COVER STORY • Exploring Future Relations in East Asia • 3

China & Europe:
Confrontation or Dialogue?
Author Claude Meyer

By Claude Meyer

While the West doubts itself and is clutched by a kind of“democratic fatigue”, China resolutely asserts its ambitions andprojects itself into the future with a self-confidence that contrasts
with its past restraint. “[In the middle of this century] ... China will
rank first in the world in terms of global power and international
outreach,” President Xi Jinping told the Chinese Communist Party
Congress in October 2017. To become the first power in the world
and thus to put an end to Western domination, this is the “Chinese
dream” he announced when he came to power in 2013. The
challenge thus posed to the West is not only economic andgeopolitical, it is also ideological and cultural. Given Beijing’s
ambitions, the risk is that relations between China and the West will
be dominated by confrontation. To avoid it, what are the conditions
necessary for a constructive dialogue that could lead them tocooperate for greater security in today’s unstable world, underminedby inequalities and threatened by the rise of nationalism?

The Chinese Challenge: Three Global Ambitions
In order to recover its past position and become the world’s
leading power, China has three main ambitions: to assert its
economic supremacy, to rebalance in its favor the international
system currently dominated by the United States, and to develop asoft power proportionate to its economic weight.

Economic, Technological & Financial Supremacy
Most forecasters predict that by 2030, China’s GDP will exceedthat of the US. The gap is expected to widen further and in 2050 the
Chinese economy will represent one and a half times the US
economy. However, in parallel, the quality of growth will have to begreatly improved so as to correct the serious dysfunctions of theChinese model today, especially the social divides and the ecologicaldisasters. While China will dethrone the US as the world’s largest
economy by size, the income per capita will still be half of theAmerican level. From the point of view of productivity, it will
therefore still be in a phase of catching-up with advanced economies.
To accelerate this process, technical progress will be essential, andBeijing’s ambition is therefore that China, as the world’s largest
economy and a society of “moderate prosperity” by 2030, become amajor technological power.
China is currently the first industrial power in the world, but it
does not shine by the quality of its industry, which is still very
14 Japan SPOTLIGHT • January / February 2019polluting and of low added-value. In addition, the country is still very
dependent on foreign technologies. Beijing is pursuing a very proactive policy to become the “laboratory of the world” and no longer
its “workshop”: China has already surpassed the US in the
publication of scientific articles and has emerged as the top applicant
of patents in the world with 35% of the total. Its voluntarism anddetermination to become a technological leader is reflected in theambitious program “Made in China 2025”, which targets virtually all
high-tech industries.
As the world’s largest economy by 2025-2030 and a major
technological power, China will also be a leading financial power,
thanks to its exceptional savings capacity. It is already becoming theworld’s banker in terms of foreign direct investments and lending.
Raw materials, foreign companies, financial assets: the Chinese
dragon is pursuing acquisitions all over the planet. In addition, China
acts as a banker to the rest of the world, including the US anddeveloping countries. It is not, however, a major global financial
power, as it does not yet have the tools and technologies needed toturn its savings into high-value financial services. It lacks asuccessful financial system and its currency is not widely used in theworld. But ultimately, China should assert itself as a global financial
power, once its institutions and markets are fully liberalized.

Reforming the World Order
For the Chinese government, economic expansion is of course,
like elsewhere, aimed at increasing the population’s standard ofliving, but it must also serve its strategic objectives: China strives totranslate its economic weight into geopolitical benefits in order torecover its “fair place” in the world. China’s foreign policy pursues
two goals: on the one hand it wants to assert its supremacy in Asia,and on the other it aims to become a global power with economic
supremacy and proportionate military means.
The first step is to establish itself as the undisputed leader of Asia,
where it wants to be an active and “benevolent” regional player. To
achieve this aim, its strategy covers three main areas: stabilization ofborders, economic diplomacy and regional security. Deeply marked
by its history of foreign domination, China is very touchy on issuesof sovereignty: this is of course the case with Tibet, Xinjiang andTaiwan, but also with the South China Sea which it considers almost
as an inner sea, under the so-called “Nine-Dash Line”, unilaterally
determined by China and not recognized in international law.
Economic diplomacy is the second part of Beijing’s strategy inhttps://www.jef.or.jp/journal/

