Between cooperation and systemic rivalry: The EU-China Relations

Conversation

How will EU-China relations look like in the future? Which priorities need to be set? Opportunities for the German EU Council Presidency.

Young woman between eagle and panda

Reinhard BütikoferMember of the European Parliament for the Greens, Germany and Janka Oertel Director, Asia Programme and Senior Policy Fellow, European Council on Foreign Relations in a conversation with Katrin Altmeyer Head of Asia Division, Heinrich-Böll-Stiftung, Berlin

Katrin Altmeyer: I would like to start with the EU-China Strategy that was published in March of 2019 and has the objective of introducing a shared, comprehensive China policy. How did this discussion evolve in Brussels? How did the member states react to it? What will a strategy that follows the paper look like?

Reinhard Bütikofer: The publication of this paper was a great breakthrough for realism. We are systemic rivals. This Big Bang became possible because the Commission circumvented a couple of the typical bureaucratic routes in Brussels; it did not allow much influence to those that would have watered down the text before it came to light. On the other hand, that meant limited participation for the member states. Overall, the paper met with a lot of positive resonance, because it very adroitly managed to integrate multiple perspectives of European China policy. This allowed different positions to accept it. The paper does not bid good-bye to cooperation with China, even though we are systemic rivals. It ends, however, the dominance of the win-win rhetoric. But in the recent discussions, a weakness has become apparent: cooperation and competition with China have to be shaped by understanding what it means that we are systemic rivals. The convergence theory failed; rather, the divergences are increasing. The simple juxtaposition of cooperation, competition and rivalry thus remains imprecise.

Janka Oertel: Over the last couple of years, Europe’s relationship with China has changed markedly. The Strategic Outlook document of March 2019 was a milestone that was achieved towards the end of the last EU Commission’s term. The same holds true for the Connectivity Strategy. Both of these key topics have to now receive new attention, because unfortunately, the 2019 consensus is already outdated. Partner, competitor, systemic rival – it no longer suffices to merely name these elements of the relationship in parallel. Europe has to define in concrete terms what these aspects entail. The emphasis has shifted. A European China policy that takes systemic rivalry seriously means to clearly define red lines in certain areas and to actively decide against cooperating if it increases dependence and reduces Europe’s strategic sovereignty. The current 5G debate is a good example. The German government had months to define its own path – European at the core, economically sensible, and with a clear-eyed understanding of the security risks at play. Now we face the impact of even more fierce US restrictions on Chinese companies and are reactive instead of active. It is sad that we have been unable to come to an independent and clear political decision within a reasonable timeframe – Germany really could have played a leading role in this area.

How can the balancing act of pursuing a constructive policy with a rival system work? How can the EU set priorities? Where do you see especially great conflicts of interest between the individual member states with respect to the Format 17+1?

Janka Oertel: China policy starts at home – and it can only be effective if it is embedded within a strong EU. We have to also begin to think through the uncomfortable scenarios of greater confrontation with China and listen closely to the statements coming from Beijing to understand how priorities are shifting to be prepared for what may come.

China’s climate policies are a good example. We need China for effectively combatting climate change, but we currently see limited to no ambition on the Chinese side to really become active. We need to increase the pressure on Beijing to deliver. If China wants to be our partner on climate policy declarations are no longer enough – we need to see real action.

The other key factor is European solidarity. At the outset of the coronavirus pandemic, it proved way too easy for China to divide Europeans in its attempt to re-shape the narrative of the crisis.

Europe needs to define its own policies in a much more confident way. This requires us to focus on our strengths and interests. With regard to formats such as the 17+1 it is central to think about the opportunities as well. This is a format that includes twelve EU member states and five accession candidates! We have a huge interest in fostering cooperation and integration among those twelve and five. All of these countries have agency in this, they have their own interests and can contribute to a more constructive overall European China policy. The format has evolved a lot since its founding and has deprived itself of its mystique to an extent for its European members.

Beijing is currently prioritizing technological leadership in its attempt to boost the domestic economy after the health emergency and the resulting economic shut down. This includes the construction of 600,000 5G base stations by the end of the year and 2 billion US dollar of investments in the tech sector over the next five years. This could give China a real advantage in the sectors that build upon 5G-technology. Europe needs to urgently follow suit and invest in its own competitiveness – the green economy and digitalization. Connectivity is key. But certainly the questions ‘Where do we invest? Which jobs need to be secured?’ can become a real test for European unity. We have to decide whether the coronavirus crisis marks the beginning of something new or whether we want to continue with the same policies as before. Recalibrating our relations with China will be absolutely key in defining Europe’s economic future.

Reinhard Bütikofer: Federica Mogherini repeatedly spoke about Europe as a superpower. She has not been alone in suggesting that the role of Europe could be found in constructing a sort of G3 world with China, the U.S. and the EU as three poles of global power. This G3 world will never exist. The best development, from a European perspective, would create a world in which multilateralism was re-invigorated and developed so that the hegemonic competition between the two superpowers could be reined in. Europe should play a leading role towards this goal. This approach can only succeed, if Europe aligns with like-minded partners in other regions of the world. Actors in the global south in particular could be attracted because this should allow them a higher degree of agency. We also must reflect about alliances within the EU. On his last visit to China, President Macron brought a German minister along. That was a good political signal. But just German-French cooperation is not enough, is too narrow. Why can’t the German government systematically get our European partners involved in our intense relations with China? Think European!

