Europe must keep engaged with China

Europe, China, and the US: a turbulent triangle

Victor Ângelo

 

European policy towards China requires a smart balance between respect for democratic values and economic interests. It is a complex issue that touches the daily lives of European citizens. You only have to look at the map of rail connections - 5,000 freight train journeys are expected in 2021 - or at the sea charts showing the routes of cargo ships to understand the interdependence between Europe and China. We need to import what we do not produce - or have stopped producing. The Chinese need our markets to ensure important levels of economic growth, one of the pillars of internal stability and regime continuity.

This interdependence has increased spectacularly since Xi Jinping came to power in 2013. It is part of his strategy. And the trend is for it to accentuate in the coming years. In addition to mutual investments and the increasing purchase by Westerners of Chinese stocks and treasury bonds, note that the economic corridor is more and more diverse. Some lines pass through Russian Siberia, others through Kazakhstan. Later, there will be a land link via Iran and Turkey, not forgetting the sea routes, which rely mainly on the ports of France, Italy and the Netherlands. The smooth functioning of this vast transit area requires a permanent political dialogue between the countries, which will have to be based on an understanding of mutual interests and perceptive pragmatism. To facilitate this dialogue and open a wider door, Europe should take the initiative to propose the creation of a consultative platform for the Eurasian corridor. Any disruption of traffic, for political or security reasons, would have a dramatic impact on the economy and people's lives, particularly in the European area. This tangle of relationships stems from the process of globalisation that began more than two decades ago. Anyone who thinks that the way in which the international economy is now organised can be significantly reversed is dreaming politics without having their feet firmly planted in reality.

The disruptions currently occurring here in Europe in the supply chains for raw materials or finished products produced in China and the escalating cost of transporting a container from a Chinese port to a European one already give us a bitter taste of what could happen if there were a serious disruption due to disagreement between the parties or the imposition of ill-considered sanctions. For example, before the pandemic, transporting a 40-foot container by sea from Shanghai to Europe could cost between $2,000 and $4,000. Now it has reached $17,000 and the waiting time can be up to several months. And this is despite the fact that Chinese container production accounts for more than 85% of the world's total. These problems may be temporary, the result of an acceleration of economic recovery in the more developed parts of the world and the pressure they put on shipping. Any European importer who needs made-in-China goods or components to maintain their manufacturing activities will be well able to explain the importance of a trade relationship without unnecessary hindrance. The more informed will also stress the need to avoid a further escalation of tensions in Taiwan and the South China Sea. This also applies to the Chinese side, which should not continue to pursue an escalation of offensive actions in these sensitive areas.

In a deeply interconnected world, one cannot think geopolitically and make strategic decisions following past models or seeing the world as a black and white scenario. The Americans have chosen a path of confrontation. On this side of the Atlantic, that option appears to be a dangerous choice and contrary to our interests. This is why Europe cannot and must not copy Washington.

(Automatic translation of the opinion piece I published yesterday in the Diário de Notícias, the old and prestigious Lisbon newspaper)

 

 

Europe and China: a difficult dialogue

The summit call that took place today between the EU leaders and President Xi revealed a gulf of differences between the two sides when it comes to political values and the interference of the State in the economy. On the European side, reference was made to human rights as a fundamental value, as well as to the Chinese leadership’s policies towards the Uighur minority, Hong Kong, and Taiwan. President Xi did not like what he heard. But he could notice that the Europeans consider these matters fundamental and will continue to be raised in the future. At the same time, the economic relationship between both sides will continue – the trade between them amounts to one billion euros a day. And on this matter, the key issues will remain and must be addressed. The Chinese must open up to European investment and cease all kinds of political meddling in the governance of European firms already operating in China.

In the meantime, and as we wait for progress on these fronts to be achieved it is becoming clear that Chinese investments in critical European infrastructure can only be accepted if they do not put at stake the strategic dimensions of European security and stability.

The two sides must cooperate. They are key players in the international scene. It is therefore important they keep talking and be frank when doing it.

Without borders

My point is that the borders should re-open shortly. First, the borders between European states, the Schengen area. To keep them closed for longer has a tremendous impact on the economy of the countries concerned and feeds the prejudiced views that the nationalist extremists try to propagate. Europe is about freedom of movement and accepting the others as fellow Europeans. To erect borders and obstacles between the countries undermines that critical dimension of the European Union. It sends an extremely negative message about the other. It makes us go back to the old suspicions and narrow views.

Second, it is necessary to resume international travel, well beyond the European space. Most of the progress that has been achieved during the last decades is linked to international contacts, to a global view of trade and tourism. Our world, the world we built during the last decades is based on mobility.

