Volker Perthes

Dimensions of Strategic Rivalry: China, the United States and Europe’s Place

Global Power Rivalry

The issue at hand is global power equilibria and their status within the international system. There are grounds to believe that US President Donald Trump regards superiority – and above all military dominance – as an end in itself rather than simply a means to promote particular interests and values. President Xi Jinping appears to be driven more by a Chinese vision of world order in which superiority is both means and end. But the conflict also has secu­rity-related, economic, technological and ideological dimensions, as well as what one could call a person­ality dimension. The contributions in this volume examine each of these dimensions and their contexts, as well as the repercussions of US-China rivalry on international institutions and on Europe. The issues of relevance also encompass the respective influence of the established and the rising superpower on other states, regions and societies.

From the Chinese perspective, as Hanns Günther Hilpert and Gudrun Wacker show, the United States will never voluntarily cede significant international influence to China. America regards China as a revi­sionist power whose long-term aim is global supremacy. This, as the contribution by Marco Overhaus, Peter Rudolf and Laura von Daniels demonstrates, is a matter of broad consensus in the United States, across both main parties and throughout business, politics and society as a whole. More considered positions do exist, but they tend to be marginalised. Real debate is confined largely to the question of the means by which the conflict is to be conducted.

For that reason too, hard security challenges esca­late, leading to the emergence of a classical security dilemma. As Michael Paul and Marco Overhaus out­line, this applies especially strongly to China as a great power that is expanding its radius of action and in the process transitioning incrementally from the doctrine of coastal defence to maritime “active defence”. But it also applies to the United States, which sees China’s growing military capabilities as a threat not only to its own military bases in the Pacific, but also to its system of partnerships and alliances in the Asia-Pacific region – and in the longer term to its nuclear deterrent.

Conflicts over Trade, Economic and Financial Policy

Economic competition and conflicts over trade, eco­nomic and financial policy form a real dimension of rivalry in their own right, which predates the pro­tectionist course adopted by the United States under President Trump. Washington’s criticisms of Chinese trading practices, unfair competition and rule vio­lations are widely shared in Europe. The trade conflict is, as both Hilpert and von Daniels explicate in their contributions, closely bound up with questions of world order that are of vital importance, especially from the European perspective. That applies for exam­ple to the future of binding multilateral trade rules and institutions. These issues are also of domestic political relevance in both states, with strong mobi­lising potential that is not fully contingent on the extent to which global developments actually affect the employment situation in particular sectors. All in all, however, Hilpert argues, the material benefits accruing to both sides from their economic coopera­tion have declined in comparison to the period between 1990 and 2015. Bilateral trade between the United States and China is no longer a stabilising factor capable of ameliorating political conflicts. Instead trade conflicts are politically instrumentalised, although they may also represent the most easily untangleable knots in the complex web of US-China rivalry. Or put another way: the strategic rivalry be­tween the United States and China will continue to exert decisive influence on international politics for the foreseeable future, even if Washington and Bei­jing succeed in resolving important trade issues and manage to conclude a trade agreement before the upcoming US presidential elections.

Technological Dimension

The technological dimension of the rivalry runs deeper and will outlast any putative resolution of the trade disputes. Both absolute and relative prizes are at stake: the question of who will secure the largest piece of the cake in the long term, for example by defining the technical standards. And technologi­cal competition is always also a question of security. There is no other plausible explanation for the sharp­ening of competition and the growing mistrust that has in the meantime noticeable restricted exchange and cooperation in the technological sphere. As Matthias Schulze and Daniel Voelsen explain, this competition also connects with geopolitical questions in the traditional sense: “Technopolitical spheres of influence” built on digital products and services are no longer purely territorial, but still allow geopolitical power to be projected and international dependencies to be cemented.

In this connection, questions of the development and use of technologies increasingly connect with political and ideological aspects. They become part of a system opposition or systemic competition con­cerning the internal order: the relationship between state and society, between government and governed. Hilpert addresses this political/ideological dimension, which located in a global competition between liberal and democratic paradigms on the one side and authori­tarian on the other. Everywhere, including Europe, this might ostensibly be an internal debate, but it is codetermined by the polarisation between the United States and China. Defending democratic values and liberal elements in the world order is plainly not a priority for the serving US President. But for Congress both these concerns are front and centre in the Sino-American rivalry and both chambers have been working to promote more decisive policies in this respect – most recently with the Hong Kong Human Rights and Democracy Act in November 2019.

