CHINA'S GLOBAL REACH: FINDING A MODUS VIVENDI
We all know what it means to live in a world that is dominated by the US. However, very few of us can imagine what would happen if China were to influence the world as America does now. This will happen by the middle of the 21st century. Are we ready for it?
The 37th president of the United States, Richard Nixon, had barely managed to get comfortable in the Oval Office at the White House when the new administration’s policy planning meetings began. At one of these meetings, Nixon jotted down the following note: “Chinese Communists: Short range—no change. Long range—we do not want 800,000,000 living in angry isolation. We want contact … [want] China—cooperative member of international community and member of Pacific community.”1
It was late January 1969. The US was attempting to steer the ongoing Vietnam War to an end with the initiation of the Paris peace talks, and the Soviet Union launched two more probes to study Venus, establishing a new frontier of space travel. Less than five years had passed since China’s test of a nuclear weapon and Mao Zedong had restored control over the party through the Cultural Revolution. The tension in the relationship between China and the Soviet Union, however, developed into a border conflict at the rivers Argun and Amur, which lasted for several months and left its mark on the relationship between the two communist neighbours. Normal communication was restored only in the spring of 1989 with Mikhail Gorbachev’s visit.
Diplomatic ties between China and the US were established as early as 1844 but were broken off after World War II. More precisely, Washington recognised Chiang Kai-shek, who had retreated to Taiwan during the Chinese Civil War, as the leader of China. The strained relationship with Beijing declined further due to the Korean War, with communist China contributing to the division of Korea by joining the Soviet Union in supporting the expulsion of US forces below the 38th parallel.
By the time Nixon took office, it was clear that Washington could no longer ignore the nuclear weapon-wielding People’s Republic of China. It was clear to US strategists that, at the time of a fundamental stand-off with the Soviet Union, it would be wise to attempt to restore the relationship with Beijing. Nixon entrusted this secret task to his new National Security Advisor, the 46-year-old Henry Kissinger.
In reality, Washington had been gauging for some time whether Communist China was open to potentially normalising the relationship. Diplomatic contacts were made in Warsaw, but the first serious signs of readiness for a high-level meeting arrived from Beijing as late as early 1970. Kissinger’s plane finally landed in Beijing on 9 July 1971, amid great secrecy.
Over the next two days, Kissinger held talks with Chinese premier Zhou Enlai lasting a total of 17 hours. This historic meeting is recorded in detailed transcripts and Kissinger’s memoirs. It makes fascinating reading, because these 50-year-old accounts resonate deeply even today. In his introduction to the talks, Kissinger admitted that it was the very first time that leaders of the US and China had spoken to each other as equals. In a conversation that lasted late into the night on the first day, Zhou prophetically noted that the US could no longer consider itself the hegemon of the world 25 years after the end of World War II.
Kissinger spoke highly of Zhou, describing his leadership qualities and statesmanship as equal to those of French president Charles de Gaulle. The two men had a deep respect for each other, even though there was a 25-year age gap between them and their ideological principles were completely opposite. Their meeting changed the world because it led China to take its first cautious step towards emerging from long-term international isolation. It is likely that neither Kissinger nor Nixon (who visited Beijing in 1972) foresaw that this was also the start of the US slowly giving up its global hegemony—just as Zhou had predicted.
In reality, it was years before the relationship between the US and China was restored. The final stage in the establishment of diplomatic relations began only after the accession of Deng Xiaoping to the Chinese political elite. In a meeting with US Secretary of State Cyrus Vance in August 1977, Deng warned the US against excessive lenience towards the Soviet Union. Deng was convinced that the concessions made to the Kremlin could be catastrophic for the West. “You will end up with a Dunkirk,” Deng warned, referring to the World War II episode. Deng knew exactly which buttons to push. Vance was cornered ahead of his visit to Beijing, because the ongoing Strategic Arms Limitation Talks with Russia forced the Americans’ hand.
