Tag: trade

  • Europe is not essential for Xi Jinping at China’s epochal moment with the US. That offers opportunities too

    It is not just Beijing’s steadfast support for Putin’s Russia that raises questions about China’s true commitment to better ties with the European Union (EU). The charm non-offensive of empty gestures towards Brussels as the US-China trade war hots up also makes abundantly clear how Xi Jinping really thinks about Europe.

    Europe is not essential for Xi. The EU is a nice-to-have, not a must-have. The main show is the match between what the Chinese Communist Party (CCP) elites observe as declining US hegemonism versus the rising developing world with China at its core. To use Maoist terms: this is the principal contradiction of the current Moment in History. That is why Europe sees overpromising and underdelivering: there is no commitment to follow through at the highest levels in Beijing.

    It is the indifference rather than active antagonism that truly makes clear Europe’s lack of importance to Xi. Europe is a wavering middle force in the Maoist narrative. Yet this also makes it less necessary for Beijing to spend much capital on punishing Brussels. At the same time, Europe can make greater effort to drive home China’s need for access to the EU’s Common Market. The resulting position can offer Europe the space it needs to take the measures against Chinese threats to its industrial foundation without the fear of crippling Chinese punishment.

    Strategic indifference

    When Xi Jinping left Moscow following his 2023 state visit, the cameras famously caught him telling Vladimir Putin that they together were driving the ‘changes unseen in a hundred years’. Returning for another state visit in 2025, Xi signed three joint declarations with Putin that further operationalised their countries’ strategic partnership.

    The close diplomatic relationship between Beijing and Moscow goes back to the end of the last century. China has been indifferent to the harm caused to its ties with Europe by continued ideological alignment with Russia after its full-scale invasion of Ukraine in February 2022. President Zelenskyy complains about support for weapon production as visiting Europeans tell Beijing about their problems, only to be met with denials and justifications.

    The lack of Chinese moves to meet European concerns on Russia can be explained by the unique strategic importance of the bilateral relationship. The lack of clear consequences from Europe also strengthened Beijing’s conviction it can get away with it. Yet the real diplomatic damage must be obvious to the Chinese foreign ministry.

    However, Beijing’s strategic indifference is also obvious in other areas besides its important ties with ‘great power’ Russia. The global trade war launched by US President Donald Trump and the accompanying political attacks on Europe by Elon Musk and Vice President JD Vance have caused many in the EU to reconsider ties with the US. Yet Beijing has not meaningfully responded to the opportunities this offers.

    European Commission President Ursula von der Leyen and EU trade chief Maroš Šefčovič mollified their language on China following Trump’s election victory. Beijing responded with some supportive language and outreach in the form of visiting vice ministers. The meagre substance of what has been called a Chinese ‘charm offensive’ by some makes clear the message is that there is no new offer in the making. Beijing simply hopes that Brussels goes to Canossa and admits that the CCP was right about the danger of the US and that Europe’s economy cannot do without China.

    The first clear signal came when former ‘wolf warrior’ ambassador to Canada and France, Lu Shaye, was appointedBeijing’s special envoy for European affairs. Europe has to swallow complaints about Lu’s Soviet-friendly worldview and deal with him. In a recent interview with the CPPCC Daily Lu makes clear that there is no recognition that EU worries are legitimate. There are no fundamental conflicts of interests between Europe and China in his book, Chinese new technology exports helped the EU fight carbon emissions and inflation, and Lu heard many voices for the revival of the dead Comprehensive Agreement on Investment (CAI).

    Much was made off China lifting sanctions on members of the European Parliament. However, rather than create goodwill, this move only signalled Beijing’s cynicism. There had been months of rumours about discussion proposing mutual lifting of sanctions. The Commission was just not interested, given the view that the problems in Xinjiang had not improved while Beijing’s countermeasures had crossed a line. In return, Beijing worked with the European Parliament (EP) to create the suggestion of momentum without giving a crumb more than needed. It only lifted sanctions on sitting MEPs. That was enough to remove a blockade on official contacts with the EP and not a bit more.