The debate in the United States is characterised by fear of the rise of China and the possibility of being overtaken. This is perhaps why, as Hilpert outlines, the Chinese elites also still feel insecure, threatened by liberal values and world views. That remains the case despite China having disproven the West’s liberal expectation that democracy and rule of law would emerge more or less automatically if the coun­try developed economically and generated growing prosperity. China’s development model has been successful, and liberal values still remain attractive especially to young, well-educated and mobile mem­bers of Chinese society. This explains the Chinese leadership’s nervousness over Hong Kong, its appar­ently exaggerated fear of colour revolutions, and its comprehensive efforts to secure its grip on power and ideally establish its own type of harmonious society by technological means.

Technologies are, as Schulze and Voelsen point out, not value-neutral. The more technological devel­opments touch on fundamental questions of political and social order, the more technological competition will be tied to the political/ideological dimension of strategic rivalry, be it in data gathering and process­ing, artificial intelligence or biotechnology. Germany and the European Union will also have to address questions such as what it would mean for the Euro­pean model of state and society, which is committed to the protection of individual rights, if Chinese technology investments were to enable a large-scale out­flow of personal data. There is also a need for a criti­cal investigation of how the development and export of surveillance technologies and social control tech­niques by Chinese high-tech firms not only assists authoritarian and repressive regimes but also pro­motes the dissemination of illiberal concepts of gov­ernance and society.

Different Leadership Styles

One can debate the extent to which the personal factor, the specific traits of Trump and Xi, represents a separate dimension of the US-China rivalry in its own right. In any case, Günther Maihold argues, their different but in both cases very personal styles of leader­ship will continue to influence relations between the United States and China. Trump’s trans­actional and Xi’s externally and internally transfor­mative style are highly incompatible. They tend to undermine whatever basis of trust still remains, restrict the possibilities of diplomacy and exacerbate bilateral conflicts. Other powers, including the Euro­pean Union, might in certain cases gain room for ma­noeuvre of their own. But they will principally have to put their efforts towards upholding inter­national rules and international institutions, which are being harmed in different ways by both Washington and Beijing.

International Effects

Even if the constellation of conflict and competition described here is understood as a bilateral rivalry and to some extent plays out as such, its significance and consequences are global: It affects relationships with other powers, influences regional dynamics even in Europe, shapes the work of international organi­sations and forums (such as the G20 or the United Nations and its agencies), and, as Laura von Daniels describes, often enough undermines multilateral institutions. This is especially clear in the case of the World Trade Organisation, whose rules have been violated by both sides and whose very function the Trump Administration has sought to impair. China is establishing new international forums and organi­sations in line with its own Sinocentric concepts of order, especially in its own regional environment. But unlike the United States, China is showing no signs of withdrawing from international and multilateral institutions. Instead it is working actively to expand its influence at the United Nations and within its agen­cies and programmes. One channel by which this occurs, not least in the case of UN peacekeeping, is for China to assume greater responsibility and a larger share of the costs. But at the same time it seeks to estab­lish its own political terms and values in the language of the United Nations. Whereas Trump took the United States out of the UN Human Rights Coun­cil, China has been working establish its own ideas within it, for example by relativising the importance of individual human rights.

The European Union and its member states are affected directly and indirectly by the Sino-American rivalry. Europe’s take on China has become more criti­cal, in Germany probably more so than in other EU member states. Europe no longer sees China just a negotiating partner with different interests and an economic competitor, but also a “systemic rival pro­moting alternative models of governance”.2 Never­theless, from the European perspective China remains a vital cooperation partner for tackling global chal­lenges, first and foremost but not exclusively in con­nection with climate protection. Europe cannot have any interest in a “decoupling”, in the sense of a broad severing of technological and economic ties of the kind being discussed and to an extent also prepared in the United States. Like many other states and regional groupings, Europe will also have to resist the bipolar logic pressing it to choose between an Ameri­can and a Chinese economic and technological sphere. Instead it will have no alternative but to work towards sustainable long-term ties on the basis of real interdependency and shared rules. Equidistance to China and the United States, as occasionally proposed by interested parties in European debates,3 is not an option however. For that the gap between Europe and China – in terms of questions of values, the political system and the rules-based international order – is too large. And however great the differences may appear, the ties that bind the Euro-American com­munity of values and security are likely to remain a great deal closer than the relationships of either the United States or the states of Europe to any other international partner.