In the spring of 1978, the US was finally ready to restart the relationship with China. Following lengthy negotiations, the parties achieved agreement on 16 December 1978, two days before the Plenary Session of the Central Committee of the Communist Party of China (CPC) that was focused on the opening-up of China and reforms. They would recognise each other as of 1 January 1979. The US confirmed that it would acknowledge Taiwan as part of China, but retained the right to establish trade, cultural and other contacts with Taipei.
The normalisation of relations between China and the US was monumental not only for the relationship between the two greats; it also influenced the future development of the world as a whole. One can be sure that globalisation would not have progressed in leaps and bounds in the last 40 years without the reconciliation of these two major countries and the opening-up of China in particular.
It is hard to imagine today’s global economy without the close interconnection of the Chinese and US markets. In 1979 alone, trade between China and the US tripled, reaching three billion dollars. By 2017, the volume of trade had grown to 711 billion dollars and China had replaced Canada as the US’s largest trading partner. At the same time, China has developed into the US’s largest creditor, controlling 1.168 trillion dollars-worth of US bonds as of the beginning of 2018—5.3% of the total US debt. Behind this lies Chinese trust in the US dollar and the US is an important trading partner.
Deng’s policy of opening up and reforming China had an immediate impact on the tectonic changes in the world, including the collapse of the Soviet Union and the end of the supremacy of the West.
Re-establishing relations with the US and Japan allowed China to successfully thwart the ambitions of the Soviet Union and its ally Vietnam in the region. In turn, the coupling of China and the US forced Moscow to take the defence of its Asian borders more seriously, which called for additional defence expenditure. In 1965, the Soviet Union had 15 divisions on the Chinese border but by 1982 the figure had grown to 50. The Far East accounted for around one-seventh of the Soviet Union’s defence expenditure. Analysts have noted that Moscow’s fear of potential US-Chinese cooperation in Afghanistan could have been one of the reasons why the Kremlin decided to launch the catastrophic incursion to the country in December 1979. At the same time, this meant the US could focus more on Europe, leaving China in charge of Asia.
The KGB kept a close eye on Chinese economic reforms right from the beginning, even though Beijing was initially scolded by Moscow for abandoning the holy cause of socialism. In 1982, Leonid Brezhnev’s successor as Soviet leader, long-time KGB Director Yuri Andropov, admitted that the USSR should consider the experience of “brother states” in reforming the economy. At the same time, many Soviet economists and analysts, such as Tatyana Zaslavskaya and Fyodor Burlatsky, began to view China as a role model for economic recovery. For instance, Burlatsky wrote about this in Novy Mir magazine in 1982.
In 1985, the Central Committee of the Communist Party of the Soviet Union formed a separate department to assess and analyse the Chinese reform programme. Attempts to copy the Chinese experience—one state, two systems—in the Soviet Union proved unsuccessful. While in 1970, the economy of the USSR was four times greater than China’s, by the early 1990s the latter had surpassed Russia.
It can therefore be said that the era of Chinese reforms that began in December 1978 contributed to the restoration of the independence of Estonia a little more than a decade later.
Deng’s reforms produced rapid results. The average income of a Chinese farmer had doubled by 1982, and by 1984 the country’s corn production had increased by a third compared to 1978. The positive news reinforced Deng’s authority and allowed him to further intensify the reform programme. The Chinese economy almost doubled in the first decade of reforms alone.
There were numerous reasons for China’s great turnaround, but three seem the most important. First, in the mid-1970s, China went through a major leadership crisis after the deaths in 1976 of both Mao Zedong, who had steered the communist country for decades, and his closest comrade-in-arms, premier Zhou Enlai. After their deaths and the rehabilitation of Deng Xiaoping in 1977, the diplomatic behaviour of Chinese leaders took a sharp turn towards openness and was more conducive to cooperation. They began to visit other countries, enter into new contracts and create the conditions for China’s emergence from its debilitating isolation. For instance, Deng Xiaoping visited Japan, Malaysia and Singapore immediately before the historic plenum.