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Asia with the main objectives of access to natural resources in theregion and the development of exports through the intensification of
trade flows. It focuses on free trade agreements, direct investment
and development assistance, trying to conclude with each country abilateral “strategic partnership” in a spirit of “good neighborhoodand friendly cooperation”.
The third field of China’s policy in Asia concerns regional security
initiatives. However, its ambitions in this respect are largely
hampered by the overwhelming military domination of the US in theregion, complemented by their alliance with Japan which despite its
pacifism is seventh in the world for military expenditures. China’s
aim is very clear: it wants to put an end to American domination withrespect to regional security and establish in Asia a new order where
it will play the central role as justified by its economic and strategic
weight. Beijing knows that the moment is favorable because theabandonment by President Donald Trump of the Trans-PacificPartnership (TPP) means a renunciation to the “pivot to Asia” policy
advocated by his predecessor.
China wants supremacy in Asia but within a logic of world power,
because its vision is global and not regional. To realize this global
ambition, it deploys worldwide an offensive diplomacy, mostly basedon bilateral economic partnerships. At the Davos Forum in January
2017, Xi stood up as a champion of globalization and free trade, of
which China is in fact the main beneficiary, in spite of its constantrhetoric for “win-win” relations and mutually beneficial agreements.
Except with Australia, Chinese has a trade surplus with every regionof the world and its global surplus — $422 billion in 2017 — hasmore than doubled since 2008. In the least developed countries(LDCs), China is actively promoting its development paradigm alongwith trade and financial support. This model, which Beijing prefers tocall “the Chinese way”, is opposed to Western political and economic
models based on democracy and Anglo-Saxon liberal capitalism.
China believes that its own record in reducing poverty speaks foritself in favor of its economic and social model. In just three decades
indeed, some 700 million people have been pulled out of poverty in
China — a first in human history — and an exhausted country after
the Cultural Revolution has become the world’s second-largest
economy.
Moreover, the Chinese way advocated by Beijing postulates that
economic liberalization does not imply political liberalization, whichis good news for authoritarian regimes and dictatorships. Far fromlimiting its influence to the developing world, China believes that thetime has come for it to put its mark on the global economic order.
China is no longer the “free rider” of globalization, as former US
President Barack Obama said in 2014: on the contrary, it wants to be
its leader, as shown by the spectacular initiatives that it has takenover several years. It is working on the reform of existing
institutions, the IMF for example, and does not hesitate to create newones, such as the “BRICS Development Bank” and the AsianInvestment Bank for Infrastructure (AIIB), the latter having been agreat diplomatic success despite the hostility of the US. The launchof the “One Belt, One Road” in 2013 was the most spectacular
initiative taken by Xi and the heart of his strategy in Eurasia. Thispharaonic project will give substance to Beijing’s dual ambition forthe coming decades: to guide the world economy in the direction of
its interests and to offer Asia a mobilizing project that willconsolidate China’s regional leadership coupled with the declining
influence of Japan.
At the same time, China is strengthening and modernizing an armyof more than 2 million men, whose budget has increased five-foldsince 2000. The primary objective is to maintain the “absoluteleadership of the Party over the army”. Xi’s vigorous anti-corruption
campaign at the highest levels eliminated hostile elements andensured the army’s total loyalty. The second axis of the reform is toincrease operational capabilities through a redesign of the chain ofcommand, a restructuring of forces and a reorganization of themilitary regions covering the territory. The moment when China canthreaten American military power in Asia is still very far away. For thetime being, it is somehow comfortable with the status quo, whichallows it time to consolidate its economic power, strengthen its
military might and deploy the third component of its “peacefuldevelopment”, the international influence of its soft power.

The Conquest of Soft Power“We must make our country a cultural superpower ... we must
increase the soft power of China, formulate an attractive national
narrative and better communicate the messages from China to therest of the world.” These statements by Xi express both a fact —China’s image deficit today — and an ambition: to recapture thecultural outreach of the Middle Kingdom that had so much struck theJesuits when they arrived at the end of the 16th century. China
knows that alongside its economic success, its universally admiredcultural heritage is its best asset for the development of its soft
power abroad. For the past 15 years, it has launched a vigorous
offensive to publicize its immemorial culture and its contemporary
achievements. To promote its image, China also uses all the
resources of “public diplomacy”: hosting major global events,
deployment cultural centers and media abroad, promotion of
language, hosting foreign students, etc. The Confucius Institutes,
whose main mission is to teach Chinese language and culture, havedeveloped tremendously. China is also making great efforts topromote its cultural heritage — ranked second in UNESCO’s world
heritage list — but also to highlight its creativity and current
performance in the arts, literature and even sports. This proactive
strategy of influence and seduction also translates into hugeinvestments in a vast worldwide network of press, radio andJapan SPOTLIGHT • January / February 201915

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television.
However, its international influence is greatly handicapped by its
policy of internal repression which stifles the contribution of civilsociety, absolutely crucial for the development of soft power. Despite
the considerable resources deployed, estimated at $10 billion a year,
the results of Chinese soft power remain disappointing because,
lacking the decisive contributions of society, it remains essentiallygovernment-led. The authoritarian and repressive nature of theregime also contributes to blurring the image of China, which
remains negative in many countries. However, it is positive in Africa
and Latin America, which confirms the major role played byeconomic diplomacy in Chinese soft power.

