Europe’s China Question by Riccardo Perissich former General Director of the EU Commission

There is no compelling reason why the 21st century should become “China’s century.”
Analasys by Riccardo Perissich former General Director of the EU Commission
15 settembre 2020

There is no compelling reason why the 21st century should become “China’s century.” It could however be defined by the “China question”, as large parts of the 19th and the 20th centuries were defined by “the German question” (and to some extent also by the Japanese one); we also know their outcome. Hopefully the China question can avoid their tragic fate, but if it does the center of the conflict will be in Asia, and it will involve both China and the United States. The other certainty is that Europe, even if it tries, will not manage to stay out of it. It is, therefore, high time that we develop a European China policy.

The way to start is looking at the US, as their debate is further along than ours at present. The country is heading towards crucial elections and is as polarized today as it has been since the civil war. In the American system, the powers of the President in all matters of foreign policy are significant; it follows that the personality of the next President will matter a lot.

We can also identify two conflicting visions that would be of consequence for American foreign policy and particularly for the handling of the China question.
One, very much in line with Trump’s instincts, sees a Westphalian world of conflicting nationalisms, made almost Hobbesian by that the collapse of the existing rule-based international order.
The second calls for a foreign policy that would be the natural prolongation of the desired fight against injustice and inequalities at home. Both schools call, at least in theory and from opposing ideological angles, for a smaller engagement of the US with the rest of the world.

They both fail to understand that some degree of American leadership is not a choice but the inevitable consequence of the world as it is; in particular, neither provides useful guidance for how to address the China question.
Realism implies a continuous constructive engagement, politically, militariliy and economically, that will not produce results if it is not based on some sort of agreed rules. The set of multilateral rules that characterize what we call liberal internationalism was the product of the most creative period of the nation’s history. It may be overtaken by events, it surely needs to be reformed, but this does not make it any less necessary. Underneath this ideological divide, the American “foreign policy community”, diplomats, universities and think tanks of different political affiliations are however, engaged in an extensive debate on the China question that is reminiscient of the one that was centered on the USSR during the Cold War.

Even at a rather preliminary stage, it nevertheless points to an emerging bipartisan consensus that is gradually becoming the outline of a possible realistic policy. We are still far away from the comprehensive vision that existed at the time of the Cold War, starting with contributions such as George Kennan’s “long telegram”, but a number of emerging points are worth noting.

The hope that, through a process of political engagement and integration into the rule based international order, China could gradually become more “like us”, has proved to be an illusion. To be fair, this narrative despite its popularity in academia, was followed by US governments of both parties with a high degree of caution. However, the vision of “constructive engagement” as it is currently called, has also induced a lingering complacency about China’s domestic evolution and the motivation of its foreign policy.

One argument was that after all China is only reclaiming the central position that it had occupied in Asia and in the world economy until a combination of internal retrenchment and European expansionism led to decline and humiliation at the hand of foreign powers. Furthermore, the conceptual fallacy of many analysts and some politicians both in the US and even more so in Europe, has been to believe in an inevitable virtuous link between the development of a market economy, the integration into the international system and progress towards the rule of law and liberal democracy.
After all, if the syllogism has worked for Germany, Italy and Japan, why not China? The lack of caution that accompanied its admission into the WTO is a good example of this complacency. China’s evolution has proved the assumption wrong, at least for the time being. China has indeed integrated into the world economy, but in doing so it has developed its own form of largely state controlled and rather efficient capitalism that under President Xi is moving farther away from any of the many models of market economy that exist in the west.

Furthermore, the system has become even more centralized and authoritarian. So much for convergence. The “Chinese origin” of the pandemic and the subsequent mishandling of the situation by the Chinese authorities has added some animosity, but the illusion of an easy relationship had already started to crumble before that.