New Strategy for Europe

Europe will, as Annegret Bendiek and Barbara Lippert underline, have to discover its own strengths and develop a China policy that is not conceived as a “country strategy”, but as part of a comprehensive European strategy of self-assertion, or, in other words, part of a striving for greater European sovereignty or strategic autonomy.4 Especially in connection with China, this demands more supranationality, or what Bendiek and Lippert call a “supranational geopolitics”. Work is already under way on instruments that could serve a confident, prudent European policy towards China, such as foreign investment screening complemented by national legislation. The trick is to prepare Europe for harsher competition by streng­thening social and technological resilience, without weakening cooperation and interdependency. Such a strategy should apply to not only the direct relation­ship to China but also to Europe’s international and global profile as a whole. Many states and societies in Asia and Africa value China’s economic engagement and its Belt and Road Initiative, but fear one-sided dependencies. Here the European Union’s connectivity strategy towards Asia represents a sensible approach. The same applies to the already considerable funds that Europe provides for African infrastructure, for example via the European Investment Bank. Finally, European states will have to expand their engage­ment in the United Nations and other multilateral organisations and forums. In the process they may find themselves having to fill gaps created by the disinterest or withdrawal of the current Administra­tion in Washington. That offers an opportunity to demonstrate that Europe’s understanding of multi­lateralism and international rules differs fundamen­tally from Sinocentric multi-bilateralism.

Peter Rudolf

The Sino-American World Conflict

China’s Rise as Threat to American Predominance

In the United States the rise of China is widely regarded as a danger to America’s own dominant position in the international system. Although the idea of an unstoppable Chinese economic and mili­tary expansion and a relative loss of power for the United States is based on questionable assumptions and projections, China is genuinely the only country with the potential to threaten the status of the United States. Power shifts, it is argued, could endanger the stability of the international system, if the predominant and the rising power prove incapable of reach­ing an understanding over governance and leadership in the international system. This is the implication of the power transition theory that has been avidly discussed in both countries and in recent years col­oured the public debate in the guise of the “Thucydi­des Trap”. The theory itself is problematic, its explanatory value contested. But as an interpretive framework it influences perceptions both in the United States and in China. On the one hand this framework highlights the risks of a transition, on the other it sees individual conflicts of a more regional or local nature coalescing to a global hegemonic conflict.

On the Structure of the Sino-American Conflict Syndrome

A string of elements make up the US-China conflict syndrome. Its basis is a regional – and increasingly also global – status rivalry. China’s growing power has awakened American fears over its status as the only international superpower. Some would argue that states (or the protagonists representing them) seek status as an end in itself, as postulated in ap­proaches grounded in social psychology. In this under­standing, higher status engenders the psychological gratification of superiority over other individ­uals or states, and the prospect of losing this status threatens one’s own identity. But status is also asso­ciated with material gains. In the longer term, China threatens not only America’s status as the leading power, but also the privileges and economic advan­tages that ensue from that status. China could, the sceptics argue, acquire dominant global political, economic and technological influence, set rules and standards across the board, and establish a kind of “illiberal sphere of influence”. In this case the United States would no longer be able to guarantee the secu­rity and prosperity it has enjoyed to date.

This competition for influence melds with an ideological antagonism. Of course, the human rights situation in China has always been a cause of inter­mittent friction in US-China relations. But as long as China’s rise was not perceived as a global challenge and as long as the hope survived that China would eventually liberalise, China was not perceived as an ideological antagonist in the United States. From the Chinese perspective this ideological dimension has always been more salient, given that Western con­cepts of liberal democracy and freedom of expression threaten the ideological dominance of the Chinese Communist Party. It must be expected, however, that the systemic conflict will loom increasingly large on the American side, sometimes interpreted as a clash between “liberal democracy” and what is occasionally referred to as “digital authoritarianism”. Highlighting the ideological conflict might be employed to mobi­lise sustained domestic support for a power clash with China that cannot come free of economic costs.