Europe-China Dialogue in Action
Rivalries for world supremacy, antagonistic political views, clashesof cultures: dialogue with China is fraught with difficulties. Someseem insurmountable for the time being, especially in the politicalfield, but that should not prevent an obstinate search for common
values ​​and a shared horizon in world affairs. The difficulties of suchdialogue, both open and demanding, must not be underestimated, as
it excludes two attitudes: the claim to consider one’s own values ​​andpractices as universal norms and, on the opposite side, relativism
that locks everyone into their own specificity. A historical precedent,
the Jesuit mission in China in the 17th and 18th centuries, can be asource of inspiration for initiating such exchanges. This firstencounter between the Middle Kingdom and the West was “thegolden age of relations between China and the West”: for two
centuries Jesuit missionaries, especially the pioneer Matteo Ricci(1552-1610), deeply immersed themselves in Chinese culture andsociety, becoming Chinese with the Chinese. They transmitted totheir country of adoption the many European advances in scienceand technology and as such enjoyed a high prestige among theelites. In return, their reports made Europe discover many aspects ofChinese civilization and thus fed the intellectuals’ reflections at thiscrucial moment in the history of ideas in Europe, which saw the
emergence of the Enlightenment. Obviously, those contexts are too
far away to hope to restore today such a “golden age”. They also
showed certain limits: for example, the image of China reported by
the Jesuits was highly idealized. However, this exceptional model ofintercultural dialogue can inspire, to a certain extent, an authentic
encounter between Europe and China today, beyond clichés andprejudices. At which levels can such exchanges be developed?
Cultural dialogue is promising, economic dialogue is essential
though very difficult, but political dialogue is for the moment
impossible.

16 Japan SPOTLIGHT • January / February 2019

Rich Cultural Exchanges but Very Difficult Economic
Dialogue
The first meeting between Europe and China was one of two
cultures. Even today, cultural exchanges remain the cornerstone of a
dialogue based on respect and the constant search for better mutual
understanding. The number of students studying Mandarin in Europe
has exploded in the past 10 years and European languages ​​are alloffered in Chinese universities. More broadly, beyond the linguistic
field, exchanges of students, researchers and artists are intensifying;
many scientific and technological cooperation projects have been set
up between Chinese and European laboratories, such as the Pasteur
Institute of Shanghai for Infectious Diseases. Numerous thematic
colloquia and major cultural events are organized both in China andin Europe to develop mutual knowledge, to which contributes also
the expansion of tourism, with about 5 million tourists both ways. All
these cultural, artistic and tourist exchanges are all the morenecessary for a better mutual understanding given that economic
dialogue is proving extremely difficult because it involves majorinterests for both Europe and China.
In the economic field, dialogue does not mean weakness and theapproach of the European Union (EU) should therefore be two-fold: aconstant search for equitable compromises, but at the same time agreat determination in defense of the interests of millions ofEuropean citizens. Economic relations with China present two majordifficulties: unfair competition in Europe from China in commercial
matters and a difficulty of access to the market for European
companies investing in China. Trade is at the heart of EU-China
relations: the EU is the first partner of China, which is itself its
second partner. But trade remains marked by deep imbalances andthe European deficit reached 176 billion euros in 2017. The EU
believes this is largely attributable to unfair practices of China: nontariff barriers to imports of foreign products in China and in the
opposite direction a flood of exports at cheap prices due to Chinese
overcapacity. Among the measures taken by the European
Commission in the anti-dumping fight, the majority concern China.
On several occasions, it had to impose high duties to protect aparticular sector of European industry, threatened by these Chinese
products almost sold off at give-away prices (solar panels, somesteels, etc.). In December 2017, the Commission issued a damning
500-page report on China’s anti-competitive practices that will form
the basis of its future actions against Beijing in the WTO. It isestimated that without these safeguards, between 1.7 million and 3.5
million jobs could be at risk in Europe.
China is pushing for a swift conclusion of a free trade agreement,
but Brussels believes it is more urgent to conclude an investment
treaty. Indeed, many European companies feel that they suffer
discrimination — explicit or implicit — in access to the Chinese
market. In the other direction, Chinese investors in the EU are

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essentially seeking access to markets, brands and technologies.
Although these areas are largely open to them, they often face deep
distrust in the host countries, because when the investor is a
Chinese state-owned company it is feared that it is the Party-State
itself that is pursuing its own economic goals and geopoliticalambitions. There is a particular area where Chinese investments canbe problematic and where vigilance is needed — that of national
security. The risks are numerous when it comes to dual or highly
sensitive technologies, the control of strategic installations such as
ports or airports, the manufacture of mixed civilian and militarycomponents, etc. A prime area of ​​cooperation could be infrastructure
investment, given the EU’s ambitious goals under the “Juncker Plan”
and China’s “One Belt, One Road” initiative. This has already been
enforced financially by European participation in the Beijing-based
AIIB, and in the opposite direction by China’s accession to theEuropean Bank for Reconstruction and Development.