The second point of consensus is that the China question is very different from the USSR’s and therefore, the suggestion that we could be heading towards “a new Cold War” is both misplaced and misleading. There are a number of very significant differences. Unlike the USSR, China is not motivated by an ideological mission, by the entrenched conviction of the inevitable incompatibility between communism and capitalism.
China’s posture is nationalistic. In this sense, it is more reminiscent of the confrontation with the Germany of the Kaiser at the beginning of last century, than of the conflict with Nazi Germany that led to WWII. Furthermore China is a vastly more complex and potentially powerful country than Russia has ever been. On the other hand the USSR represented a direct threat to the security of Europe and of the US.

The nature of the Chinese threat is more difficult to define; some in the West and particularly in Europe, even hesitate to acknowledge its existence. It should be noted that understanding China, its culture, its domestic dynamic and its motivations is considerably more complicated than in the case of Russia that is, after all, a European country. During the Cold War the USSR and its satellites where economically almost irrelevant. China is an integral part of the world economy and it could only be isolated from it at considerable cost. While it doesn’t pretend to have an ideological mission, China has developed a peculiar political and economic system and is willing to present it to other emerging countries as a superior alternative to that of a “declining” West. For all these reasons, the type of containment that was at the basis of the West’s Cold War policy is not applicable in the case of China.

The strategic challenge is unquestionable. If this is the state of play of the American debate, what could be the building blocks of a European China policy? It would be absurd to pretend at this point that we have one ready to be adopted, but we can at least define a number of questions that need to be asked and answered.

First, what is our purpose?

What conclusions can we draw from this American debate? For all its perceived strength, China also has many important structural, economic, social and political imbalances that make it fragile, with its demographic decline possibly being the most serious. It is this very fragility that feeds nationalism. The fact that China’s posture is nationalistic rather than ideological doesn’t make it less potentially hostile to the West.
We Europeans know a thing or two about aggressive nationalism because we invented it. Contrary to popular belief it is not necessarily related to the politics of “left or right”; even though our minds jump immediately to Fascism or Nazism, but its roots are in revolutionary France whose policies were much more aggressive than those of the Ancien Régime.

The main characteristic of an assertive nationalism such as the one currently displayed by China, is that it is the product of a perceived fragility; it tends to use the necessity to “defend us from the hostility of foreigners” in order to divert attention away from domestic problems.
The Kaiser’s paranoia with “encirclement” is a useful reminder. At the end of the day, a country can be at peace with others only if it is at peace with itself. However, a western policy that would aim for “regime change”, would be misguided and counterproductive.

For all its weakness, the system is remarkably resilient;
its long-term evolution will not depend on anything that we do, but on the forces at play within Chinese society. A common characteristic of all forms of nationalism is also the tendency to overstretch. This evolution makes them vulnerable, but also dangerous because tempted by adventurism. Remember Athens’ suicidal Syracusan war, Napoleon’s equally suicidal invasion of Russia, or the Kaiser’s and Hitler’s fatal decision to disregard Bismarck’s advice never to fight on two fronts.
Even in its recent assertive mode, China has not given signs of abandoning its traditional caution. The question if it is becoming overstretched economically, politically, and militarily is nevertheless worth asking.

Against this background, the overwhelming objective of European foreign policy in this as in other fields must be the search for stability. If both “convergence” and a new Cold War are not practical options, the alternative is a pragmatic combination of confrontation and dialogue.

That an emerging power should not be prepared to accept wholesale rules established by others is understandable. However, China, while rejecting the existing order, doesn’t seem willing or able to propose how it could be improved. It pays lip service to the rules (for instance, regarding the WTO or the Paris agreement on climate change), but is mostly keen to bend them to its own advantage and disregard them when they are deemed to not be in its interest.
This cherry-picking is obviously not acceptable, and a degree of confrontation is inevitable, but Europe’s interest is that it is managed in a way that doesn’t disrupt the world economy and further weaken the rule-based international system. This is a major difference with the present posture of the US. Not to adhere to the multilateral international system can be a legitimate Chinese choice, but it must be clear that there is a price to pay for it; some mutually acknowledged rules are however necessary even in a system based on a Westphalian balance of power.
If we cannot yet integrate China in the multilateral system, we should at least push it to share an interest in stability; the way to do it is to increase the cost of disruption.