Even if the ideological conflict is not the most im­portant layer, it must certainly be expected that an increasingly pointed “ideological difference” will inten­sify threat perceptions and thus strengthen the security dilemma between the United States and China. Since the Taiwan crisis of 1995/96 both sides (again) see each other as potential military adversaries and align their planning accordingly, so the security dilemma shapes the structure of the relationship. Neither side is especially sensitive to the reciprocal threat perceptions this produces, because the antago­nists each see themselves as defensive, peaceful powers but suspect the respective other of aggressive offensive intentions.

Dimensions and Dynamics of the Rivalry

Given that China and the United States are potential military adversaries – and not merely systemic an­tago­nists competing over status – the relationship between the two must be understood as a complex strategic rivalry. This is especially clear on China’s maritime periphery, where the rivalry is dominated by perceptions of military threats and the American view that China is seeking to establish an exclusive sphere of influence in East Asia. In the South China Sea Washington’s insistence on unhindered access and freedom of navigation collides with China’s efforts to create a security zone and counter Ameri­ca’s ability to intervene. The geopolitical conflict over the South China Sea is, moreover, interwoven with the nuclear dimension. China appears to be turning the South China Sea into a protected bastion for nuclear-armed submarines to safeguard its second-strike capability vis-à-vis the United States.

Technological dimension of global competition for influence.

There are also military threat perceptions – albeit less important – in the global competition for influ­ence, which in the meantime also encompasses the Arctic. The present US Administration is convinced that China’s growing global economic and political presence comes at the expense of the United States. In response Washington is applying pressure and incen­tives to dissuade other states from expanding their economic relations with China.

The global competition for influence is intimately bound up with the technological dimension of the US-China rivalry, which concerns technological pre­domi­nance in the digital age. What makes this dimen­sion of the conflict so crucial is that technological leadership creates global competitive advantage and secures the basis for military superiority.

As reflected in the campaign against Huawei, we are witnessing a turn away from the positive-sum logic in economic relations with China. As long as Washington was not afraid of the rise of a strategic rival the economic logic predominated. And in abso­lute terms the United States profited from eco­nomic exchange relations. That China may have derived relatively larger benefits played no real role. This economic logic of absolute gains was tied to an expec­tation that economic interdependence would have cooperation-promoting and peace-stabilising effects. Now fears that China is growing into a global strategic rival are eclipsing the economic logic. Under Trump the security logic now dominates both rhetoric and practice, in association with concerns over the rela­tive distribution of gains and the view that economic interdependence has negative consequences for the technological basis of military superiority.

Consequences

If the strategic rivalry between the United States and China consolidates into a lasting global conflict con­stellation this could set in motion a kind of deglobali­sation, ultimately leading to two parallel orders, one dominated by the United States, the other by China. If the US-China conflict continues to sharpen and accel­erates the bipolarisation of the international system, the basis for global multilateralism could disappear. And the US-China world conflict confronts Germany and the European Union with the question of the extent to which and terms under which they should support the United States against China. One thing appears certain: Whether President Trump is reelected or a Democrat enters the White House in January 2021, the strategic rivalry with China will shape US foreign policy.

Washington views the world, and Europe, through a “China lens”.

Washington will likely view the world, and Europe, above all through a “China lens”. If this leads the Unit­ed States to fixate even more strongly on the In­do-Pacific and competition over influence with Chi­na, it may treat crises in Europe and the European pe­riph­ery as secondary. Washington’s pressure on its allies to take a clear position on the sharpening US-China conflict and clearly side with the United States is likely to grow rather than wane.

Hanns Günther Hilpert and Gudrun Wacker

Chinese Narratives about the United States

China as “Champion of the South”

From the Chinese perspective, the country’s gain in economic and political importance is nothing more than a resurgence. Until the late eighteenth century China’s per capita income exceeded that of Western Europe or North America, and China was the un­contested leading power in Asia. Only after the arrival of Western colonialism and imperialism was China plunged into a decline lasting roughly a century, dur­ing which it suffered economic exploitation, politi­cal humiliation and military invasion (the “cen­tury of humiliation”). Chinese views of America and the West remain correspondingly ambivalent today. On the one hand the United States engenders fascination for its capacity to innovate, its economic strength, its universities, its military capabilities, and its political system; all these earn respect and admiration in China. On the other, the negative experiences of the past create distance and mistrust towards the West. More recently, the global financial crisis, America’s military interventions in the Middle East and Trump’s erratic style of politics have greatly eroded the West’s reputation.