The second reason for China’s opening-up policy was the impressive economic development of its neighbours. Japan, with whom China entered into a Treaty of Peace and Friendship on 12 August 1978, had undergone a rapid change from a ruined country that had lost the war into the world’s most successful economy in the previous 20 years. From 1950 to 1973, the Japanese economy’s average annual growth was 9.29%. By 1968 Japan had become the second-largest economy in the world after the US.
Deng’s visit to Japan made history in two ways. It was the first time a Chinese leader had visited Japan and met the emperor. Deng also managed to see beyond one of the greatest tragedies in recent history, which had led to the breakdown of the relationship between the two neighbouring countries. Only 41 years earlier, the Japanese had committed the Nanjing Massacre, murdering up to 300,000 Chinese people according to various sources. “Even though our countries have been through a regrettable period, the 2,000-year-old history of our good relations confirms that it was a really short period,” Deng commented on the matter. He told his hosts that he had come to Japan to seek the source of eternal life, as in ancient legends. He was most interested in learning how China could benefit from Japan as much as possible in order to modernise its own economy.
The Asian tigers (Singapore, Taiwan, Hong Kong and South Korea) undertook their first significant modernisation and industrial development in the 1970s. The per capita GDP of all four countries doubled in this decade alone.
One of the biggest spiritual influencers of Deng Xiaoping, who inspired him to make reforms and advised him later in life, was the long-term prime minister of Singapore, Lee Kuan Yew. The two men first met on 12 November 1978, when Deng visited Singapore. At the time, the relationship between the two countries was still quite tense, as China had hoped to convert the predominantly Chinese-speaking Singapore to communism. Lee convinced Deng not to export communist ideology to South-east Asia. Deng listened to him and the relationship between the countries slowly began to normalise.
By 1987, Lee had been in power for 22 years. In this time, Singapore had grown into a rapidly developing contemporary city-state. The difference from the time when Deng had made a stopover there on his way to France in 1920 left a deep impression on him. Compared to the development of Singapore, China’s economy and society were still only a step away from mass poverty.
Deng had a lot to learn from Lee’s experience in devising China’s awakening policy. The two men were on the same wavelength and understood what it meant to restore a country ravaged by colonial oppression. The only difference was in their socio-political beliefs; as it turned out, this did not hinder the great change they undertook.
The third reason for China’s opening-up was the geopolitical situation, which forced China, on the one hand, to act in order to counter the Soviet Union’s interests in East and South-east Asia and, on the other, to use the opportune moment to reconcile with its neighbours and the major global powers, in particular the US.
China has undergone mind-bogglingly impressive economic development in the last 40 years. Regardless of which numbers or developments we compare, everything points to an almost unbelievable change.
Let’s start from the fact that this is the shortest period in the history of humanity in which anyone has helped so many people emerge from extreme poverty. According to World Bank calculations, since the late 1970s more than 800 million people have escaped poverty in China, and today only 2% of the country’s 1.4 billion people live below the poverty line. China’s per capita GDP has grown by a factor of 50 in the last 40 years—from 155 dollars in 1978 to 8,000 dollars in 2017.
The Chinese authorities have consciously implemented poverty-reduction policies since 1986 and spent at least 70 billion dollars on targeted programmes. In addition, industrial development, urbanisation and construction of general infrastructure from land drainage to roads has created the conditions for a rapid improvement in people’s quality of life. For instance, from 1994 to 2000, around 42,000 kilometres of local roads were built as part of the food-for-work programme, which provided free food to participants in road construction.
The dramatic reduction in poverty brought with it a proportionate increase of the middle class, which in turn influenced the expansion of private entrepreneurship and a consumer boom. Ensuring a better standard of living required more resources, which in turn pressured the Chinese government into being more open and global. The demand for energy made China into an importer of petroleum products as early as 1991 and an importer of oil in 1996. In order to ensure energy and food security, China has increased its active diplomatic and economic presence in several regions around the world, from Africa and the Middle East to Latin America and countries far across the ocean.