Second, a China policy requires an Asian policy

Like all confrontations between great powers, one with China will be global. For instance, from a European point of view Africa will play a significant role. However, the focus will be in the Indo-Pacific region. Europe ceased to have an Asia policy a long time ago. Even former colonial powers like the UK, France and the Netherlands have become almost irrelevant.
At the moment the play is therefore essentially between China and the US. It is an exercise of deterrence, but of a totally different nature from that of the Cold War. The strategic imbalance between the two main actors is such that China couldn’t seriously think of winning a total war with the US for a long time. But we also know that deterrence is a very complicated game.
In this case, its aim is to make too high for China the cost of interfering in the independence, integrity and the rights of a number of countries in the region that are understandably worried about its growing power. It is a long list of rather diverse countries.
It starts with Taiwan, the most delicate and critical situation, and includes Australia, New Zealand, Japan, Korea, members of ASEAN and even India. Another difference with the Cold War era is that, while wary of the rising power of China, they all entertain strong economic relations with their powerful neighbour.

Some suggest that China could not be denied a sphere of influence in the region, as it was de facto the case with the USSR. The parallel doesn’t stand. That characteristic of a sphere of influence, as different from an alliance, is that the countries that are part of it are normally not consulted. The USSR had acquired its satellites as a result of a war; to change the status quo would have required another war.
To recognize a Chinese sphere of influence would compromise rather than improve the stability of the region. As in all exercises of deterrence, the risk of miscalculation from either side, for instance in the South China sea, is high and the rules of the game difficult to establish. The very peculiar situation in the Indo-Pacific also demands an assessment of the possible impact of new developments such as space, artificial intelligence, cyber-war and various other forms of asymmetric warfare. Beyond the impact of these new technologies, the nuclear question will remain at the heart of any system of deterrence.
The rules of the game that were painfully established during the Cold War are collapsing and, more importantly, they don’t include China. This should no doubt be a European priority.

European countries cannot play a military role in Asia any time soon. Our relations with the US are therefore bound to remain asymmetrical; however, they must be assessed in a global perspective. That is indeed one of the main reasons why all sides of the American political spectrum press us to take greater responsibility for our own defence and for that of our immediate neighbourhood, so that they can devote more resources to Asia.

Nevertheless, this does not exempt us from assuming the wider political and economic implications of our inevitable involvement in the region; for reasons of transitive logic, we are bound to start looking at the allies of the US as our “allies” as well.
Which means that we must stop considering Australia and New Zealand simply as exotic fringes of the anglosphere, or looking at Japan, Korea and India exclusively as economic partners and competitors. If there is one area where the post-Brexit security cooperation with the UK can be mutually beneficial, this is one.
These countries are also far from forming a united front and some of them (Japan and India are two prominent examples) display a strong nationalism not dissimilar from that of China. Ours is the continent whose post-war history is defined by the reconciliation between Germany and its former enemies and victims.
Our posture should therefore make it clear that, while all nations can have legitimate interests and aspirations, no stable order can be based on the unregulated confrontation of different nationalisms. We must also recognize that the position of the West in Asia is not easy.
On the one hand, China’s neighbours do look at the US and the West for support. On the other, we often overlook the fact that some of them have not forgotten Europe’s direct or indirect colonial past as well as America’s errors and humiliating defeat in Vietnam. It is not difficult for China to play those feelings against us, with the addition of intense propaganda about the decline of the West: two effective weapons that, when combined, can be very toxic for the future of western influence in Asia.