Despite its economic success and great power status, China still sees itself as part of the Global South. To this day the political leadership speaks of China as the “the world’s largest developing country”. In fact the North/South dimension – citing a global devel­op­ment and power gap between the West and the rest of the world – probably features more prominently in the Chinese discourse than the more ideological East/West divide: China presents itself as the trail­blazer and advocate of the emerging economies and developing countries, not as the systemic adversary of the United States and the West. From this perspective America represents the paradigm for modernisation: China needs to reduce the gap with the United States and catch up in order to make the world a fairer and more just place. This self-assessment also modifies the triumphalism that always resonates in Beijing’s recur­rent narrative of a rising China and declining America.

America Blocking China’s Progress

Beijing has always viewed America with deep mis­trust, suspecting it of seeking to internally corrupt and transform China – and the rest of the Com­munist world – by means of “peaceful evolution”, in other words infiltration and subversion from within. These fears were confirmed with shocking rapidity in 1989, when the Tiananmen massacre was followed almost immediately by collapse of the Soviet empire. Since then the perception of the United States as an obstacle on China’s road to restoring lost greatness has been, at least implicitly, a consistent motif in the Chinese discourse.

Fate of Soviet Union warns China to avoid open competition with the United States.

The fate of the Soviet Union also left an indelible mark on the attitudes of all subsequent generations of Chinese leaders. They concluded that open com­petition with the United States was to be avoided, whether in the form of an arms race or through con­frontation in other fields; real conflict was out of the question. Accordingly, they responded to what they perceived as America’s attempts at containment with the rhetoric of cooperation (“win-win”) and concepts such as a “new type of great power relations”, in which each side would respect the other’s “core na­tion­al interests”. Although realistic Chinese analysts understand the relationship between rising and de­clining powers as an unavoidable zero-sum game – where one side’s gains are the other’s losses – they nonetheless see the Chinese and US governments as bearing a responsibility to prevent conflict (and cer­tainly war) from breaking out.2

Beijing’s fears that Washington was ultimately seeking regime change in China deepened in the wake of the so-called “colour revolutions” of the 2000s and the Arab Spring of 2011. The Chinese wonder whether the United States would accept their coun­try’s rise and its possible leading role in new tech­nologies (artificial intelligence, 5G) if it was a democ­racy based on the Western model. Is preserving Ameri­can supremacy Washington’s prime interest – or would it be conceivable for it to give up this role in particular areas if China were to change fundamen­tally, in other words democratise?

A US-Dominated World Order

China also takes an ambivalent view of the post-1945 liberal world order and the values and institutions upon which it is built. That order and the globalisa­tion process it gave rise to have enabled China to industrialise and modernise via market opening and market reforms, to largely eliminate absolute poverty, and to acquire international power and prestige. But ultimately, the Chinese believe, the Western liberal sys­tem remains a manifestation of American hegemo­ny. Beijing does not expect the United States to concede China the voice that its economic and political weight would merit.3 Chinese leaders are convinced that Ameri­ca and the West will never voluntarily grant China greater influence at the international level. In line with this, they believe, the role of a “responsible stakeholder” – as first demanded of Beijing in 2005 by the then US Deputy Secretary of State Robert Zoellick – would primarily strengthen America’s claims to hegemony but not benefit China’s economic development, still less its political rise. In any case, China regards the West’s advocacy of a liberal world order and universal human rights as a hegemonic discourse.

The United States under Donald Trump

Donald Trump’s election as US President in 2016 was officially welcomed; scholarly assessments of the im­plications for the bilateral relationship were cautiously optimistic. Although Trump railed against China in his election campaigning, most Chinese believed he was merely replicating a familiar pattern. Previous presidential candidates – Carter, Reagan, Clinton, Bush jr. – had presented China as competitor and adversary in their campaigns. But after taking office each newly elected Administration sooner or later found its way back to a pragmatic and cooperative policy towards Beijing. In the case of Trump, as a businessman, it was also assumed that a viable basis would be found. On that assumption, official and media responses to Trump’s attacks were restrained (except over Taiwan). There was also little public criti­cism of his competence and leadership style. Even on Chinese social media the initial responses to Trump’s election tended to be positive. He was principally char­acterised as an unorthodox personality, and his dis­dain for political correctness was seen as refreshing.4

Open admission that the dangers presented by Trump were underestimated.

