And will the EU make (explicitly) clear what price Beijing is going to pay for its continued support to Russia in the war in Ukraine?

If not, how will the EU manage its relationship with the US if the threat perceptions widely differ? What is the room for maneuver for Brussels and each individual member state? How much strategic autonomy Europe really does have, in particular in military terms?

Subsequent dilemma’s requiring answers/decisions are:

Do EU member states want the EU to be a geopolitical player? If yes, a coherent EU China & EU US strategy is mandatory. What leverage do we have over the PRC and/or US and are we willing to use it? If the strategy is just left to each national government Europe as a whole is likely to remain a play ball of the US and the PRC. Which role does, can (or wants) Europe/Brussels (to) play in any of the conflicts around the world?

To what extent is each member state prepared to play the European card and to sacrifice its own interests for the sake of a higher, common European good?

And to what extent does Europe want to align its policies with the US which treats the PRC as its main adversary? How to coordinate available military resources of individual member states with Nato and EU for current (nearby) conflict zones (Red Sea, Middle East, Ukraine/Russian threat) and potential future ones (South China Sea, Indo-Pacific)?

Is the EU ready and willing to quickly and more intensively involve the civil sector & technical universities to stimulate innovation in defense? Traditionally there has been a lot of (academic) resistance/hesitation in European societies against/about such ‘civil-military fusion’. Will the EU invest massively (=far exceeding current investment levels) in AI and other new technologies, like the US & the PRC are doing?

Is a level playing field in business relations possible at all with a communist regime that is increasingly considering economic ties as a zero-sum game and its totalitarian marxist and ultra-nationalist governance- and economic system as superior?

What role -if any- does the EU see for China in its green transition plans and targets? Can the EU allow involvement of China without introducing undesired China dependency & (economic) security risks? Or are these risks deemed non-existent and/or well manageable? Or would no- or limited Chinese participation in Europe’s green transition make costs for Europe’s consumers too high? Does the EU have a plan to alleviate this pain for consumers? The current discussion on Chinese EVs is a prime example of this complex dilemma facing Europe

If the intention is to force the PRC to invest in Europe in key industries/(green) technologies (such as in automotive) via joint-ventures (JV), can we ensure that Beijing will allow its companies to transfer the know-how that Europe is looking for/needing?

But if this is the intention, does the EU at the same time still want all its EU members to implement an inbound investment screening mechanism? Or how to prevent unwanted dependencies? How to match this JV intention with the so called de-risking approach of the EU? And how to mitigate the even higher risk of espionage, data-and cyber crime by the PRC?

And does the EU still plan to implement an outbound investment screening mechanism towards China too?

Is the EU also aiming for an updated (‘country neutral’) export control policy prohibiting export of new & sensitive technologies/know-how to the PRC, yet at the same time expecting that the PRC will still be willing to share precious technological know-how with Europe via JVs?
Is the EU going to (pro-actively) prevent or even punish China for its constant cyberattacks? Or what are Brussels and the European national governments going to do about this state sponsored crime?

Can/will the EU offer compensation/alternatives/solutions to companies whose fortune depends on the China market but are at risk of partially or completely losing it? Does the EU have any plan to mitigate the pain and risks of eventual Chinese economic repercussions and retaliation?

Can European companies safeguard the well-being and privacy of its European and Chinese employees in view of the horrific Chinese lawfare, surveillance & growing number of random arrests of foreigners?

Will the EU soon clarify which groups, individuals, organizations, European/foreign executives & former politicians are acting as lobbyists for the Chinese state & Chinese companies in Brussels?

Will the EU follow the Dutch parliament which accepted a motion that rejects Beijing’s distortion of UN Resolution 2758, and requests the Dutch government to seek support for this position within the EU? UN Resolution 2758 has been used by Beijing to block Taiwan’s rightful representation in the global arena and to silence a vibrant democracy.

In view of the on-going erosion of liberties and repression in Hong Kong by Xi and the related PRC’s trampling of the 1984 Sino-British Joint Declaration, will Europe impose any sanctions on the collaborating HK governor and his officials?

Will the EU put more energy and effort into its Global Gateway strategy announced in late 2021 to counter China’s activities and ambitions in the Global South?

Will the EU in the battle of narratives finally push its own narrative and use means to its disposal (social media, news & international organizations, forums, embassies etc) to far more energetically and pro-actively counter the PRC’s global propaganda machine?

As a primarily economic organization, the EU has had a tendency to view foreign policy predominantly from an economic angle. So does a considerable part of the European business community. Von der Leyen has tried to change this, but so far she has had only limited success.

Conclusion

For mijngroeve.nl it is crystal clear that Xi’s China has -unfortunately- turned into a security threat that urgently needs to be taken seriously. The PRC has been using the openness & naivety of European democracies and governments to undermine these same democracies and test our resilience. Beijing has even employed Western MPs and business leaders ‘to tell China’s story well.’

For over a decade Xi has been preparing his population for a long struggle with the West, in particular with the US. But in view of the fragmentation in Europe, the lame ducks in Paris and Berlin, the populist & anti-EU sentiments in European capitals, it’s hard to imagine any coherent European US & PRC strategy will be forthcoming any time soon. Mijngroeve keeps on hoping, nevertheless…

In Germany the China discussion has been dominated for years by business interests. European business execs are inclined to publicly name and blame Washington for creating unnecessary trade tensions with China. It has not impacted their business interests in the US. Yet they are too afraid to publicly utter one word of criticism about Xi’s China out of fear for their personal or employees’ safety or -more importantly- for losing market share in the PRC.

The US-China tensions are just one dimension of the multiple challenges that the rise of Xi’s China poses. The China challenge goes far beyond economic competition between the US and China. European politicians and business execs have their own responsibility in judging the developments and policies of Xi’s China instead of conveniently pretending they are just powerless bystanders in an American-Chinese contest. Moreover, by continuing to downplay Europe’s (economic) security interests they make themselves vulnerable for criticism about their mercantilist short sightedness.

Politicians, execs and academics in Europe ‘d better join hands and quickly and greatly expand cooperation with like-minded countries around the world (think first of all of Japan, South Korea, Taiwan, Australia but also f.e. Brazil, Argentine, & India) to foster innovation, to outcompete the PRC wherever possible and to open up new markets and opportunities, especially in the Global South. They should accept that their China dream has already been shattered by Xi and realize that new dreams can be built in other parts of the world.

Paper tiger

Meanwhile Xi can have his own China dream, but there is no need for the EU to continue to feed it in any substantial way. Under Xi the socialist dream of a prosperous, harmonious society has been traded for the promise of stability, security and above all “national greatness” in order to reclaim “China’s historical stature”. Chinese society is paying a heavy price, especially in the form of an ever increasing inequality, ubiquitous surveillance, censorship and repression. The Party, business elites and the Chinese population should ask themselves the question what will be left of China if President Xi will achieve his goals…

It is ultimately up to Xi to decide if he wants to be a responsible player and stake-holder on the international stage. For more than a decade he has been provided the chance to show his sincerity. Europe has given him the benefit of doubt long enough. The shape of Xi’s ‘brave new world’ is hiding in plain sight for us all…Treating the PRC as a serious security threat and speeding up Europe’s de-risking process is essential so that Xi’s China can never hold us hostage. This would prevent the EU from being reduced to a paper tiger…