Tuesday, July 16, 2019
Home World "For the Chinese, European positions are always the cause"

"For the Chinese, European positions are always the cause"

Arrived Sunday of Italy, Chinese President Xi Jinping begins today his visit to France, where Emmanuel Macron will try to persuade him to play according to the rules of a multilateralism badly in point and while the Europeans are divided in front of the diplomatico-commercial offensive of Beijing. Global governance, trade rules, respect for the environment, investments … The Chinese titan is changing the face of the world by investing massively everywhere.

But the most important part of this state visit will undoubtedly unfold this Tuesday morning, when the two leaders will be joined by the German Chancellor, Angela Merkel, and the President of the European Commission, Jean-Claude Juncker. Europe is openly worried about the increasing number of chinese investments on its soil. Beijing has indeed invested in several strategic assets of member countries, such as the port of Piraeus in Greece, or the Portuguese electricity supplier.

Last investment in date: that of Italy. China has just joined this founding country of the Union to its project of maritime and terrestrial infrastructures of "new road of the silk". An opening that preoccupies some European leaders, critical of the Italian populist government. François Godement is adviser for Asia at the Montaigne Institute. A specialist in China, he is also a senior associate of the Carnegie Endowment for International Peace. He explains China is becoming more and more ubiquitous (1).

Europe seems to suddenly discover China's hold on it and the rest of the world. How to explain this delay?

This is the culmination of a big gap that has lasted since the crisis of 2010-2011. China talks a lot with the European institutions, but these are lengthy discussions, especially in the economic or human rights field. But in parallel, Beijing has continued to multiply bilateral negotiations with each of the twenty-eight. And even beyond that, since partnerships have been formed within these countries called the "16 + 1" format, which is made up of China and sixteen countries of Central and Eastern Europe (2). For the past four years, the alliances within the framework of this Format have been around the Chinese initiative of the "New Silk Road". Of these sixteen countries, five are Balkans and EU accession candidates. All are sensitive to Chinese offers to finance infrastructure projects.

Infrastructures that are supposed to promote the transport of goods between the Far East and Europe …

And which are registered, according to Beijing, in the project of the silk roads. But this name covers everything and anything. China proceeds with Europe in the same way as it does with the African Union and the African states: with a dose of formal recognition of the regional organization, its speech is meant to be integrative. But once this approach has been adopted with regional authorities, Beijing is putting the package on bilateral negotiations. And of course, in either case, it does not pose political conditions for its investments. That's what she just did with Italy.

Does it respect its commitments?

If we look at its investments in Europe, we realize that they are not where it had made promises: this is the case of the countries of the "16 + 1" format. Many Eastern European countries realize the gap between promises and acts.

Has China contributed to this awareness in Europe?

It contributed by refusing to deal with the major issues of international macroeconomics such as the undervaluation of its currency, its trade surpluses, the opening of its market or even the access to public services … Regarding the conditions between Europe and China, we are at the 20the round of negotiation. Result? Zero.

Zero for Europe?

Meanwhile, China has continued to increase its economic and political footprint on Europe and the rest of the world.

How does the trade war between Beijing and Washington play in favor of Europeans?

This is a factor that does not work in favor of Europe, because the United States is much more convincing than the Europeans as a threat. They are not 28 and do not have problems with integration. Whether economic or geopolitical, their strike force is immediately mobilizable. Europe can talk, be indignant, but it is not certain that it can fight back so quickly.

Should we move closer to the United States to join forces?

Not during the Trump era, which has only one idea: to put down international institutions when we need them. The United States has natural monopolies like Silicon Valley and Gafa. China has the batteries … Europe sells a bit of everything to the rest of the world, but without the exclusivity … What is not the case of China and the United States. Without international rules for trade, Europe risks the worst.

Does China give priority to the United States when it comes to bargaining?

It's obvious. It does so because it understands that Europeans can speak with one voice today, and act individually tomorrow according to their interest. For the Chinese, European positions are always the cause.

But the real problem is not that China enjoys the international status of a developing country, when it is no longer …

This is a central topic. In fact, China is still considered a developing country since joining the WTO in 2001. And because of this, it still benefits from favorable trade rules, such as the ability to protect strategic sectors. Thanks to this status, it does not adhere to the international system of public procurement …

It is a vice of "manufacture" of the WTO …

It is all the more absurd because it is China itself that will choose the moment when it will leave this status. This is the main reason why Europe is trying to do everything to save the WTO because it needs it. Faced with the non-response of China, it adopts a defensive position going so far as to say that it could adopt an industrial policy. And the first condition of this industrial policy, according to Commission documents, would be to change the rules on how Europe approaches the subject of competition.

How to understand this condition?

Until now, Europe did not take sufficient account of the competition rules of the rest of the world. Let's hope it stops looking at how EU countries grant subsidies without looking at what other big countries are doing. Certainly, some will say that Europe finally wakes up, but the problem is that we move forward and then back. We have a double language. Italy is an example. The previous government had a cautious stance towards China, while being virtually the first destination for Chinese investment. And there, the new government turns around.

Which European sectors are threatened by China?

Those where she is in overcapacity. This is the case of steel, aluminum, ceramics, solar panels … And we will soon have batteries that are about to be at the heart of the global automotive industry. Should we remind that China subsidizes this battery sector. Same for the 5G. China has a billion smartphones, it will soon have tens of billions of connected objects. And it invests 180 billion euros in the 5G network. Because of its size, it will have unbeatable production costs.

Are you pessimistic?

Not totally, because I think that the numbers on the Silk Road are inflated a lot. It will be read everywhere that it is $ 1.2 trillion in investment. Many estimate that over the last five years, it is rather 200 billion. I insist: when we talk about the Silk Road, we talk about everything and nothing, the Chinese talk about 65 countries. The Silk Road is a metaphor for evoking external economic expansion with credits and infrastructure. We must not seek to give a geographical definition to the Silk Road, or we would have the world less the United States.

(1) Latest work: China on our doorstep, a strategy for Europe, co-authored with Abigaël Vasselier (Odile Jacob ed.)

(2) Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary, Romania, Bulgaria, Slovenia, Croatia, Serbia, Bosnia and Herzegovina, Montenegro, Albania and Macedonia.

Vittorio De Filippis

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