In the meantime, deep disillusionment seems to have set in.5 It is openly admitted that Trump’s un­predictability, his willingness to escalate, and the dangers he poses to Chinese economic growth had been underestimated. The President’s trade-related accusations concerning China are rejected as un­founded, illegitimate and without substance.6 The nationalist Global Times these days bluntly asserts that Washington has swung behind a course of containment, which is manifested in its Indo-Pacific strategy.7 The newspaper also demonstrates the new mood of self-confidence, asserting that China can no longer be con­tained and any attempt to do so would harm America more than China. But even the Global Times does not restrict itself to promoting a confrontative stance to­wards the United States. Instead it expresses cau­tious optimism that a solution to the trade dispute can be found. A new Cold War, it says, is “unrealistic”.8 The dominant tone of official and published statements is that, in light of the bilateral tensions in the economic field, both sides need to seek compromise in order to avoid inflicting harm on themselves. But sceptics warn that a lasting and dependable trade peace will not be possible with President Trump.

Official statements and media reports are highly critical when it comes to the recent protests in Hong Kong. Here the United States is sharply attacked, with the US Congress and the CIA accused of supporting the protests financially as well as verbally. Here again we see the narrative that the United States is seeking to weaken the Chinese system and ultimately achieve regime change in Beijing. This is because in Hong Kong “core national interests” such as China’s terri­torial integrity are at stake.

Back to the Future?

China’s America analysts differ in their expectations of future developments in the Sino-American rela­tion­ship. One camp hopes that both sides will return to pragmatic and constructive relations, whether by reaching an agreement with Trump over the trade dis­pute or by his losing the next election. Another camp interprets the shift in Washington’s policy towards China as permanent and structural. They believe that a bipartisan consensus in the United States will deter­mine the bilateral relationship for the foreseeable future (“no turning back”).9 More reform-oriented Chi­nese academics regard the pressure applied by the Trump Administration as counterproductive because it leads to a hardening of the defensive stance in the Chinese leadership. From this perspective, such fun­damental attacks to the system principally harm the pro-reform forces.

This is indirectly confirmed when official media write that the ongoing trade disputes have bolstered China’s determination to resist American bullying and defend its own rights and interests. Chinese ob­servers of the economic conflict also sometimes point out that aside from trade and growth losses, opportu­nities for China also arise. For example Washington’s technology boycott could accelerate China’s efforts to achieve autonomy in this field. They also note that Washington’s destructive, anti-WTO trade policies and its withdrawal from a series of international organi­sations and agreements has enhanced Beijing’s role at the global level.10

A Differentiated Perception of Europe

China’s perspective on Europe is less characterised by extremes. Although Europe – at the opposite end of the Eurasian landmass – is a pillar of the West and political ally of the United States, the Chinese regard it (unlike the United States) as presenting little ob­stacle to its own development, and in fact tending to be useful. In China it is also noted that Europe works to preserve multilateralism and the liberal world order and indeed has its own political and economic prob­lems with the Trump Administration.

China as champion of multilateral international order?

China likes to present itself as a defender of multilateralism against Trump’s disruptive attacks on the international order, and offers itself as an alliance part­ner to other states. But Germany and Europe should not be misled by Beijing’s rhetoric. In fact China opportunistically breaks multilateral rules as soon as that serves its interests: In its external economic policy China ignores fundamental WTO principles of non-discrimination and transparency, just as it ignored the Permanent Court of Arbitration’s ruling in its territorial dispute with the Philippines. There is certainly a fundamental difference between the Euro­pean and the Chinese understandings of multilateralism.11

Marco Overhaus, Peter Rudolf and Laura von Daniels

American Perceptions of China

Normative, Security and Economic Dimensions of Criticism

American criticisms of China have normative, secu­rity and economic dimensions. The normative dimen­sion, China’s threat to human rights and democratic values, has been central to the American debate since the bloody suppression of the student movement on Tiananmen Square in 1989. Human rights groups traditionally find it hard to gain a hearing against the powerful China lobby in American business, but feel their concerns have been confirmed as Beijing ex­pands its surveillance state and constructs so-called reedu­cation camps in the autonomous region of Xinjiang.4 The human rights situation in China has led to bi­partisan initiatives in Congress, seeking to persuade the Administration to show a more forceful response to the repression of the Uigurs, for example through sanctions against Chinese officials.5