The salient point with respect to 17+1 is that the 17 countries gain a better understanding among themselves. At the moment, the entire management of the 17+1 process is de facto in Chinese hands. That´s not how it has to be. As regards the German role, we should display a constructive attitude towards the 17+1 and at the same time attempt to relativize that format by finding novel ways in which European partners can partake in and benefit from German strength vis-à-vis China. That the majority of the smaller countries should wait in anticipation that at some point a few crumbs would fall from the German table will not do as a basis for a solid European policy.

In the course of the coronavirus pandemic, economic ties have become much more apparent and questions of economic dependency have gained a new dimension. At the same time, China is also attempting to expand its bilateral influence. How do you assess the long-term consequences of the pandemic for the role of the EU?

Janka Oertel: From the Chinese side, there is a clear prioritising concerning how much money will be spent in order to bring its own economy back up to speed, especially in the technology sector. The measure aimed at building six hundred thousand 5G stations by the end of the year is enormous and could provide China with a qualitative advantage in all technologies being built based on 5G. Countries in Europe should invest in two things at the same time: the green economy and digitalisation. The questions ‘Where should we invest? What jobs do we need to secure?’ can turn into a crucial test. This is also visible in China. We in Europe also have to weigh precisely whether we should consider this a ‘new start’ moment. However, this has to be clear: The redefining of our relationship with China is the absolute key underlying premise for the question of how our economy can be shaped.

Reinhard Bütikofer: The coronavirus crisis looks like a historical milestone. China acts with great self-confidence as a global power with leadership ambitions for the first time. They seek to newly define the framework for international relations. And they believe now is their opportunity for important advances. Look at the conflicts in the immediate periphery of China: in Hong Kong, against Taiwan, India and even Bhutan, around Japan´s Senkaku islands or all over the South China Sea. Beijing is playing aggressively for the expansion of its political power.

What sustains my optimism, though, is the fact that the EU does not stand still in the face of these problems. Internally: The agreement for the Recovery Fund is an unprecedented and important leap forward in the integration of European economic policy. That helps to strengthen the internal market, which is our strong economic pillar. Internationally: The WHA provides an example of how ‘Leadership through Multilateral Cooperation’ can work. It was the Australians and the Europeans who demanded an investigation into the development of the coronavirus, including China‘s role. China originally opposed that, while the U.S. played the stubborn loner. Nevertheless, we managed to win over 130 countries to co-sponsor the motion, and it was successful. We also have obvious weaknesses. In technology policy, we must bolster the sheer volume of investments and we need more conceptual discussions. China is working on its own cyber currency, which would facilitate absolute state control of the economy. That would be a whole new dimension of totalitarian utopia. And where are we? In the context of the International Telecommunications Union (ITU), China is working on getting the global community to commit to a new internet protocol, that of a top-down internet, one which would offer every authoritarian government a censorship switch. There are other ideas, from the European Telecommunications Standards Institute (ETSI) for example. But these debates are still getting too little political attention.

Janka Oertel: A lot of the thinking about these issues is currently taking place in Brussels, but the transfer to the member states does not always work super well.

Reinhard Bütikofer: I am for a whole-of-government effort, but we also have to address the need for an all-of-society approach in order to deal adequately with the Chinese challenge. Building up competencies across institutional borders is key. Sweden is leading the way with a national China Strategy and a China Competency Centre.

I would also like to ask you what, from your point of view, are the most important topics for future EU-China relations? Since the ‘Leipzig Format’ (a summit planned for September in Leipzig, Germany) was cancelled or postponed, the starting point is different.

Reinhard BütikoferIn the negotiations concerning the investment agreement, our motto is substance over speed. The investment agreement can only be successful if Beijing moves substantially on three fronts: market access, fairer conditions for competition, which especially involves the role of state-owned enterprises, and sustainability. Europe’s market is very open and China’s is not. For that reason, we are not willing to meet China half way. That would be strategic defeat. Apart from investment and trade, in high-ranking contacts with the Chinese leadership contentious issues must also be raised. For example, the question of the systemic repression in Xinjiang with forced sterilisations on a brutal scale and the imposition of forced labour on the Uyghurs. With respect to the Belt and Road Initiative, we should very critically push back against China´s policy of promoting the export of coal technology.

Janka Oertel: We must revisit the question whether Beijing is willing to adhere to commitments and international treaties after the new Security Law in Hong Kong has been pushed through. This really cuts to the heart of our relationship with China. In Europe, we have to really think about reducing dependence on China to strengthen our negotiation position in all those questions that really matter to us. Focussing less on China is not the end of globalisation and the beginning of the erosion of the international economic order - quite the contrary! It includes more active engagement with our partners in East, South and Southeast Asia, but also in Africa to find new avenues of cooperation and enhance connectivity. Additionally, we are beginning to realise that we do not only have to coordinate better with partners outside the EU, but also within the European structures. It would be extremely valuable if Europe could manage to establish sustainable mechanisms in this regard, even without the Leaders Meeting, which was envisaged by the German Council Presidency. Germany has a specific responsibility. We have to put Europe first in our China policy. If our European partners do not trust us that this will always be the case, we actually reinforce China’s attempts to divide and rule.

Many thanks to both of you for the conversation!

The conversation took place on 25 May 2020.