In 40 years, China has integrated itself with the rest of the world in a way never seen before. In 1997 Chinese vice premier (and later premier) Zhu Rongji emphasised that “never before in history has China had such frequent exchanges and communications with the rest of the world”. While in 1978, China’s share of global trade was less than 1%, forty years later global trade revolved around China. In 2003, it overtook the US as the largest destination country for foreign investment. Since 1978, China has received more than 500 billion dollars-worth of direct investment, ten times more than Japan received in the period 1945–2000.
More distant observers often forget that the history of China did not begin with Mao Zedong or the communist revolution after World War II—just as the history of Russia did not begin in August 1991 or with the Bolshevik revolution of 1917.
China is the oldest surviving empire and has managed to withstand all the twists and turns of history in the course of more than 2,000 years. The founder of the Qin dynasty, Qin Shi Huang, brought China together into a unified empire in 221 BC and managed to build more than 6,000 kilometres of roads in a short time, comparable to the Roman Empire. In only 15 years, a unified system of weights and measures was implemented, a shared currency and written language were introduced and the empire was subjected to common laws. A centralised state and a highly professional and egalitarian bureaucracy kept the empire relatively homogeneous and sustainable through several dynasties. This pattern has remained more or less unchanged in China, even under communist rule.
Thanks to its centralisation, innovation and large population, China has been the world’s greatest economy for most of the last 2,000 years. Immediately before the Industrial Revolution in the West, when Scottish economist and philosopher Adam Smith wrote his ground-breaking The Wealth of Nations in 1776, China produced around one-third of the world’s output. In his hefty work, Smith described the Chinese economy in detail and saw it as one of the wealthiest places in the world throughout history. Thus, it is not surprising that the last 40 years of opening-up is now about to restore China’s role as the leader and main influencer of the global economy. It is like a law of nature that cannot be ignored.
One of the most central questions of Chinese national identity is the independence of Chinese civilisation from the rest of the world. This can be observed to a certain degree even today, as China’s central power attempts to protect its intellectual and cultural space from possible external influencers by applying censorship and internet restrictions. The continued centralisation is also symbolised by the fact that all of China follows a single standard time. (Its neighbour, Russia, has four or even five different geographical time zones.)
The results of a survey held a few years ago showed that many contemporary Chinese people would be happy to live as subjects of the Tang dynasty (618–907 AD). This was a time when China’s influence accounted for 60% of global trade. Its capital, Chang’an or Xian, was a real metropolis with a population of more than a million and a meeting point of East and West. This confirms that the majority of Chinese see strong central power as an integral part of their identity and are loyal subjects of their state.
Former US Secretary of State Madeleine Albright once described China as a country that is “in its own category—too big to ignore, too repressive to embrace, difficult to influence and very, very proud”.2 It is very difficult to argue with that.
In order to secure its sole power, the CPC has, particularly in the last decade, considerably broadened its historical perspective and sought reference points from the imperial era in order to promote the socialist Chinese Dream. President Xi Jinping is considered the most nationalist leader since the communist victory in 1949.
In October 2017, 2,600 delegates gathered for the 19th National Congress of the CPC in Beijing. The whole world listened to the speech by the General Secretary of the CPC and president of China, Xi Jinping, which lasted more than three hours. This was a manifestation of the socialist Chinese Dream.
Xi stressed that China’s main objective was to remain true to its original goals and to remember its mission, hold high the banner of the special brand of Chinese socialism, ensure a decisive victory in building a moderately wealthy society, strive towards the great success of Chinese socialism in a new era, and work relentlessly towards achieving the Chinese Dream—in order to make national renewal a reality.
“[W]e should not just mechanically copy the political systems of other countries”, said Xi, referring to Western democracy. He went on, “We should do more to foster a Chinese spirit, Chinese values, and Chinese strength to provide a source of cultural and moral guidance for our people.”3
China’s soft power and the international influence of its culture have increased considerably. In the course of its 5,000-year history, the Chinese people have established a successful civilisation, made a great contribution to the development of mankind and become one of the great nations of the world.
Xi set two great strategic objectives in his 2017 speech. China must become the global leader in innovation by 2035 and the global leader “in terms of composite national strength and international influence” by mid-century.
