During my trip to China this month, I was fortunate to be in Beijing on the day of the Qingming Festival – one of the most traditional Chinese holidays. It is a day to honour and pay respect to past generations. And it is part of the very rich history and culture of China that certainly fascinates and captures the imagination of people all around the world. Seeing this country again first hand only reinforced my deep admiration and respect for the people of China. For centuries they have helped to shape world civilization. And in the last decades, they have really transformed the economy of their country, lifting more than 800 million people out of poverty in the last 45 years. We should never lose sight of the magnitude of this transformation into a modern-day economic powerhouse, key global player and a leader in many of the cutting-edge technologies that will certainly shape the next decades of global civilization and progress. This international and economic status – as well as our own interests – make it all the more important for Europe to manage its relations with China. For me, that also shows that decoupling is clearly not viable, desirable or even practical for Europe. But as I said back in January and as I set out in more detail a few weeks ago, there is clearly a need for Europe to work on de-risking some important and sensitive parts of our relationship. So de-risking but not decoupling.
Much has been said about this since I set out the principles of this de-risking strategy. And even more has been said since the last trip. In many ways, that reaction is good because Europe needs to have this discussion. And so, I want to first and foremost thank the Parliament for putting this debate on today. It is urgent and it is good that we have this debate. Most importantly, I say this because this relationship is too important for us not to define our own European strategy and principles for engagement with China. I believe we can – and we must – carve out our own distinct European approach that also leaves space for us to cooperate with other partners, too. And the starting point for this is the need to have a shared and very clear-eyed picture of the risks and the opportunities in our engagement with China. And this means acknowledging – as well as clearly saying – that the Chinese Communist Party's actions have now caught up with its stated ambitions and the hardening of China's overall strategic posture over the last years. For example, the shows of military force in the South China Sea, in the East China Sea, and at the border with India, directly affect our partners and their legitimate interests. Or on the issue with Taiwan. The EU's ‘One China' policy is long-standing. We have consistently called for peace and stability in the Taiwan Strait and we stand strongly against any unilateral change of the status quo, in particular by the use of force. We must also never shy away from talking about the deeply concerning and grave human rights violations in Xinjiang. And just as China has been ramping up its military posture, it has also ramped up its policy of economic and trade coercion as we have seen from Lithuania to Australia and the targeting of everything from pop bands to trade brands. We have also seen these tactics directed right here in the House of European democracy. And I want to express my solidarity to those Members of the European Parliament who have been unfairly sanctioned by the Chinese Communist Party just for calling out human right violations. And all this is symptomatic for the fact that China has now turned the page on the era of ‘reform and opening' and is moving into a new era of ‘security and control'. I heard this in Beijing from many European companies who have witnessed first-hand this shift towards security and away from the logic of open markets and free trade. And to strengthen that security and control leverage, China is openly pursuing a policy of reducing its dependency on the world – that is completely okay, that is their right –, but while increasing the world's dependency on itself. You know the examples, for example, whether it is on critical raw materials or the renewable energy, on emerging tech like artificial intelligence, quantum computing or biotech.
Having this clear-eyed assessment of the Chinese Communist Party's actions and direction of travel – actually, including its relations with Putin's Russia and its attitude towards the war in Ukraine – is a pre-requisite for today's discussion. And it will allow us to develop an approach that is tailored to our economic and national security imperatives. One that we can all rally around. And one that is clearly understood in Europe, in the world and crucially also in China itself. And this last point is one of the key reasons I felt it was important to make the trip to Beijing alongside President Macron. It was a chance to discuss with President Xi the shared challenges that we need to work on together – whether in our bilateral trading relation or on global issues like debt relief, climate change and nuclear non-proliferation. But equally important, the trip was necessary to ensure that we are as honest and clear in our messaging in Beijing as we are in Brussels or here in Strasbourg. This is a core part of our efforts to de-risk through diplomacy – by reducing the space for misunderstanding and miscommunication regardless of how difficult the conversations may be. The point I made in Beijing is that we do not want to cut economic, societal, political and scientific ties. We have many strong links and China is a vital trading partner – our trade represents some EUR 2.3 billion a day. Most of our trade in goods and services remains mutually beneficial. But there is an urgent need to rebalance our relationship on the basis of transparency, predictability and reciprocity. What we want is China to respect the level playing field when it comes to access for our companies to the Chinese market, to respect transparency about subsidies, to respect the intellectual property. And beyond this, we also know that there are some areas where trade and investment poses risks to our economic and national security, particularly in the context of China's explicit fusion of its military and commercial sectors. This is why the central part of our future China strategy must be economic de-risking.
There are four key areas for us to work on which I want to very briefly touch on. The first is taking a critical look at our own resilience and dependency and making our own economy and industry more competitive and more resilient. This is the work we have been doing together – you know it, it began in the investment in the green and the digital through NextGenerationEU, to the pillars of our industrial policy and the landmark Acts – you know them too –, it is the Chips Act, it is the Critical Raw Materials Act and it is the Net-Zero Industry Act. And Leaders signed up to it in Versailles during the French Presidency. So now we must keep strengthening our resilience and sovereignty in key areas – you know them all –, it is energy, it is health and pharmaceutical products, it is food security, but also of course when it comes to our defence capabilities.
The second point is becoming bolder and better at using our existing trade defence instruments. We have given ourselves the right tools to deal with security concerns and economic distortions. So we must be more assertive in using them when we need them. And I want to take this opportunity to thank the Parliament for its leadership in agreeing on the new anti-coercion instrument just a few weeks ago.
The third element is the need to look at where we need to work on new tools for some critical sectors. We need to ensure that our companies' capital, their expertise, their knowledge are not used to enhance the military and intelligence capabilities of those who are also our systemic rivals. That cannot be. So we have to look at where there are gaps in our toolbox which allow the leakage of emerging and sensitive technologies through investments in other countries. This is why we are currently reflecting on if – and how – Europe should develop an instrument on outbound investment for a very small number but very sensitive technologies. This will form part of a new Economic Security Strategy which the Commission will put forward in the coming months.
The fourth principle is cooperation with partners, whether on economic security or on trade – whether with partners we are close to in the G7 or with those with whom we have looser ties but some shared interests. This will be a core part of diversification and the strengthening of the resilience of our supply chains to reduce our own vulnerabilities.
As the High Representative said, in 2019, the Commission and the EEAS collectively proposed a strategic update of our China policy. Since then, the world has changed enormously. China has changed. Europe has changed. That is why our European strategy has to adapt, too.
A few weeks ago, when I gave my speech on China, I said that ‘a strong European China policy relies on strong coordination between Member States and EU institutions, and on a willingness to avoid the divide and conquer tactics that we know we may face.' We have already in the recent days and weeks seen those tactics in action. And it is now time for Europe to move to action, too. Now is the time to demonstrate our collective will, it is time to jointly define what success looks like, and to show that unity that makes us strong.
And in this sense, I say: Long live Europe.
- Publication date
- 18 April 2023
- Representation in Cyprus