We have, of course, to ensure the safety of those who will be travelling as well as protect the health of those providing the services to this economic sector. That is possible. It does not require we keep each nation behind thick walls.

Notes about China and Europe

In the last few days, I have re-tweeted some articles on China, must of them without a personal note about their content. Just sharing. I did it because I think we need to have, in this part of the world where I live, a serious debate about the future of our relations with China.

Looking ahead, my starting points are two. First, the growing hostility between the US and China is dangerous for both countries and for the rest of us. I have written about that and I will keep repeating it. I see such antagonism spreading in the US, both among Republicans and Democrats. And it has now reached some other circles in the West, from Australia to Europe. The second point is that the European Union must engage positively with China, meaning, in a balanced and frank way, defining clearly what we expect from this relationship and what are the limits we cannot cross. The Chinese would be expected to do the same. Such dialogue would be based on the understanding that both sides would gain from a close and fair relationship.

I do not want to spend time commenting on the internal politics of China. However, I should be clear about such an important matter. My approach is that there are values we all must follow. The list would include freedom of speech, human rights, and acceptance of political diversity. A leading country must be a sharp example of full respect for such values. In our dialogue with China, as well as in our policy discussions with the US, Russia, and others that play paramount roles in the world, we cannot ignore such values. The younger generations expect us to act based on fundamental principles, that are common to all peoples.

Having said that, I do recognise the great achievements the Chinese can legitimately claim and the potential they have for further innovation and the betterment of their society. I also know some of the contributions they made to the growth of other nations. All that is incredibly positive. I am also aware of China’s increased contributions to peace, security, and development in various parts of the world.

There is -- and there will be in the times ahead of us -- a good number of Western politicians that will try to gain popular support by systematically attacking the Beijing leadership. Please do not count me in that group.

The UN's appeal must be heard

The UN Secretary-General launched yesterday an appeal for funds to help the developing countries to tackle the Covid-19 pandemic and to finance their socio-economic recovery. António Guterres stated very clearly that this pandemic is by far the deepest crisis the world has faced since World War II. It has many dimensions and all of them tremendously affect the weakest people in the poorest countries of the world. The amount he deems necessary is about $8 trillion US, meaning 10% of the global GDP.

I agree with the Secretary-General’s analysis, approach and amount he is looking for. But I am extremely pessimist as it regards to the response the richest countries will provide. Every country, in the better off regions of the world, is desperately looking for resources to deal with the impact of the Covid-19 within their own borders. The call for international solidarity is a distant call. It will not be heard. The developing world will be left to its own fate.

The developing countries that were better connected to the global economy will gradually re-establish those connections. It will take time for different reasons. The logistical chains of supply have been seriously disrupted, the demand in developed economies will remain weak for a good period and there will be an attempt to produce locally what was up to now imported from afar. International trade might take a new shape, to operate within smaller circles of nations.

The countries that were outside the global sphere of production and commerce will continue to struggle at subsistence level. Poverty will continue to be as widespread as it is now. The opportunities to go beyond the local level will not open. And we can easily guess that international cooperation and aid priorities will go further down in the multilateral agenda.

In both cases, food production for local consumption will become the central concern. Any assistance to the agricultural sector will make a difference. The other concern will be to maintain peace and security in societies that have been profoundly de-structured and further impoverished.

The media that matters is too busy with the Covid-19 progression in the most developed societies to give any serious echo to Antonio Guterres’s appeal. No media attention means additional hurdles in terms of money mobilisation. 

Independently of the success of this initiative, the Secretary-General did the right thing. He must be the moral voice of those who are too far from the wealthy and the powerful to be heard.  

Contain, contain, contain

Today’s word is containment. Every government should ask themselves what they can do to more efficiently contain the epidemic. That must be the priority. But containment is not just about the disease. It is a lot, a great deal, about the disease. Indeed. But is also about the panic and the epidemic’s impact on key sectors of the world’s economy.

My reading of the G20 summit (2017)

On the recent G20, the negative issues on the table, either openly or coated in diplomatic words, could be summarised as follows:

- The risks linked to international uncontrolled massive migrations;

- The US withdrawal from the Paris accord on Climate Change

- New trends towards trade protectionism

- The attempts to side-line key international organisations, including the UN, the WTO and the Human Rights Council.

The positives, as I see them:

- Establishment of a new fund, to be administered by the WB, to promote the entrepreneurship of African women; USD 325 million.

- The review of steel overcapacity issue and the recommendation that a plan of action should be prepared by Nov. 2017 to address this most divisive economic and trade issue.

- More coordination on the fight against terrorism and violent extremism.

- The leaders have shown they want to find a common ground on a number of issues.