In May 2020, as the EU-China tensions rise, Margareth Vestager, EU Commissioner for Competition, voiced concerns over Europe’s lack of “strong knowledge on contemporary China.” Vestager’s concerns are important because knowledge, perception and policymaking are closely tied in international politics. Nevertheless, how does a mere deficiency in China scholarship affects one of the world’s largest economic powers? Simply put, this dearth of knowledge yields at least two critical consequences for the EU. First, Brussels’ limited understanding of China may negatively impact the soundness of the many EU policies involving China, from trade to competition. Second, misperceptions of what China is and wants could push the EU towards an excessive alignment with Washington’s strong China stance to the detriment of its own interests, which could be better served by a more autonomous European approach. Hence, given the stakes, some reflection upon the representation of China on which the EU conducts its policymaking is long-overdue.
Representations are important in social life, including politics, for they constitute a cognitive basis on which individuals and groups engage with outsiders and themselves. Thus, back in the early Enlightenment, Jesuits’ accounts of China fed into the European philosophers’ meditations on ethics and non-arbitrary government as a powerful case study, which suggested that sustainable enlightened governance and areligious morals were possible. In a way, the Europeans’ representations of China played a key role in the rise of European Modernism. Nowadays, the EU bureaucrats’ meditations on ‘The End of Naïvety’ and China as a ‘systemic rival’ led to the toughening of many EU ‘naïve’ policies, which have had the benefits of arming the EU cruise ship to better navigate increasingly geopolitical waters – e.g. the upcoming anti-foreign subsidies instrument. In both cases, the Europeans’ representations of China were key in engaging with themselves and the world.
However, unlike in the Enlightenment, the late European thoughts on systemic rivalry, which draw from an American ‘all-powerful’ representation of China, seem to inform many though policy moves that directly affect Brussels’ relations with Beijing. But, is this understanding of ‘all-powerful’ China accurate? While it is true that China is an authoritarian great power that may pose certain political and economic challenges to Western states, Beijing is also riddled with systemic weaknesses, which cast uncertainty over its future – e.g. aging population, shrinking workforce, or massive economic inefficiencies. Hence, any excessive focus on China’s dazzling strengths to the detriment of a proper appreciation of its deep-rooted deficiencies could alter the EU’s perception in potentially dangerous ways. In short, sound policymaking should address ‘China-the-powerful’ without losing sight of ‘China-the-weak’.
Take Beijing’s foreign policy. Very often, foreign states view Chinese policies as parts of a grand strategy aimed to render the world more sinocentric. While such views rightly consider the strategic elements underpinning certain Chinese policies, they often overlook Beijing’s complex policy implementation processes. That is, despite Chinese President Xi’s efforts towards centralization, strategic policies formulated in Beijing are implemented by substate actors according to their interests, which sometimes diverge significantly from those of the central government. Thus, while the Belt and Road Initiative does involve strategic considerations, its strategic effectiveness is often undermined by its implementation along the interests of local politicians and Chinese substate actors. Many significant issues and international misperceptions emerge from these ‘implementation politics’, such as China’s massive overlending to certain countries, which is often mistaken for a ‘debt trap’ strategy. In this context, developing more fined-grain approaches to China is critical for they help make sense of the usual confusion around Chinese projects and policies. In other words, they generate the kind of ‘strong knowledge on contemporary China’ that should inform sound policymaking.
Now, take the popular ‘China economic powerhouse’ narrative, which focuses on the links between Beijing’s GDP and international power, and informed a lot of Western policymaking towards China. Political economist Sean Starrs found that while Chinese privately-owned enterprises accounted for about 45% of China’s total exports in 2017, they only accounted for 10% of tech-intensive exports, which the Chinese Communist Party (CCP) deems central to the country’s future development path. By contrast, foreign-owned firms accounted for about 65% of these tech-intensive exports, while joint ventures mostly accounted for the rest. Nowadays, as China became the world’s first foreign direct investment recipient in 2020 and foreign companies seem unwilling to leave the country, Starrs’ findings on the role of foreign firms in the Chinese economy are likely to remain relevant.