Both objectives seem realistic. China has already established the best innovation cluster, alongside the US and Germany, and is ranked 14th in the Global Innovation Index for 2019. (By comparison, Estonia ranks 24th.) By mid-century, China could indeed have such international influence in terms of the economy, research and military potential that Beijing’s decisions could carry the most weight on a global scale.
Even though the Chinese economy has slowed to a level that was last recorded in 1992, its 6% annual growth still beats Western countries. This, in turn, means that China’s relative rise continues at a fast pace and the imminent economic crisis could instead bring about a more rapid decline of the West’s leading position. In the last 40 years, China has emerged stronger from all major crises. This was particularly evident after the financial collapse at the end of the last decade, which curbed the development of Western countries and allowed China to speed right past them.
China became a superstate in the modern sense years before the reforms initiated by Deng Xiaoping. On 16 October 1964, China carried out its first nuclear weapons test at the Lop Nur test base, which is twice as large as Estonia, in the Gobi Desert. Operation 59-6 was a success and China officially became the fifth nuclear state after the US, the Soviet Union, the United Kingdom and France. From that moment, all the permanent members of the UN Security Council were nuclear states.
China launched a secret nuclear programme immediately after the end of the Korean War. In 1965, Chairman Mao described the nuclear programme, which was co-initiated with the Soviet Union, to the CPC Politburo in simple terms: “if you don’t want to be bullied in today’s world, you need to have one [a nuclear weapon]”. It is worth noting that China brought Operation 59-6 to successful completion on its own, due to the worsening relationship with India in 1959, which, in turn, drove a wedge between Moscow and Beijing. In the end, the road to a nuclear weapon was made possible thanks to the knowledge of the Americans and Europeans, some of which China stole.
China exploded a hydrogen bomb at Lop Nur a mere three years after its first nuclear test. This was the fastest any country had managed to begin testing a hydrogen bomb. In the years that followed, China conducted a total of 45 nuclear tests, the last of them in the summer of 1996 immediately before the signing of the Comprehensive Nuclear Test Ban Treaty.
The Chinese military currently has around 260 nuclear warheads. Their range extends up to 14,000 kilometres, thanks to China’s recently modernised arsenal of ballistic missiles. In 2011, China confirmed in its defence doctrine: it would employ nuclear weapons only as a measure of minimal deterrence and would not be the first to use them.
The targeted modernisation of the Chinese armed forces has lasted for quite some time, and the goal of having a navy with up-to-date capabilities was established in 1982. It was then that Admiral Liu Huaqing, who belonged to the CPC elite, published his strategic vision that foresaw a three-stage plan for China to develop a navy that was able to control the oceans of the world, relying on aircraft carrier groups.
Liu’s vision is being successfully implemented. Admiral Phil Davidson, Commander of the US Indo-Pacific Command, assured the NATO Parliamentary Assembly in the spring of 2019 in Honolulu that China was already able to operate successfully in the so-called First Island Chain, stretching from the southern end of the Kamchatka Peninsula all the way to the South China Sea in Japan. By the middle of the century, China will likely be capable of competing with the US for domination in the Pacific Ocean, to say the least.
The Chinese armament programme has been so extensive in the last 20 years that it already quantitatively surpasses the US presence in East Asia and the Pacific Ocean. The Americans are still ahead in terms of technology, but the gap is closing rapidly. In order to achieve this, investment in research and development is used, as well as espionage. According to a recent report by the Pentagon, Chinese intelligence has become noticeably more active in its attempts to acquire high-tech solutions in all fields of defence.
One indicator of the expansion of China’s global capacity is its presence in space. For instance, China hopes to establish a robotic outpost on the Moon by the end of the next decade, provided that the Chang’e programme proves a success. The modernisation of the Chinese armed forces is estimated to be complete by 2035, and by the middle of the century the People’s Liberation Army (PLA) is expected to be one of the world’s most capable armed forces. To this end, China has gradually increased its defence expenditure, which currently stands at 1.9% of GDP, according to SIPRI. In 2019, China’s defence spending increased by more than 7% to around 150 billion dollars. According to the RAND Corporation, a US think-thank, it may rise to 185 billion dollars by 2025. This would secure China a solid second place in the world (but it would still be less than one-third of what the US spends).
