Debate: EU-China relations
Date: TUESDAY, 12 DECEMBER 2023
Speaker: Josep Borrell Fontelles
Language: EN

China will mark this century for sure. I’m just coming back from China, by the way. I was there five days ago. I came back last Saturday. I attended the EU-China summit. It’s the first time that it has taken place in person since 2019. And talking to China face-to-face at the highest level was a good experience, and essential in order to have a constructive and stable relation and to understand better where we are and what are our positions. So I was very happy to have this opportunity. I was there before – one month before – to prepare the Strategic Dialogue, which is part of our summit. What can I say? Well, the least I can say is that our relations are broad and complex. And how we manage them will be crucial for us, crucial for China and even for the world, given the importance of our relations and the global challenges we must face together. There is no way to try to solve the climate issue without a strong engagement from China, because China is burning today more coal than the rest of the world together, and 90% of the new coal plants in the whole world are being built in China. So if you want to solve the climate issue, count on China. Otherwise, you will not be able. This is one aspect of our complex relationship. And once again, we repeated this famous triptych – being partners, competitors and rivals – that China doesn’t like a lot because they claim that they are not rivals, they are just partners and maybe competitors, but certainly not rivals. And every time I talk with my Chinese friends, I spend quite a long time trying to explain what we mean by being a rival. And then I use the example that Real Madrid and Barcelona are rivals when they play football, because being rivals means that they have different goals and each one wants to win. But maybe in Chinese the word ‘rival’ has a different connotation than in English. Maybe ‘rival’ in Chinese is a stronger assessment – it looks more like being an enemy than being just someone who is competing systematically. In any case, we discussed a lot about what it means to be a rival. And I wanted to convince our partners that we can be partners and rivals at the same time, that there is not a contradiction, because it is one thing to be a systemic rival – because our systems are rivals – and another thing to be in a systematic rivalry. C’est une chose que d’être des rivaux systémiques, et c’en est une autre que d’être dans une rivalité permanente et systématique.  We are not confronting every day on everything. On the contrary, in some things we have to cooperate and in others we have to compete. But to compete, we compete also with the US. Competition is with everybody in the world – economic competition at least. Another thing is political competition. But we are rivals because our values and visions are different on key subjects: on democracy and on the universal character of human rights. These two things are important enough to justify rivalry. We are rivals because we have different political systems – including the way people elect the people who rule the government – and we are considering human rights differently. At the same time, you must work with China, because today’s global challenges, as I said, cannot be solved without China, and our economic ties and common political responsibilities are too weak. So we have to manage our relations constructively. For example, the trade relationship is critically imbalanced. But this imbalance has been growing in the last 20 years. In 20 years it has been increasing 10 times, but in the last two years it has doubled. So there has been a strong acceleration of the imbalance. The imbalance was a logical trend because China is exporting more and more high value added products and it makes the trade deficit increase. But in the last two years it has doubled. And when something doubles in a couple of years, wow, something’s happened. Because if it is an accident, if it is just the consequences of the rebalancing of the world economy after the pandemic – well. But if it is structural and it is going to double in the next two years, then we have a problem. And that’s what we talked about with the Chinese. Is that the result of fair competition or is it the result of market access which is being obstructed and hampered by regulations? This was an interesting discussion. What does overcapacity mean? Overcapacity over what? We also have overcapacity if we consider that in some sectors we produce more than what we consume. Overcapacity means that you have a capacity to produce more of what you need to consume and your exports. Then it’s true we have also overcapacity. But when you count the capacity of the Chinese economy to produce cars – and you see that they are able to produce 50 million cars a year – this is an extraordinary capacity, much bigger than the internal consumption. It’s about 20 or 30 million cars that can be exported on a yearly basis. So everything is relative and we have to discuss the meaning of the words in practical terms, taking into account international trade rules. We asked China to act to address the root causes of this trade deficit, which has reached an