    Meanwhile, European officials of various stripes increasingly feel that there is no chance for meaningful concessions from Beijing on core economic issues. EU ambassador Toledo suggested the EU might walk away due to the lack of progress. Beijing happily works with a select few member states to offer disappointing assembly factories while denying the complaints about structural issues.

    Principal contradiction

    Many experts have pointed out the obvious fact that Beijing cannot concede on many of the EU’s core worries, because it would require major modifications to the political and economic model that Xi Jinping deems essential for China’s grand rejuvenation. However, in the past China has shown it is willing to compromise if deemed essential to its interests. The problem for the EU is that to Beijing Europe is a side theatre to the main conflict of the Moment.

    Official CCP language has always been satiated with the language of struggle. The trade war between the US and China is no exception. Even when they might downplay the language in English, the original Mandarin makes clear in what terms the Party conceives of the trade war. The April Politburo meeting spoke about the ‘international economic and trade struggle’ while the Beijing Daily invoked Mao Zedong’s concept of ‘protracted warfare’.

    ‘Struggle’ is what a Marxist uses to resolve contradictions. The closer to resolution a contradiction gets, the more intense the situation becomes. The various commentaries in Chinese state media attack the US for the hegemonism and unilateralism of Trump’s tariffs and other trade measures. It places this in opposition to China’s openness and the Global South’s right to development. Beijing positioned itself as united the forces for the rules-based multilateral trading system.

    One of the ‘unique contributions’ of Maoism to Marxism-Leninism is the idea of the principal contradiction. In each arena at each specific moment of time, the configuration of structural forces gives rise to one contradiction that dominates. To move that arena forward in Time requires to first focus on resolving that principal contradiction. This gave rise to the so-called ‘united front strategy’, a tactic to isolate the main enemy by finding allies and weakening the resolve of potential opponents.

    To achieve this aim, minor contradiction can be temporarily put aside. This is why the CCP worked with third-party forces in the Chinese Civil War against the Chinese Nationalists. Of course, after the CCP’s victory, those third-party forces found themselves the targets of the new principal contradiction and were wiped out in turn. Struggle is never ending, as the later targets within the CCP found out a decade after that. Yet, until that moment, the new enemies of Mao Zedong’s Anti-Rightist Campaign and Cultural Revolution had been ignored.

    In the international area, the current principal contradiction is the tension between declining American hegemonism and unilateralism on the one side, and on the other side growing ‘democratisation’ and multilateralisation of the international system because of the rise of developing countries with China at its core. This is a story of the US lashing out in decline while China leads the Global South to a new, more democratic world order. Europe does not play a major role in this narrative. 

    Space for European interests

    It is important for Brussels to realise how little the EU matters to China’s top leaders. China is a big country with many interests. Beijing has a lot of officials that work on Europe. Yet, ultimately, they are limited in what they can do as far as it concerns Chinese core economic interests, because Xi Jinping simply does not think about Europe that much.

    The EU is important to Xi as far as its big market is nice to have and his story of a new multipolar world can benefit from a convincing European pole. Weakening the unity of the West by targeting ‘wavering middle power’ Europe can be part of a united front tactic to isolate the US. In the end, however, the position of the EU is not systematically important when Xi weights the forces of History of this Moment.

    This sobering reality should lower expectations in Brussels about what can be achieved in trade negotiations. The EU is not worth sacrificing what Xi Jinping regards as core strengths in China’s political and economic system in the struggle with the US. European industry must brace for impact.

    Yet, the relative indifference to Europe by China’s top leaders also offers space to develop responses to this. If the EU is not important enough under the current principal contradiction to offer major concessions, it is also not vital enough to waste large amounts of resources on in punishment. Brussels can be braver in adopting policies to protect the future of the EU’s industrial foundation in the face of an onslaught of underpriced Chinese goods. The EU is apparently not worth overly expensive carrots, but conversely also sticks too dear.