In his October 2017 speech President Xi Jinping said that China must have an army that can fight as well as win. He also emphasised that China would focus on defence logic in developing its armed forces and ensuring peace via its independent foreign policy. At the same time, China refuses to back down from protecting its sovereignty, national security and development interests.
But still, why is China creating an army capable of winning? The primary reasons are to maintain the integrity of China as a historical centre and civilisation-sized empire and to eliminate even the slightest of threats.
According to Xi:
Resolving the Taiwan question to realise China’s complete reunification is the shared aspiration of all Chinese people, and is in the fundamental interests of the Chinese nation. We must uphold the principles of “peaceful reunification” and “one country, two systems”, work for the peaceful development of cross-Straits relations, and advance the process toward[s] the peaceful reunification of China. … We stand firm in safeguarding China’s sovereignty and territorial integrity, and will never allow the historical tragedy of national division to repeat itself. Any separatist activity is certain to meet with the resolute opposition of the Chinese people. … We will never allow anyone, any organisation, or any political party, at any time or in any form, to separate any part of Chinese territory from China!
To this end, all manner of measures have been taken, from the biometric points system for monitoring citizens and exercising control over the public information space to the “rehabilitation” of the Uyghurs and securing the sovereignty of the Communist Party. The People’s Liberation Army, who must, above all, assure the deterrent against the US near Taiwan and in the South China Sea, also plays a part in it.
The second application that justifies improving China’s defence capability is the protection of the country’s global interests and critical trade routes. Piracy in the Gulf of Aden, which peaked ten years ago, finally led to China establishing its first-ever overseas military base, in Djibouti in 2017. This support base, which cost nearly 600 million dollars, gave a significant boost to China’s strategic capability in the Horn of Africa and the Indian Ocean region.
It seems very likely that, by establishing new Silk Roads and expanding China’s global reach, Beijing will inevitably need to project its military power to other strategically important countries or regions besides Djibouti in the coming decades. Tajikistan and Cambodia have already been named as potential future destinations.
It is the morning of 23 August 2019. China has just announced that it will respond to US threats by applying higher tariffs on several categories of goods. The trade war between the two great countries is becoming more heated. The time is 10.59 in Washington. The 45th President of the United States, Donald Trump, types a lengthy tweet in one breath.
Our Country has lost, stupidly, Trillions of Dollars with China over many years. They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue. I won’t let that happen! We don’t need China and, frankly, would be far better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.
Trump’s followers immediately reacted with 13,000 likes. As expected, the media were shocked and spent the whole day discussing what Trump’s next move would be and how China would react.
The trade feud between the two greatest global economies began in early 2018 when president Trump began to fulfil his election promise by raising tariffs in order to pressure China into stopping “unfair trade” and combat the theft of US intellectual property. (The US suffers up to 600 billion dollars-worth of IP losses each year.)
The hope that China, which joined the World Trade Organization in 2001, would follow the rules, open its market and end the theft of intellectual property remained wishful thinking. China has hidden its obstinate behaviour behind its developing country status. At the same time, in its official rhetoric Beijing has always supported a liberal trading system and expressed the wish that the WTO should promote these principles globally. As China grows richer and more confident with time, the more it tries to establish its own set of rules and find allies around the world to support them.
In reality, China joining the West-dominated world trade system marked the finalisation of global tectonic changes. Let us look at a trend that speaks volumes. In 1995, the world’s leading democratic industrialised states (the members of the G7) accounted for 45.3% of global GDP. At the same time, the seven largest emerging economies (China, India, Brazil, Mexico, Russia, Indonesia and Turkey—the E7) managed to produce a total of 22.6% of global GDP. However, by 2015, the situation had changed dramatically. The G7’s share had fallen to 31.5% and the E7’s had risen to 36.3%. According to consultancy company PricewaterhouseCoopers, the G7’s share will fall to one-fifth by the middle of the century, while the E7 will account for a whopping 50% of global GDP based on purchasing power.