Third, Russia matters as well

Russia continues to represent a threat for a number of known reasons that go beyond the scope of this paper. It is another case that requires a mixture of dialogue and confrontation. It is also part of the “China question”. While great differences and potentially conflicting interests exist between them and China, there are signs that both countries could be tempted to form a sort of alliance.

Although not necessarily likely to happen, it would be an extremely detrimental development to our interests, among other things because it would bring the “China question” right to our borders. It would also be dangerous from a global point of view.
The imbalance with China is such that Russia would inevitably be the junior partner in the alliance. History tells us that the management of asymmetric alliances can be very difficult; the amount of influence that Beijing could have on its partner would be limited. Russia, with a GDP lower than Italy’s, a declining population and a stagnating economy is already unquestionably strategically overstretched. However, the combination of nationalism, domestic fragility and insecurity that characterizes the present Russian leadership, could possibly make it a new Austria-Hungary: the imploding conglomerate that was so instrumental in sleepwalking Europe into WWI.

Forth, the economy matters most

It has been so far the only aspect of the China question that has attracted real attention in Europe. Until recently it has been treated as part of the wider question of the benefits (in terms of market opportunities) and dangers (in terms of low-cost competition and social disruption) of globalization.
For a period, the European Commission and the more free trade minded governments of Europe including Germany have tended to underplay the threats and focus on the advantages of strong economic links developed with China, as well as on the dangers of Chinese retaliation.
Typical examples have been the slightly surreal discussion on the “market economy status” of China and the hesitations of the Commission in integrating the China question in the implementation of competition policy.

More recently the debate has acquired a more specific (and more political) dimension. First, there has been the problem of how to react to the Belt and Road Initiative (BRI), the well-advertised initiative with which the Chinese government intends to materialize its outreach beyond Asia, to other continents and including Europe.
There are signs that it could result in little more than an expensive branding exercise; time will tell. In the meantime, the reaction to this initiative has nevertheless already led to some disagreements among the members of the EU.
More importantly, the discussion about Chinese competition has gone beyond cheap labour and counterfeit goods, to the more critical dimension of unfair competition in many fields of technology and of intellectual property. Compounded by some Covid-related issues, we have also discovered an excessive dependence on Chinese raw materials and a number of components in some critical supply chains, including but not limited to pharmaceuticals.
Finally, the 5G-Huawei question has obliged Europeans to focus on the links between technological dependence, espionage and the control of the internet. The wind has now changed with some of the traditionally cautious countries including Germany and the Netherlands clearly moving in the direction of a more restrictive policy.

A number of member states, not surprisingly the most advanced, have started to call for a stricter vetting of Chinese acquisitions of European firms. The Commission, while continuing to refer to China as a “partner”, has also defined it as a “systemic rival.” The concept of a “geopolitical Commission” outlined by Ursula von der Leyen, must find a concrete expression in the EU’s China policy if it doesn’t want to become an empty slogan.
It is a welcome development that nevertheless is also not devoid of dangers. The problem is not so much Chinese retaliation that could be contained by a united European front, but that of a slippery slope with protectionism getting out of control under the pretext of a Chinese threat.

More generally, there is the danger that the combination of the Chinese question with the necessity to reassess the governance of globalization, could promote the vision of decoupling the world economy into two or more large regional blocks. There is something of this logic in the policy of the Trump administration. Such a perspective, if pushed to its limits would be extremely costly and even devastating for large sectors of the global economy, starting with internet dependent activities. It would be particularly detrimental to European interests.
It is also very unlikely that our partners in Asia and other emerging countries would be willing to play the game. Many of them will not want to sacrifice their strong economic links with China and we could paradoxically end up with the formation of those very spheres of influence that we want to avoid.