    There is a method behind seemingly erratic Chinese punishments for European infractions in the past. The campaign against Lithuania after the Taiwan office in Vilnius and extreme Chinese countersanctions after EU restrictions on Xinjiang officials concerned issues that were core enough to reach elite people and did not require a large amount of capital to punish. This does not necessarily apply to economic measures. 

    Brussels can also create more space. Beijing’s neatly rounded Marxist story of history can leave out some essential facts. China’s export economy will only grow more dependent on the EU’s Common Market. Europe is poised to be the largest remaining rich consumer economy now the US is closing itself off. Beijing needs to be reminded of this fact and, through a show of unity, disabused of the notion that it can continue dividing the member states with meagre offers.

    Countless think tanks have produced reports on what the EU needs to do to save its economic future. The Draghi report was well-received because of the realisation it is time to act. It is not necessary to repeat the recommendations here when better-equipped people have written more eloquently about them. It remains to point out that there is more room to move than some think.

    Beijing has been very good at inculcating fears for retribution in foreign capitals. Yet Europe too should not pre-emptively disarm itself. Its lack of importance in China’s narrative means it cannot expect much from Beijing. However, it can be a blessing, when Europe realises it does offer the space to not look for gifts from China but do itself what is necessary in its own epochal struggle.

  • Xi Jinpings Chinese Droom maakt handelsconflict met Europa onvermijdelijk

    Elektrische auto’s zijn de inzet van oplopende handelsspanningen tussen China en de Europese Unie. Chinese staatssteun zou een bedreiging zijn voor de Europese auto-industrie, een essentiële pijler van de Europese economie. Brussel is een onderzoek begonnen. In juni kwamen er al voorlopige invoerheffingen. Daarop nam Peking al cognac, brandy en varkensvlees uit Europa in het vizier.

    Dat weerhield Brussel er niet van door te gaan. Nu reageert China op de volgende stap in het EU-onderzoek door zijn pijlen te richten op Europese zuivelproducten. Dreigende geluiden in de richting van Europese auto’s met verbrandingsmotoren worden ook concreter. Een handelsconflict lijkt nog lastig te vermijden. Tegelijkertijd moet Europa niet onderschatten welke troefkaart het in handen heeft dankzij de gemeenschappelijke markt. 

    Het is duidelijk dat Peking een gerichte campagne is begonnen. Doel is om een meerderheid van EU-lidstaten te overtuigen tegen te stemmen, wanneer in de herfst de definitieve beslissing genomen moet worden genomen over het onderzoek naar elektrische auto’s. Duitsland was vooraf al tegen. Nederland moet er echter vanuit gaan, dat de meeste EU-lidstaten niet anders kunnen dan doorzetten.

    De economische botsing is namelijk structureel. Subsidies waren altijd al ingebouwd in het Chinese politieke systeem. Nu vereisen de plannen van president Xi Jinping dat buitenlanders nog meer delen van hun industrieën opofferen aan goedkope producten uit China. Daarmee brengt hij zijn land op ramkoers met de halve wereld. Nu gaat het conflict namelijk om de lucratiefste, hoogwaardige producten.

    Xi Jinping introduceerde in 2012 de Chinese Droom. Doel is de ‘terugkeer’ van China naar zijn ‘historische’ rechtmatige positie als grootmacht. Voor rechtgeaarde marxist Xi is een fundament van economische kracht hierbij essentieel. Juist aan dat fundament schort het de laatste tijd. De Chinese consumptie is zwak sinds de coronapandemie. Dat komt boven op de vastgoedcrisis, begonnen met maatregelen om onhoudbare speculatie een halt toe te roepen.

    Stimulans blijft echter uit. De communisten in Peking menen dat ‘gratis geld’ de Chinese burger net zo lui zou maken als de decadente Europeanen al zijn. Volgens hen is een economie die tastbare producten maakt in plaats van ongrijpbare diensten consumeert een vereiste voor de macht die de Chinese Droom mogelijk maakt.