We are witnessing the West’s rapid loss of global dominance, which it has enjoyed for more than 200 years since the Industrial Revolution. This is shocking and difficult to get used to, because we were still full of false expectations as recently as the 1990s thanks to Fukuyaman delusion. The US will suffer the greatest repercussions, which is why president Trump’s ferocity is somewhat understandable in terms of domestic policy. Nevertheless, it reflects, rather, helplessness and puzzlement. For the first time, the US is in a situation where it is facing not only a great country and power but also a global influencer which is at times more capable and confident than it is.
The time when a more serious conflict might occur between China and the US is not far off; it could happen over Taiwan, for instance. According to US analysts, it is likely to occur in the next decade. In 2017, the US National Defense Strategy pointed to China as the US’s greatest opponent, along with Russia.
The Cold War atmosphere between Beijing and Washington threatens to divide the world, which puts European countries in a particularly difficult situation. Even though the EU single market is China’s largest overseas market and trade amounts to 1.5 billion euros a day, the EU is still too amorphous in the field of geopolitical competition and does not form a pole of its own. The Common Foreign and Security Policy is weak, unconvincing when it comes to defence topics, and liable to fracture should the powerful economic interests of the member states come into play.
Formal relations between the EU and China were established as early as 1975. Although a bilateral dialogue is maintained in more than 60 fields, China has skilfully imposed on European countries an agenda based on economic interests. In so doing, Beijing has successfully managed to muffle the human rights dialogue, for instance.
The EU has still not managed to form a unified position on China. The largest members are all individually in the hunt for new billion-euro contracts. At the same time, Eastern and Central European countries, including Estonia, adopted the 17+1 format in top-level contacts with China in 2012. It is high time that EU member states understood that on our own we are an easy target for China’s huge interests. Only a shared strategic stance will help us to counter China’s growing dominance.
The EU’s strategic outlook on China, which was published in the spring of 2019, emphasises that trade relationships could work on a more equal basis if Western countries treated China as a developed country. This would pressure Beijing into assuming greater responsibility in strengthening the rules-based world order. The EU itself must get used to the changed reality of the international economic environment, and reinforce its policies and industrial groundwork. One of the best examples of the latter is that of Airbus, to which other success stories from other clusters could be added. In order to avoid China dominating the field of new technology—for instance, the development of 5G and 6G networks—the EU should significantly increase its spending on innovation and R&D. Europe should urgently ask itself: given the challenges of the 21st century, is the distribution of the majority of the EU budget to European agriculture still really a key priority?
The EU actually wields considerable leverage. In terms of volume, China considers the European single market more important than that of the US. At the same time, the development of a system of ambitious new free trade agreements has become one of the most successful shared policies of the EU. China’s neighbours, South Korea and Japan, view it as very useful. This could be a strong argument in the negotiations for an all-inclusive investment agreement, which have been going on since 2013.
However, ensuring greater transatlantic unity via the creation of an all-inclusive free trade space would be an even more effective way for Western countries to establish a long-term modus vivendi with China. It is true that this currently seems like a utopia. As a speech in Manchester, New Hampshire on 16 August revealed, president Trump considers the EU even worse than China when it comes to questions of trade. The logic of profit and loss prevents Trump from understanding the importance of an alliance built on shared values at a time of great change. Nevertheless, even he cannot fight the law of nature. It is a shame to waste so much time.
At least 15 million jobs currently depend on transatlantic trade and this figure will only grow with continuous economic globalisation. The EU, the US and Canada account for half of global consumption and around a third of global GDP calculated on a PPP basis. Another example that links the markets is that 54% of investment in the US comes from the EU and 64% of US foreign investment goes to the EU.
A shared market with more than 800 million residents would provide the West with an economic safe space, help to cope with China’s rise and influence new standards considerably better in the era of robotics and biotechnology.
A more balanced world would allow us to deal with global challenges such as climate change and population growth more productively, ensuring sustainable development—which is becoming increasingly crucial.