This is the one aspect of the China question where the EU has real clout; not only in trade matters, but also with the use of its extensive regulatory power that has been described as the “Brussels effect”.
That being said, in the context of the China question if the EU wants to retain that clout it will have to increasingly integrate security considerations in its trade and regulatory actions. To be effective, such a European foreign economic policy will need to be exceptionally well focused and imply the use of a scalpel rather than an axe; it will also require a high degree of unity. While the latter is far from being there yet, the former is not easy to apply amidst rampant populism. Quite naturally, the EU would like to promote all this within the purview of the multilateral system. It is unfortunately an option that at present lacks credibility due to the open rejection by the Trump administration of all multilateral institutions.

Fifth, what about human rights?

Nobody could possibly deny the dismal situation of human rights in China. Even the most ardent adepts of Realpolitik must accept that this is a dimension that cannot be excluded from our foreign policy aims. It is however a rather elusive dimension. Despite its declared importance, nobody has yet developed a convincing conceptual framework that could guide those in charge of conducting foreign policy.
It is therefore a field dominated by emotions rather than logic, with a public opinion keen to react to the evening news, but whose enthusiasm for strong action is sometimes indirectly proportional to its cost. Sanctions are the most often used instrument, and while they are not ineffective they do have limits both in scope and duration. Threats work both ways.
The growing importance of the Chinese market carries the risk of Western companies being tempted/obliged to abide to Chinese censorship and even import it at home, for instance in the entertainment and media sector.
European companies that do business in or with China must know clearly what they can and cannot do and say. In addition, while our public opinion can be very sensitive to the issue, the same is not necessarily true for some of our Asian “allies”, whose human rights performance and democratic credentials are likewise sometimes less stellar than we would like them to be. Finally, in the loose institutional set up that characterises the EU, human rights are the typical issue that plays on national sensitivities and invites free riding.

Sixth, don’t be complacent with Europe’s soft power

We have known since the teachings of Thucydides that the relations between nations are primarily shaped by power. We have also known that power has many aspects and is not only a synonym of military strength. Recently, possibly because of the mixed results of the most recent military endeavours of the US, the concept of “soft power” has gained prominence; some political analysts in the US and Europe have developed the theory that success in the international scene is mainly determined by a competition between systems, their moral values, as well as their economic and social performance.
There is some truth in it; having a healthy, sustainable and dynamic economy, cohesive society as well as a well-functioning political system is arguably one of the best foreign policy investments that a country can make. This line of thought is, not surprisingly, particularly popular among progressive analysts and politicians, particularly in a Europe that a lack of military clout relegates to a marginal role in the hard power game.
To the dismay of their American critics, many Europeans take Robert Kagan’s famous suggestion that they “come from Venus” as a compliment. Europe’s soft power is real, not only as an economic actor, but also for the social cultural and democratic values that it displays. But the mistake to avoid, that could be fatal in the case of China, is to become complacent and forget that at the end of the day “hard and soft” are two sides of the same coin.

The development of weapons of mass destruction has made the game of deterrence and avoiding military confrontation one of the main purposes of foreign policy; however, you are not even admitted to the table if you don’t have credible military capability. Even more so now that the unity of purpose with the US cannot always be taken for granted. We should also be realistic. To fill this gap will require determination, resources and, inevitably, time. However, for all its soft power Europe will never become an important actor unless it shows willingness to also address its military weakness.

Seventh, can we be united?

It is typical of the European enterprise that we unite only when any other conceivable option has been exhausted. You can take this as a less complacent way of expressing Monnet’s famous statement that “Europe is forged by crisis”. This “integration by default” has been highly successful (so far) in the economic sphere; much less so in that of foreign policy.
During the Cold War, the perception of the threat was clear and we had a ready-made common policy under the leadership of the US. While today the Atlantic bond cannot be taken for granted to the same degree as in the past, the perception of China as a “systemic rival” (to use a definition of the European Commission) is not powerful enough to induce a real unity.
We therefore live, in this as in other fields of foreign policy, in an uncertain limbo where the perception of a common interest can be easily included in diplomatic papers, but not many people are really prepared to “walk the talk”.