    Het ‘nieuwe ontwikkelingsparadigma’ (xīn fāzhǎn géjú 新发展格局) van Xi uit mei 2020 voorziet hiertoe in de zogenaamde ‘dubbele circulatie’ (guónèi guójì shuāng xúnhuán 国内国际双循环), twee onafhankelijke economische sferen. Een onafhankelijke ‘binnenlandse circulatie’ moet de Chinese economie beschermen tegen sancties en schokken. In de ‘internationale circulatie’ moeten de mondiale leveringsketens juist afhankelijk worden van China, wat Peking geld en macht oplevert.

    Het zijn de technologieën van de toekomst die de werelds afhankelijkheid van China moeten versterken. Dat staat bekend onder weer een ander xiïsme als de ‘nieuwe productieve krachten’ (xīn zhí shēngchǎnlì 新质生产力). Dit zijn de technieken achter elektrische auto’s en kunstmatige intelligentie – niet om streaming en spellen. Brussels subsidieonderzoek is een bewijs van Pekings succes.

    De Wall Street Journal legt uit hoe dit er in de praktijk uitziet. Onder de noemer van „eerst maken, dan breken” (xiān lì, hòu pò 先立后破) zet Peking in op high-tech industrieën waarin China graag dominant wil worden. Ondertussen moeten de oude ‘laagwaardige’ maakindustrieën nog behouden blijven. Het gevolg is dat overheden elkaar overtreffen in subsidies voor nieuwe producenten terwijl verlieslijdende fabrieken ook in de lucht worden gehouden.

    Teruglopende bouw is echter funest voor de vraag naar bijvoorbeeld staal. Onzekere consumenten hebben minder geld voor nieuwe auto’s. De buitenlandse markt moet daarom uitkomst geven. Als China niet meer consumeert maar wel meer produceert, dan zullen buitenlanders de spullen moeten kopen die Chinese fabrieken maken. Als die buitenlanders niet plotseling veel rijker worden, betekent dit dat de rest van de wereld minder moet produceren.

    Handelsblatt schrijft dat de Duitse industrie een nieuwe China Shock wacht. Westerse bedrijven hebben lang veel geld verdiend door de laagwaardige stappen in hun productieproces naar Chinese fabrieken te verplaatsen. Chinese producenten leerden vlug en konden al snel zélf goedkope producten te maken die het al langer goed doen in ontwikkelingslanden. Nu zijn Chinese techbedrijven en automerken echter opgeklommen naar het hogere segment.

    Chinese merken vormen nu een directe bedreiging voor Westerse kampioenen. Berlijn én Brussel kunnen Pekings succes niet langer negeren. Europa zal de eigen industrie niet helemaal kapot laten gaan om alles vervolgens uit China te importeren. De kortermijnbelangen van Duitse automakers met fabrieken in China wegen uiteindelijk niet op tegen de langtermijnbelangen van het continent. Het begin van die botsing zien we nu.

    Ons voordeel is, dat de Europese markt essentieel is voor het slagen van China’s transitie naar de ‘nieuwe productieve krachten’. De minder kapitaalkrachtige consumenten in ontwikkelingslanden vormen (nu nog) een te kleine markt voor de afzet die de Chinese industriële opwaardering nodig heeft. De Amerikaanse markt is hermetisch gesloten. Consumptie in eigen land blijft achter. De enig overgebleven rijke markt van serieuze grootte is de Europese.

    Bij de exportcontrolemaatregelen die ASML treffen valt nog te twisten of het de Chinese voortgang effectief bevriest. Dit handelsconflict is echter geen complex technisch vraagstuk, maar een simpele economische afweging. Een open vraag is of Peking uit wanhoop aan gaat sturen op een totaal handelsconflict, of dat het uiteindelijk te afhankelijk is van Europese vraag (en componenten) om veel meer dan kaas en cognac tegen te houden. Wat het ook wordt, Nederland kan zich maar beter toeleggen op de juiste uitvoering dan het stoppen van dit onvermijdelijke conflict.