astronomical figure of EUR 400 billion a year and is not sustainable. So either they open more the economy or we will have to close ours. It’s one thing or the other. Either they open more, or we will have to protect ourselves – which means closing. Then there are many other demands about, for example, clarifying cross-border data flow, opening procurement markets, including medical devices, abandoning preferential treatment of Chinese firms, taking action on regionalisation of food products – a lot of issues that need to be mended. But your report on China is much more extensive than being just about economics, trade and deficits. You put forward recommendations in three areas: human rights, European open strategic autonomy and engagement in global challenges. Human rights: this is the area where our systemic rivalry is most pronounced, based on how we consider and implement international law. We continue calling on China to respect human rights and to guarantee all human rights being equal and not selective. We raise serious concerns on the human rights situations in Xinjiang, Tibet and Hong Kong, and the treatment of human rights defenders across China, mentioning some very concrete and specific cases. And we will continue doing so. Then on strategic autonomy, there comes a debate about de-risking and decoupling. I try to explain them, and it’s important that we consider that de-risking is not an anti-China plot. De-risking is not something that we use as a combat banner. It is common sense. They are practising de-risking. We invented the word, they invented the matter, and they started de-risking much before us. They started diversification and I mentioned some sentences from President Xi himself, when he was talking about the circular economy and the need to be self-sufficient, which is about de-risking. De-risking means avoiding overdependencies that can become critical vulnerabilities – like we discovered when the pandemic came and we realised that in Europe we were not producing a single gram of paracetamol. Or when Russia invaded Ukraine and then we discovered that we were 40% dependent on Russian gas. Two strong dependencies can become vulnerabilities. It is indispensable for us to ensure our security. This was also an important discussion because it’s a matter of ‘you don’t trust me’, ‘I trust you but...’. There is always a ‘but’ when we talk about economic dependencies. Because yes, the market will provide unless there is a big crisis, and then the market doesn’t provide. That’s what was happening with paracetamol during the pandemic. We discussed about security. For the war of aggression against Ukraine, we expect China to use its influence on Russia to stop this war, to convince Putin that he has made a big mistake with this war. They say that they have an unlimited friendship. Well, in practical terms, it is more limited than unlimited because they assure us that they are not part of this military alliance and not in a military alliance with Russia to fight in this war. And they are not supporting direct or indirect military support to Russia. But we continue pressing China to make clear that this is a war of aggression and to use its influence on the aggressor to stop this war. With regard to Taiwan, our ‘One China’ policy remains unchanged. We are opposed to any attempt to change the status quo unilaterally, by force, by coercion or intimidation, and that tension should be resolved through meaningful dialogue. The same is true for the South China Sea, and we call on all parties to resolve disputes through peaceful means, in accordance with international law. And lastly, on global challenges, I insisted at the beginning that there is no alternative but to work with China. China is at the same time the most important investor on renewables – a champion of renewables – and a champion of coal. Both things are true. They are developing renewables at the strongest pace in the world and they are doing the same thing with coal. And we have to tell them that it’s a problem. And then the discussion comes about climate change. Who produced the problem? It’s true that today it is not us because we produce only 8% of the world’s emissions. But if we have a look at the cumulated amount of emissions, it’s a different story. In any case, it is in their own interest – because they have a strong pollution problem – that they have to reduce emissions. And it’s important that in global health, debt restructuring, they play an important role – that they will have to play. If they don’t, if tomorrow there is a debt crisis and there is a big restructuring of the developing countries’ debt, China is the greatest creditor. The biggest creditor in the world today that is not a member of the Paris Club is China. The biggest bank of the developing world is no longer the West – it’s China. And it’s important now our ability to work with China on these global challenges, because it will define the 21st century, for sure. So this report is a very important one. I think that Parliament has to look for another occasion to continue discussing it, because I don’t think that tonight we are going to exhaust the issue. I think Parliament will close the doors, the lights, before we finish discussing China.