How to deal with China

Several Outlets - How to handle China is a major political issue for the EU, one that is more complex than dealing with Russia. Certainly, the EU’s political and economic systems have profound differences with both Russia and China. Unlike Russia, China is a real systemic actor, approaching 20% of the world economy and growing while Russia represents around two percent and decreasing.

The economic, political, and financial influence of China is considerable, and its military power continues to grow. Its ambition is clearly to build a new  world order, with China at the centre, becoming by the middle of the century the world's leading power.

The EU must be aware that many countries see the geopolitical influence of China as a counterweight to the West and therefore to Europe. And in a world that is becoming more fragmented and multipolar, most of the emerging countries are becoming hedgers, strengthening their room for manoeuvre without picking sides.

In this context the EU has to recalibrate its policy towards China for at least three reasons: the changes inside China with nationalism and ideology on the rise,; the hardening of US-China strategic competition; and the rise of China as a key player in regional and global issues.

This is putting growing pressure on the EU and sometimes creating uncomfortable dilemmas. Europe was built on the idea of shared prosperity and today is a power of peace. So we do not want to block the rise of emerging nations, be it China or India or others.  But logically we want to ensure that it does not harm our interests, does not threaten our values nor jeopardize the international rules-based order.

Last week we discussed EU-China relations with EU Foreign Ministers and we agreed that there is no viable alternative to the triptych of treating simultaneously China as a partner, competitor and systemic rival, depending on the issue. But it is necessary to adjust the relative weights among these three items and this adjustment depends in large part on China’s own behaviour and the issue concerned. EU ministers underscored that we must continue to engage with China wherever possible, and at the same time reducing strategic risks and vulnerabilities by re-calibrating our stance across three clusters of issues: values, economic security and strategic security.

On values, our differences are hardening. In all international fora, China has constructed a narrative subordinating fundamental rights to the right to development. The EU must counter this discourse and uphold the universality of human rights.

In spite those substantial differences, European and Chinese societies need to know each other better. The obstacles to the free flow of ideas and to the presence of Europeans in China must be removed. Otherwise China and Europe will become more foreign to each other.

On economic security, it is obvious that our trade relations are unbalanced. At over €400 billion a year, the EU’s trade deficit is at an unacceptable level. This is not due to the EU’s lack of competitiveness, but to China's deliberate choices and policies. European companies face persistent obstacles and discriminatory practices. Moreover, the EU faces a growing risk of excessive dependencies on certain products and critical raw materials.

Hence, the importance of reducing risks and building up resilience, also for reasons of national security. This will require the diversification and reconfiguration of EU value chains, a more effective export control system, the control of inbound investment and possibly outbound investment, and the smart use of the anti-coercion instrument.  But our international partners can rest assured that all measures we take will remain in line with WTO rules. The multilateral system must be revitalized, not abandoned.

The third cluster concerns essentially Taiwan and China’s position on Russia’s war against Ukraine. On Taiwan, the EU’s position remains consistent and based on its ‘One China policy’. Any unilateral change of the status quo and any use of force would have massive economic, political and security consequences. The EU must prepare for all scenario’s and engage with China -  in maintaining the status quo and work to de-escalate tensions.

On Ukraine, our message is clear:  EU-China relations have no chance of developing if China does not push Russia to withdraw from Ukraine. Faced with a conflict involving the territorial integrity and sovereignty of an independent state, any so-called neutrality amounts in reality to taking the side of the aggressor. We welcome positive moves from China aiming at finding a solution to contribute to a just peace in Ukraine.

The message of all 27 Foreign Ministers last week was clear: the best way to shape China’s choices is through robust engagement and by reducing strategic risks.