Policies at EU level have not all proven their effectiveness yet.
Systemic divergences and rivalry with China, asymmetric rules in many areas (openness for investment, public procurement, forced technology transfer, state subsidies, IPR…) have existed for decades. They have become more pronounced in recent years, as China’s status as a developing economy becomes less and less defensible. It has become clear that China is unwilling to make structural concessions on these issues which are of vital importance to the EU. The ongoing negotiations for a Comprehensive Agreement on Investment between the EU and China illustrate this point.
The EU institutions have increasingly been able to coordinate views and policies on a list of defensive economic policies (e.g. investment screening mechanism). Not all of them have proven their effectiveness yet. The investment screening regulation has just entered into force in October 2020. It provides for cooperation and has some binding aspects as to information and cross-border investment involving companies with EU financing. But it is not overall binding. Other existing rules and tools at the EU level often prevent effective counteraction in other areas, especially on foreign policy and security related issues. They even constrain our collective declarative power. A vivid example for the latter was the delayed and very weak EU statement on the International Arbitration Court ruling in The Hague over China’s South China Sea claims in 2016.
How to strengthen European resilience beyond purely defensive measures; how to overcome the issue of lowest common denominator in EU statements; identifying where we have leverage on China to make concessions, or where we can take countermeasures that effectively limit China’s opportunities in the absence of these concessions.
At EU member states level (and below), countries threatened by Chinese pressure have often been left to fend for themselves.
Individual EU member states (Sweden, France, Germany)1 have become targets of China’s aggressive diplomacy and/or threats of (mostly economic) retaliation. Most recently the Czech Republic, whose senate president visited Taiwan with a delegation, was threatened with "grave consequences" for this "short-sighted behavior". Below the government level, airlines and hotel chains are facing Chinese pressure on using "correct" maps (not showing Taiwan as a separate entity). In addition, publishing companies are required to take down publications considered sensitive by China from their websites (Cambridge University Press, Springer), for example on Tibet or Taiwan. Chinese pressure also takes place at the local level (cities, communities, cultural events).
In almost all cases, the targeted countries (and other entities) have been largely left to fend for themselves or, alternatively, cave under Chinese pressure. Statements of solidarity coming from other EU member states or the EU have been rare. Smaller countries are even more vulnerable to pressure – or, equally, to enticements – by China. Opportunistic behavior, as was the case when China "punished" governments having meetings with the Dalai Lama, should not endure.
Mutual support and solidarity require the willingness to pay the price in some cases. More demonstration of support and solidarity should be extended to partners beyond the EU (e.g. Canada on Michael Kovrig & Michael Spavor). Effectively supporting EU member states (and countries outside the EU).
EU-China (inter)dependence due to growing economic interactions poses a potential threat to Europe’s security and well-being.
China’s growing economic presence in the EU and its immediate neighborhood (through investments, key supply or management of infrastructure such as ports, electricity grids, water supplies) has triggered a debate in Europe on the risks from a growing economic integration with China. Digital platforms, payment systems will also present challenges. The case of Huawei’s involvement in building 5G networks, but also the Covid-19 pandemic, have painfully demonstrated Europe’s dependencies on China and triggered fears about the vulnerability of European supply chains. This has intensified the debate in the EU about China as a potential threat to Europe’s security and well-being. Adding to this is the ongoing US policy of partial decoupling from China in some key technology sectors, without any clarity about the intended end game.
The topic spans all economic transactions with China (FDI, trade, procurement and R&D) in sectors like infrastructure, dual use, emerging technologies and data protection. Even partial decoupling, diversification of supply chains to reduce dependencies and/or achieving European sovereignty in certain sectors (telecom, AI, critical infrastructure, biomedical industry) will come with a hefty price tag attached. As is the case with plans for a green economy, these costs must also be assessed.
How to narrow the gaps in understanding and develop a common and comprehensive framework of guidelines shared and implemented by member states (starting with France and Germany).
The EU and member states struggle to prioritize their own requests when engaging with China.
Hardened positions on both sides (apart from a few issues such as the adhesion in principle to COP21 and the JCPOA agreements) call into question a policy of engagement of the EU with China. The gap on values such as human rights always existed. But its concrete implications have become even more urgent over the situation in Xinjiang and beyond. Respect for international law has become a major issue over Hong Kong. Officially, the EU and member states remain committed to engaging China on all levels and on all topics. Given China’s role in the global economy, in international institutions and on transversal issues, a continuation of dialogue is unavoidable in order to call out China effectively. For this to have any effect, it is important to have a unity of views among Europeans.
Beyond declarative unity, we are faced with a new version of an old problem with China: it used to be the difficulty of prioritizing our own requests. Since China now openly or in effect replies no to most, if not almost all, requests, the issue is now to prioritize counteraction, select what is currently achievable and work to improve our leverage in the near future.
How to identify and agree on priorities where counteraction can achieve the result desired or is considered necessary to defend values and norms central for the EU. This might come at a price, either by sacrificing or making concessions on other issues, or by having to deal with China’s retaliation, especially if the EU considers instruments such as targeted sanctions over egregious abuses.
Debates on multilateral institutions and alliance politics with the United States have negatively affected the transatlantic relations.
Divergences of interests with the United States are not new; there may in fact be currently more consultations concerning some issues regarding China. However, fairly convergent views on China’s domestic and international trends have been overshadowed in the last years by debates on multilateral institutions and alliance politics. This, and perceived differences over values, has impacted large sectors of European public opinion – in some cases, almost as large as China’s authoritarian and aggressive behavior. US demands to the EU or member states for alignment with the US agenda (including threats of secondary sanctions, end of cooperation and information sharing, etc.) have not been helpful. Creating trust with the new administration in 2021 will require a more balanced dialogue – which also implies that the EU is able to present its own needs and proposals.
How to renew transatlantic consultation and coordination with a common agenda and pursue common interests together.
The Franco-German push for an "alliance for multilateralism" has gained support from other partners, but has not received support at the EU level.
Germany and France are both committed to defending and reforming, where necessary, the existing international rules-based order and international institutions (like WTO, WHO). They have launched as a general goal an "Alliance for multilateralism". France has moved forward on security cooperation in the Indo-Pacific, and particularly with India, Australia, Japan and Singapore. There has been occasional participation from other EU member states but without any successful coordination at the EU level. Germany’s recent "Guidelines on the Indo-Pacific" have a complementary accent on sustainable development and climate mitigation. But they also pledge more activity on security issues, and together with France (and other member states such as the Netherlands) to work for a European position on the Indo-Pacific. The Guidelines envisage increased cooperation with Indo-Pacific partners like Japan, Australia, South Korea, India, but also ASEAN. The Netherlands have now issued comparable guidelines.
How to reform the WTO and other international organizations; yet also prepare for the situation where China blocks those reforms by building negative coalitions. How to follow-up on the Indo-Pacific, including the allocation of necessary resources both in France, Germany and eventually at the EU level: EU’s Eurasian connectivity has targeted neither maritime regions nor North-South corridors. How to bring to life the "Alliance for multilateralism" with partners in the Asia Pacific/Indo-Pacific. How to link this up with the action of non-European actors, such as the US, India, Australia, Japan on key issues: security cooperation, technology and innovation, digital and cyber issues, climate policies.