We are witnessing a tectonic shift in global power axes. The Atlantic is no longer the only center of gravity, it is now in competition with the Indo-Pacific. This is accompanied by the end of the European era, in which the old continent was the starting point for global developments for a good 600 years, for better or for worse.
The “Pax Americana”, which dominated the global order at the latest after the collapse of the Soviet Union, is also history. These three points mark the actual “turning point”.
Two powers are currently dominating the geopolitical competition: China and the USA. Vladimir Putin’s attack on Ukraine is Russia’s attempt to regain its role as a major power in the reorganization of the world. The opportunity seemed opportune, with the deeply divided US preoccupied with itself and rival China.
Europe also seemed divided, divided into North and South, East and West. And hadn’t French President Emmanuel Macron himself declared that NATO was “brain dead”? Nevertheless, Russia’s calculations have proven to be wrong.
China’s political leadership is evidently observing this development with satisfaction. The old rival Russia, with which there were still violent border conflicts in the second half of the 20th century, seems to fall into the People’s Republic’s lap like a ripe fruit. At the same time, the US must now refocus on Europe instead of prioritizing the Indo-Pacific region. This makes it easier for China to pursue its maritime interests there. But what at first glance looks like an advantage can quickly become a significant risk.
Despite the huge Chinese domestic market, the People’s Republic remains dependent on the global exchange of goods, services and technologies. Otherwise it cannot fulfill the dream of prosperity for all Chinese. In addition, there is China’s Corona special route. The political leadership’s promise of a “historic victory” over the virus comes alongside an unprecedentedly tough lockdown policy. Given the low vaccination rates and comparatively weak Chinese vaccines, the “historic victory” is likely to result in permanent lockdown.
Like Beijing’s position on the Ukraine war, the anti-Covid strategy raises doubts about China’s reliability in international political relations and the global economic division of labor. The effects are already dramatic: since Russia’s attack on Ukraine, there has been an unprecedented flight of capital from China, foreign investment is declining, and in the economic metropolis of Shanghai, 85 percent of foreign professionals want to leave the country.
All of this could well correspond to the political calculations of the Chinese leadership. In any case, it fits in with the official strategy of the two economic cycles – more domestic consumption, less dependence on exports – and the concentration on the Indo-Pacific cooperation RCEP, the world’s largest free trade agreement. Chinese globalization, it seems, is not coming to an end, but it is getting a regional face.
Nevertheless, Germany and Europe should not make themselves too comfortable in dealing with China. As much as we are trying to make our economies more resilient and are rightly pursuing a strategy of diversification in East Asia, decoupling from China is neither in Europe’s political nor economic interest. We should therefore do everything we can to explore the scope for future cooperation, not least to test the scope of China’s new globalization strategy.
As different as China and Germany are in terms of their cultural and historical traditions, both countries are still linked by integration into the international division of labor and value creation. That should be reason enough not to rely exclusively on demarcation and exclusion.
What lessons will the EU learn from the tectonic shift in global power axes? It does not need a “big restart”, as Macron recently called for, which will never succeed anyway. However, it must focus on the central tasks and content: democracy, the rule of law, a common market, a stable currency, and an investment and defense union.
Based on the strength of civil society and democratic institutions, the EU can appear more self-confident towards other geopolitical actors and more clearly accentuate the advantages of open markets. To this day, the self-centeredness of the EU and some of its member states is irritating. The EU should finally seek exchanges with Australia and New Zealand. Both states are developed democracies, have a strong security partnership with the USA and have ratified the RCEP treaty despite major differences with China.
The USA and China have long been in the process of readjusting their relations: confrontation where human rights are at stake, Taiwan’s independence and freedom of navigation at sea. Competition and competition in innovation and technology. Cooperation where global challenges such as the fight against the pandemic, the climate crisis or the control of nuclear weapons require joint action. The “right” balance of confrontation, competition and cooperation has not yet been found, but US President Joe Biden and his Chinese counterpart Xi Jinping have set out to find it.
In turn, it would be better for the EU and China to end the spiral of mutual sanctions that has been blocking further ratification of the CAI major investment treaty for months. For example, the CAI rules could be applied before ratification. This is what the EU and Canada did with their free trade agreement. It is about more than an economically sensible approach. Above all, it is about trust in a new dynamic of the economic and political process.
This new political process is in the interest of China and the EU – regardless of whether it is about the climate crisis or weapons of mass destruction, terrorism or war and peace. Today, no global challenge can be tackled without or even against China.
The EU should also show more flexibility in the standards it demands for trade agreements if it wants to focus on realistic solutions that do not overwhelm any partner. After all, it is of little use to the EU if it is good when it comes to rules and standards, but acts badly in the realities of economic and industrial policy.
