Comment

Europe and China’s systemic rivalry beyond the pandemic

Andrew Small / Jul 2020

Photo: European Union, 2020

 

Dealing with China over the last few months has been a jarring experience for Europe. Not all of it was a surprise. European leaders already recognized that the relationship needed to be seriously rebalanced, and most elements of the Chinese government’s behavior were present in some form before the pandemic. The threats of economic coercion, the politicization of China’s position as a supply hub, the disinformation and propaganda, the “wolf warrior” diplomacy, the reneging on treaty commitments to Hong Kong, the military escalations in China’s neighborhood, and the cyber attacks in Europe are not new as such. But the concentration, the cumulative effect, and the timing - in the midst of the most significant health and economic crisis the world has faced in decades - represent a challenge to assumptions that have long underpinned European policy.

Europe’s leaders saw China as a power that moves patiently and pragmatically. Time was on its side. Although Beijing had a revisionist agenda, it was pursued in a carefully calibrated fashion. Moreover, China was a status-quo actor when the global system - or indeed Europe itself - faced shocks. From the sovereign debt crisis to Brexit, Beijing had played a constructive, discreet and stabilizing role when the chips were down. However antithetical much of its worldview may be, the belief was that China had a vital interest in the maintenance of predictability and order in its major markets, its trading and financial arrangements, and the institutions that govern them. Beijing also made very sure never to took on too many fights at once, in order not to risk catalyzing any countervailing coalitions. It made limited but meaningful concessions when it had to. The Chinese Communist Party itself was understood to have a relatively limited and defensive ideological agenda beyond its borders. The preservation of the political system at home did not require it to attack or undermine liberal democracy abroad.

These characterizations now feel like vestiges of the Deng Xiaoping era. Xi Jinping had already moved definitively beyond Deng in his approach to China’s domestic economy and his vision for the Party. For all of the greater assertiveness and ambition he exhibited in his handling of Chinese foreign and security policy, there was still a degree of restraint. There is less of it now. This may be attributed to recklessness on Xi’s part. It may be that, when in prickly, defensive mode, the Chinese government has become prone to lashing out in multiple directions. Or the incautious approach may be the new pragmatism: that the Chinese government believes that its power position is such that it can now comfortably get away with the moves it is undertaking from Hong Kong to the Indian border, and sees a window of opportunity in which to make them. None of the explanations is reassuring.

Hesitancy in the initial European response to these developments was understandable. The pandemic required other priorities to be set aside. The recently-refreshed EU framework for managing the relationship - partner, competitor, systemic rival - seemed sufficiently flexible to be able to accommodate what was happening. A few short-term moves to deal with the immediate risks of Chinese acquisitions of distressed assets, and to push back against the disinformation and propaganda could hold the line for now. More ambitious steps, such as the EU’s new competition policy instruments, were in motion already. Any bigger rethink would await the additional clarity resulting from the US elections in November.

Yet in the meantime, the old bilateral agenda for the EU-China relationship was rolling forward with only a few timetable tweaks. The Leipzig summit, negotiations over a plan for the two sides’ cooperation through to 2025, the comprehensive investment agreement, and attempts to secure greater Chinese ambition on its climate goals remained the EU’s nominal priorities. They started to look increasingly detached from reality: more an expression of European desires than a serious assessment of the possible. There is close to zero chance of China moving ahead with structural economic reforms at the EU’s behest. Beijing’s approach to coal-fired power is demonstrably regressing. And its foreign policy in most regions of the world is ever-more infused with the ideological and competitive posture that has been so much in evidence throughout the crisis. The fact that a rebalanced EU China strategy couldn’t be achieved in a few weeks, in the middle of a pandemic, was not a good reason to proceed as if nothing had changed.

The frosty EU-China summit in June, with its plainspoken EU statement and press conference, and the absence of any agreements or joint communiques, marked the opening of the final act in the transition away from this old approach. The two sides will continue to go through the motions for the rest of Germany’s EU presidency but the signaling was clear: this is the last opportunity for China to salvage the “partnership” dimension of the relationship, one which it is hard to see Beijing taking up. There will, of course, be significant practical cooperation between the two sides but it will occur under conditions increasingly defined by competition and ideological - or “systemic” - rivalry. Europe is not alone in this regard: from New Delhi to Canberra, policymakers are now having to deal with the fact that Xi’s China is now heading in a direction that is even darker than they had feared. Not everyone has fully faced up to this - most notably Germany’s Federal Chancellery - but as the revolt over the German government’s intended 5G decision demonstrated, when the political tide turns, it becomes hard even for a reluctant Chancellor to resist.

Andrew Small

Andrew Small

July 2020

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