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EU Retreat on China: A Strategic Approach for dealing with China. Keynote Speech by Secetary of State Andreas Michaelis

02.03.2020 - Speech

Take away from discussions at the Munich Security Conference two weeks ago: Question of how to deal with a rising CHN has become the top priority for the current US administration – and rightly so.

CHN growing economic, diplomatic, military and technological prowess impact almost every foreign policy issue, including the architecture of the international order itself. We would do well to treat our European relations with China with the same kind of dedication.

However, our European approach to CHN differs markedly from that of our US partners. “Decoupling” and “containment” are neither feasible nor in our interest.

We do not see a geostrategic confrontation with China as inevitable. On the contrary, we have not given up on a much broader approach, which also includes a cooperative pillar.

EEAS and Commission have developed a unique three-dimensional vision of China as our “partner, competitor and systemic rival”.

On many global issues – climate change, biodiversity, trade – China is an indispensable partner. The same is true for regional issues: the Irannuclear programme, Libya, Afghanistan and North Korea are just a few examples.

Not least: China is an important trading and investment partner for us bilaterally and we all have close scientific, cultural and People-to-People relations with China.

Particularly in economic relations China is not only a partner, it is also a competitor. Competition is a good thing – if it is fair. With regard to China, we have to improve the fairness.

But we also have to get accustomed to the fact that in some areas, China might get ahead of us and wants to do so, as expressed in the Made in China 2025 policy.

And finally, we cannot deny the fact, that today´s China is challenging key elements of the rules-based international order, be it human rights in Xinjiang or international maritime law in the South China Sea. It is thus also a systemic rival.

But how to shape a European China policy that takes the three dimensions into account is supported by all and keeps the relationship with China in a workable balance?

Making sure that we all see and agree on all the three dimensions is important starting point. We cannot come to a unified China policy, if some of us only see the partner, and some only see the systemic rival. We have to agree on the full picture!

But not only our analysis, our policy also needs to address all the three dimensions and be pursued by the whole EU and its Member States. With the support of the Commission and the EEAS, Member States – i.e. we who have gathered here tonight – must define common approaches in all these three dimensions.

Let me share some thoughts on how to do this:

First: how to balance the two opposite ends, the partner and the systemic rival?

We must have a principled approach on both of these: We must make clear, that Europe has core interests as well.

I would define ours as: EU unity, respect of international law, human rights, free, open and fair trade as well as the principle of dialogue and cooperation.

We must speak up, where our rules-based core interests are impacted AND at the same time defend dialogue and cooperation with China. Otherwise the balance of our relationship with China will be lost – and with it maybe also EU-unity on China.

The interests of all EU member states will be better served by a strong and united EU. This also entails that the interests of all the members are well reflected in our common EU agenda.

We must also put more weight into the partnership with China.

This year´s encounters with China, especially the Leipzig Head of Governments meeting with China's president XI Jinping will make an effort to strengthen the partnership side of the balance – against the backdrop of a growing “promise fatigue” in Europe.

Both sides – China no less than the European Union – are investing a lot in the Leipzig meeting. It is a unique opportunity to make progress on our bilateral relationship (e.g. through the conclusion of the EU-China investment agreement). It is also an opportunity for CHN and the EU to make a global contribution for instance in the realm of climate policy.

We have to impress on the Chinese that this chance must not be lost.

Second: “China policy” is not only the bilateral relationship we entertain with China.

China policy means: dealing with China's rise, its weight and its three dimensions. You will find China policy within the EU-internal policies, within member states domestic policies as well as within the EU´s foreign and trade policy.

For instance with regard to China as a competitor: Apart from continuing to try to make China adopt fairer practices, the main focus needs to be at home in the European Union, increasing our own competitiveness.

We need to strengthen our capacity for innovation and lead a discussion about European technological sovereignty in critical infrastructures.

We need an EU-industrial and competition policy that gives us leverage against unfair practices and makes us fit to compete with China on the world market.

And when we (occasionally) talk about reciprocity, our goal is not protectionism, it is a positive kind of reciprocity – making China (and others) as open as we are in Europe.

Third: We must not become economically dependent on China - I am saying this especially in our own direction. We’ve seen it in the past: China uses economic dependencies for its political aims.  

We must care for the European Internal Market after Brexit as our prime source of growth and well-being in Europe.

On top of that, we should continue to diversify our economic relations through the very active and successful Free Trade Policy that the EU has been pursuing.

Don´t get me wrong: Diversification does not mean Decoupling! Diversification means: China plus one…or two…or more.

Fourth: We need to find a sustainable answer to US China policy. Our different approaches do not mean that we cannot cooperate. Nevertheless, we do not want to have to choose between China and the US.

The debate about European Sovereignty is indispensable and we must turn it into concrete Action.

To conclude, let me get back to EU-China relations:

The way China looks at us is probably not so different from the way we look at them. China also sees the EU as a partner, but at the same they also see in us a competitor and a systemic rival.

However, it becomes more and more obvious that CHN makes political alignment with its “core interests” a precondition for economic or political partnership.

If we do give in to this pressure, we will lose: our values, our credibility, our freedom and our sovereignty.

There is only one way to counter this: a principled approach that we pursue together in unity, making clear: China to us is not a partner OR a competitor OR a systemic rival, it is a partner AND a competitor AND a systemic rival.

Balancing this three-dimensional EU-CHN relationship, accompanying it with EU-policies directed at ourselves and at our partners is what we should be focusing on in 2020.

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