The unfortunate result is a Europe of free riders. It is a syndrome that curiously affects all countries: from those like France that are still convinced to have a God-given special universal mission, to those like Germany that have at least until recently learned the advantage of “keeping out of trouble” and focus on the economy, to other members like Greece, Hungary or Italy that only have short term gains in mind. To create a shared vision of the China question is nevertheless urgent. Otherwise we shall be compelled to deal with whatever comes out of Washington, or worse to react to a crisis that we had not foreseen.

Eighth, it’s always the US stupid!

However carefully we devise our China policy having in mind our interests and the need to develop Europe’s “strategic autonomy”, one determinant factor is bound to be the policy of the US. In fact, nobody in his right mind could believe for a minute that we could have the leisure of wanting to drop out of the issue, to be neutral, or even to play the mediator.

Nobody can predict today the kind of America that will emerge from the forthcoming elections; this concerns both a possible second Trump term as well as a Biden presidency. Our interest and indeed that of the US, clearly stays with an America that rediscovers the importance of alliances and of the multilateral institutions.
However, it would be a mistake not to understand that, whoever wins, the nature of the transatlantic bond will have to be reassessed. There has never been a golden age of transatlantic relations. American leadership and influence have always had an ambiguous impact on the perception and the reaction of Europeans; but unity has always prevailed.

Now it is different; Europe, America and the world have changed considerably. Europeans must acknowledge the changes that have been taking place in the American vision of the world since the end of the Cold War. This concerns primarily the growing importance of Asia. On the other hand, nobody should underestimate the new wave of anti-Americanism in Europe, that is fuelled by populism and amplified by Russian and Chinese propaganda.

The present American posture towards China under Trump has been double-edged as far as Europe is concerned.
On the one hand, it has accelerated the European awakening to the crucial importance of the issue and it has dragged us out of a certain complacency.
On the other, its erratic and unpredictable character has been destabilising and is making European unity even harder to achieve. The US can have a very significant influence on the decisions taken by European countries. In certain cases, they can also cause considerable disruption in the decision-making process of the EU.
The Huawei saga is an interesting example. Despite some attempts to coordinate by the Commission, the main responsibility for the deployment of 5G networks has remained largely in national hands. At the beginning, there was a visible convergence among the major European countries towards a posture that, as far as Huawei is concerned, was cautious but not aligned to the outright ban called for by the US.
After several twists and ambiguous statements never fully explained to the public, many European countries now seem ready to align themselves to the American point of view. This may or may not be the right thing to do, but public opinion cannot help drawing the conclusion that the final decision was the result of US pressure.

A Biden presidency would probably give us an America that at least would be ready to talk. It would be a welcome development, but only a first step towards a common understanding. There isn’t much use in talking if we don’t know what to say and are not prepared to back it up with action and the appropriate instruments.
If there is one important reason to develop a European China policy urgently, it is that even if the China question will not define the 21st century, it will define the future of American foreign policy and as a consequence also of transatlantic relations.
If the looming importance of the China question and the danger of a political decoupling from the US are not sufficient to provide the urgency that is needed for Europe to find a common policy, it is really difficult to imagine what else could.

Riccardo Perissich
15 settembre 2020

Nous remercions Riccardo Perissich de nous avoir confié son analyse publiée dans le
ISPI  Istituto per gli studi di politica internazionale

Riccardo Perissich est ancien directeur général de la Commission européenne ; il est senior fellow de la School of European political economy de la LUISS University à Rome, auteur de « L’Unione europea, una storia non ufficiale (Longanesi) » , « Stare in Europa : Sogno, incubo e realtà (Bollati Boroghieri) ». Il est membre de la Fondation Notre Europe – Institut Jacques Delors (Paris), de l’International Institute for Strategic Studies (Londres), de l’Istituto Affari Internazionali (Rome) et de l’Aspen Institute Italy (Rome) –

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