Therefore, when hearing about ‘all-mighty China’ taking over the world, one should remember that the CCP’s enduring leadership – Chinese leaders’ fundamental objective – rests on an economy that is significantly fueled by firms tied to the US. In other words, Chinese GDP should not be equated to Chinese power for it merely reflects Beijing’s complex embedment in globalization, which, depending on various factors, may or may not support its international power. Huawei was reminded of this fact the hard way when the Trump administration weaponized global value chains to shut the firm from its US and foreign semiconductor suppliers.
However, some might say that China could replicate its successful catch-up in solar panels across the board and solve its external dependency problems. China certainly steers in this direction, nevertheless, after over 60 years of industrial policy, Beijing’s semiconductor industry still lags two generations behind the global leaders. This failure sheds light on another popular representation of China – Beijing as a ‘tech power’ –, which is also potentially misleading. While it is true that China has ranked 14th in the Global Innovation Index and is home to staggering technological change – e.g. ubiquitous digital payment systems –, partly supported by the Chinese society’s ‘natural’ leaning towards tech absorption, Beijing’s weaknesses in terms of basic research make it hard to foster the kind of scientific breakthroughs that allow countries to move beyond the realm of incremental innovation. In other words, China’s tech power comes with serious caveats, which happen to explain a great deal of the Chinese economy’s decreasing productivity and related declining GDP growth rate. In short, this alternative understanding of China’s ‘tech power’ is yet another indication that, for all its might, China must constantly deal with deep-rooted weaknesses.
These weaknesses are all the more concerning for Beijing, as they occur when the CCP must take the country towards a new tech/consumption-driven development path to escape the middle-income trap. Any failure would shake the Party to its core. Therefore, to get a clear picture of China, one must move beyond the glamourous foreign investment announcements and the flamboyant warships, and look at the less glittering stuff. That is, for instance, Beijing’s ability to build a social safety net to free up savings and boost its weak consumption, as a part of its ‘Dual Circulation’ strategy aiming to rebalance China’s growth engine from the global markets to its domestic market.
One way to get this clearer picture of the Chinese system is to enrich our traditional understanding of China, as a developmental and repressive state, with some thoughts on the emerging Chinese regulatory state. That is the CCP’s policy action is not only political but also functionalist for it must solve concrete economic issues while exerting significant yet limited control over national actors. Thus, yes, the CCP’s current crackdown on Big Tech is about reaffirming its authority. But, it is also about technical considerations, such as streamlining digital markets by addressing the consumers’ demands regarding the digital platforms’ abusive practices and data privacy. These pragmatic concerns led the CCP to draft a GDPR-inspired law, which combines state access to private data and a high level of privacy protection, notably including the data of deceased persons. However, Chinese Big Tech, which already refused to hand personal loan data to the authorities, are likely to attempt to circumvent the new regulations, thus fueling a complex bargaining process among actors with various degrees of connection to the CCP, which will contribute to shaping the Chinese tech landscape. Such important and ambiguous developments are hard to grasp when considering China a mere totalitarian state and further emphasize the need for more refined approaches to China in policymaking.
This kind of more refined representation of China may help make the EU policymakers aware that China’s growing regulatory needs could constitute an avenue for renewed European engagement, given the EU’s broad regulatory experience. However, EU policymakers should keep in mind that, beyond ideological considerations, the ‘Plan’ or the market, the regulatory or the repressive state, are nothing but tools to ensure China’s stability under the leadership of the CCP. Thus, further engaging with China to foster trust between politically diverse regimes rather than liberalization may be wise for the time being. After all, trust will be key in persuading the CCP that a balanced rules-based world, which suits the EU the most, is the best environment for China’s stability. Of course, such an approach should be coupled with a degree of smart market protection and a strong attachment to EU core values. That will be a fine line to walk, but hey, that is what diplomacy is for.