Political Deadlock but Possible Cooperation for Better Global
GovernanceOn the political front, two models clash in a dialogue of the deafthat leaves little room for common understanding: China praises its
meritocratic model as opposed to the dysfunctions of representative
democracy, while the West denounces the serious flaws of theLeninist regime in Beijing, including recurrent violations of humanrights. The latter have become even more serious since the coming
to power of Xi, who attributes to “foreign infiltration” the aspirationsof Chinese society for more freedom. The regime seeks only toconsolidate its power by crushing any embryo of contestation, in
defiance of the law and the Constitution, which the Communist Party
interprets according to its interests. The issue of human rights
remains an insurmountable stumbling block in political dialogue. Yet
this stalemate is no obstacle to cooperation between the EU andChina to improve global governance and tackle the world’s major
problems. This is particularly the case in two areas which are also
partly linked — the future of Africa and climate change.
The population of the African continent is expected to double to
2.5 billion in 2050, a quarter of the planet’s population. Its
development is therefore a global issue. It would take a minimum
growth rate of 7% per year for the continent to take off, because it
would be the minimum to gradually reduce its high unemployment,in particular for youth (45% for 15-24 year-olds). We are still very far
from it, as growth should not exceed 3% in the coming years. The
disappointing performance of African economies can be explained byinsufficient investment. According to a report by the United Nations
Conference on Trade and Development (UNCTAD) published in 2014,a minimum investment rate of 25% of GDP would be needed toachieve growth of 7%, while this rate has been only 18% over thelast 20 years. This report recommends three priority sectors:

infrastructure, agro-industries and the manufacturing sector. Europe
must realize that their future depends in part on successful
development in Africa. From the economic and security point of view,the cooperation of the EU and China in certain sectors could
therefore be beneficial, given their comparative advantages: soft
power and long experience on the ground for Europe, especially
France, and economic and financial power for China. Not only does
Europe have historical responsibilities towards Africa, but it is also
concerned by the problem of terrorism which is spreading there, and
it is facing a strong migratory pressure which will only be intensified.
Without strong economic growth, population expansion but also
climate change in Africa will lead to large-scale migrations: climate
migrants will thus be added to current flows of political refugees andeconomic migrants to Europe. All these factors make it all the moreurgent that European nations get strongly involved in thedevelopment of the African continent, the effectiveness of which
would be enhanced by closer coordination with China.
The second area where Europe and China must join forces is inleadership in the fight against global warming. Moreover, these two
problems — Africa and climate — are also partly linked, because we
can already see the effects of climate change in the Horn of Africawith the return of famines. The principle of this cooperation on the
climate issue was decided at the 19th EU-China Summit in June
2017. The EU and China share common visions for energy security
and are both major energy importers. Under the Paris Agreement,
China, as leader of emerging and developing countries on the one
hand, and the EU, as a leader among advanced countries on theother, could play a crucial role in encouraging all signatory countries
to implement their commitments. Besides, both parties can benefit
economically: China is the main supplier of green growth products,
especially of wind and photovoltaic plants, while EU companies hold
40% of global patents for renewable energy technologies.
In conclusion, cooperation on major multilateral issues, economic
dialogue and cultural exchanges are the main fields of a fruitful
EU-China relationship. The EU must therefore engage in aconstructive partnership, based on the search for points of
convergence with Beijing, as stressed by French President
Emmanuel Macron on Jan. 8, 2017 in Xi’an, the former capital of the
Qin Dynasty. But the EU’s defense of its own interests and values isjust as important. It must therefore strengthen its protection
instruments in commercial matters and not compromise on its
founding principles, particularly in terms of fundamental freedoms
and the protection of human rights.
Dr. Claude Meyer is associate professor at Sciences Po, Paris and senioradvisor, IFRI (French Institute of International Relations). His latest book,published in 2018, is titled L’Occident face à la renaissance de la Chine: défiséconomiques, géopolitiques et culturels (The Rebirth of China and the West:
Economic, Geopolitical and Cultural Challenges).

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