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The reality of Beijing’s investment in Central and Eastern European countries falls short of the rhetoric at the 16+1 summits. Numbers on Chinese investment connected to the Belt and Road Initiative tend to be inflated and misleading. Only a fraction of the reported sums is connected to actual infrastructure projects on the ground. And most of the projects that are underway are financed by Chinese loans, exposing debt-ridden governments to additional risks.

Caroline Meinhardt, Michael Laha, Rebecca Arcesati, Václav Kopecký 

Europe’s cautious approach to developing emerging technologies is hampering its global competitiveness. The European Commission’s AI strategy falls far behind China’s ambitious blueprint in several key aspects, including funding, sector-specific policies, startup incentives, and talent attraction. This article is part 2 of a mini-series to present the outcomes of the MERICS European China Talent Program 2018.

Viking Bohman, Jacob Mardell and Tatjana Romig

The Belt and Road Initiative (BRI) promises to advance global development but also carries daunting risks. If left unchecked, the project could both challenge EU cohesion and undermine European standards. The EU needs the institutional capacity to assess these risks and a coherent narrative to compete with China's. This article is part 1 of a mini-series to present the outcomes of the MERICS European China Talent Program 2018.

Lucrezia Poggetti, Frances Kitt

As political elites In Berlin and Canberra have woken up to the challenge of Chinese Communist Party (CCP) influence, they should work together to address it. The next edition of the biannual meeting of their foreign and defence ministers later this year should put the issue of CCP influence on top of the agenda.

At a time of rising protectionism, China is sending a signal of liberalization by lowering its import tariffs on cars. The unilateral move is only a first step if China wants to prove its commitment to the multilateral trading system. Sacrificing outdated protections can also help China’s transition towards a higher value-added economy.

The US president’s attacks on multilateralism may push Chancellor Merkel into an unlikely alliance with Beijing. Germany and the EU have to test ways to work with China in the absence of transatlantic coordination. The goal must be to organize an international pushback against destructive US trade policies.

Sebastian HeilmannGuntram B. Wolff

Germany’s economic success is under threat. Berlin needs to reduce the country’s dependency on exports by stimulating domestic growth―and push for robust European trade and industrial policies.

China’s growing political, economic and cultural influence in Europe is finally attracting the public attention it deserves. In this OpEd for the New York Times, former Beijing correspondent and current MERICS fellow Didi Kirsten Tatlow offers a personal view of how China expanded its footprint in Berlin since she last lived in the German capital.

(via The Diplomat)

China’s foreign relations institutions have emerged as stronger players from this year’s National People’s Congress (NPC). Taking advantage of the void left by the United States, Beijing is working to realize Xi Jinping’s vision of turning China into a global power by 2049.

News that China plans to reduce the frequency of its summits with Central and Eastern European countries has been interpreted as a charm offensive towards Brussels, where many see the 16+1 as divisive. But it could also be an acknowledgment that many of China’s economic promises to the region have not materialized or even an attempt to further divide Europe. 

Interview with Helena Legarda

China wants to develop a “world class” military force that can “fight and win wars” by 2049. So it comes as little surprise that the defense budget just got another boost. Military spending will rise by 8.1 percent this year. What’s behind this figure and China’s military modernization drive? Helena Legarda discusses the 2018 military budget and China’s strategies.

Geoffrey Hoffman (via ChinaFile)

Censorship and surveillance versus a free and open internet: China's ideas of cyber sovereignty are incompatible with how liberal democracies define cyberspace. Despite these inevitable conflicts, the two models could coexist in relative peace as long as governments focus on the shared goal of cyber defense.

Kim Jong-un’s Olympic olive branch to South Korea may illustrate the decline of US influence in East Asia, but it is wrong to assume that China is the beneficiary of these developments. Beijing has no better answers than Washington to deal with Pyongyang’s recalcitrance, and the Kim regime will not dance to any foreign power’s tune, certainly not China’s.

Jacob Mardell

Beijing tries hard to sell its Belt and Road Initiative (BRI) as a “win-win” for all. But the announcement of a new Chinese-led dispute settlement mechanism will only feed suspicions that the cross-border connectivity program is negotiated entirely on China’s terms.

Chinese media reports dismiss the current debate in Europe over Chinese political influencing. At the same time, their government is telling Western institutions, companies and organizations not to meddle in China’s affairs. China could be more persuasive if it allowed open transnational exchanges and debate - rather than using opaque channels and financial leverage to broaden its influence.

On her recent visit to China, Britain’s Prime Minister Theresa May got a foretaste of the difficult path ahead in carving out a new role for the UK on the world stage. Pressured to forge new trade and investment relationships with major powers like China, the UK might soon find out that it feels much less at home outside the EU than inside.

With little room for tightening, Beijing lacks good options to prevent a return of capital flight. China cannot afford to match the US policy changes as lower tax rates and higher interest rates would further drive up budget deficits and debt.

Rebecca McKimm
Helping ensure the survival of the Iran nuclear deal presents China with the opportunity to raise its profile in international affairs and to set the tone in the nuclear non-proliferation debate.

China is undergoing an “imperial turn” – domestically as well as in foreign politics. At home, Xi Jinping has reached the status of an “imperial chairman” at the apex of the CCP power pyramid. Internationally, China uses the space opened by the Trump administration to fill the void in effective global governance, but also to assert its dominance in East Asia and beyond.

China's holistic approach to state security does not differentiate between policies to respond to external versus internal threats. The CCP mobilizes the entire society - with a mix of persuasion and coercion - to preempt threats from both inside and outside China’s borders and from both inside and outside the CCP.
 

China works full steam on institutionalizing its cooperation with Eastern Europe, building the 16+1 initiative into a platform for its Belt and Road Initiative. The economic reality lags far behind the announcements, but the promise of Chinese investment and the symbolism of the high-level cooperation between China and Eastern Europe are turning into a stress test for EU cohesion.

The CCP reasserts its control over the private sector by extending its reach far inside foreign and Chinese companies. For foreign investors, such close and often involuntary cooperation with the party-state can bring lucrative opportunities but also lead to questionable business decisions.

China’s leader Xi Jinping rolled out the red carpet for the US President in Beijing. At the same time, he works on reducing the United States' influence in Asia on regional security, trade and economic cooperation, leaving Washington with fewer options to counter China's expansion.

Interview with Willy Lam

The 19th Congress of the Communist Party is an opportunity to take stock of five years of Xi Jinping rule. “Xi has benefitted tremendously from the world leadership vacuum left by US President Donald Trump”, says Willy Lam of the Chinese University of Hong Kong. But, he warns, China’s power projection won’t go very far unless Beijing addresses its “soft power deficit” and starts to respect international rules and laws.

The international community’s trade and financial sanctions against North Korea have few chances of improving the dismal historic record of such instruments. Chinese reluctance to enforce them and US reluctance to irritate China always leave a way out for Pyongyang.