Pro-democracy and human rights groups possess a powerful supporter in Congress: Nancy Pelosi, the Democratic Speaker of the House of Representatives, calls for a hard economic course against China, in­cluding import tariffs, also on the basis of human rights concerns.6

By the early 2000s, the security dimension of the rivalry between the United States and China was attracting growing attention. Since the National Security Strategy of 2002, US Administrations have explicitly raised the question of the modernisation of the Chinese armed forces.7 Initially the foremost concern was that China would sooner or later in­timi­date US allies in the region, above all South Korea and Japan; today the security threat has come to be re­garded as global. One reason for this is the perceived convergence of the economic and security components of the rivalry. This perspective surfaces for exam­ple in the Pentagon’s annual report on China’s military strength, which reviews Chinese investments in security-relevant areas and regards this as a matter of great concern. This applies in the first place to in­vest­ments in technologies that have direct military uses. But the Pentagon also worries about strategic benefits of Chinese investments in foreign infrastruc­ture, such as port facilities, which are part of the Belt and Road Initiative.8

Large parts of the US private sector shares the Trump Administration’s criticisms of “predatory” Chinese economic practices, the biggest complaints being state subsidies for Chinese firms, forced tech­nology transfer from foreign companies, and theft of intellectual property. But not all sectors and com­panies support Trump’s protectionist tariffs and his hard economic line against China.

President Trump continues to receive support from business sectors that have suffered from intense com­petition, such as producers of steel and aluminium. The escalation of trade sanctions is opposed by compa­nies that are negatively affected, directly or indirectly, by import tariffs on semi-finished products or counter-tariffs imposed by China and other trading partners. This applies to US importers, for example the retail sector, and increasingly to export-oriented businesses such as the farm sector, car-makers, and IT and com­munications companies.

After Trump threatened to raise tariffs again in two stages by the end of 2019, criticism from US businesses, Republicans in Congress and also the trade unions swelled to a level that even he was unable to ignore.9 Instead of imposing new tariffs, the Administration agreed to a limited “Phase One Deal” with China,10 which might be followed by another agreement and a mutual dismantling of tariffs.

As far as the geographical dimension of the Sino-American conflict is concerned, it should be noted that Washington has come to regard China as a threat to US and Western interests even in regions outside the Indo-Pacific “core” of the rivalry. This applies across the board to Africa and the Middle East, but is currently manifested most clearly in the Arctic. As well as a struggle over the resources there, Washington also fears the Chinese could establish a military presence.11

Congress in the China Debate

The US Congress tends to support and intensify the Administration’s hard line on China, rather than moderating it. This holds true for both parties.12 Leading Democrats in Congress and almost all Demo­cratic candidates in the primaries for the 2020 presi­dential elections propagated policies similar to Trump’s on China, even if they criticised his style of politics by tweet and accused him of neglecting allies in Asia and Europe. Chuck Schumer, Democratic Senate Minority Leader, said in May 2019: “We have to have tough, strong policies against China or they’ll continue to steal millions of American jobs and tril­lions of American dollars.”13

Congress’s initiatives and legislative proposals do reflect a changing mood in the business community and the society. But China-critical statements by politicians from both parties already had a great in­flu­ence on the public mood before Trump was elected.

President and Congress follow a hard line on China but differ over means.

The difference between the position of the Trump Administration on the one side and the two parties in Congress on the other lies in the question of which means are most suitable for the competition with China. Both Republicans and Democrats criticise the way the President’s threats of tariffs and other meas­ures alienate America’s allies in Europe and Asia and thus weaken Washington’s hand against Beijing. As presidential and congressional election campaigning gets under way in the United States, the Democrats are loudly voicing this criticism.

Opinions also diverge between Administration and Congress over Trump’s preferred instrument against China, unilateral import tariffs. Both the private sec­tor and the two political parties are increasingly con­cerned about negative repercussions of the trade conflict with China, above all for American consumers and the agricultural sector. In view of the looming presidential and congressional elections in November 2020, Trump and the Republicans risk paying for their tariff policies at the polls. Republican Senate Majority Leader Mitch McConnell, for example, said that the trade conflict could harm the United States.14

Outside of the “hard” areas of security policy and the economy, there is another new worry: Chinese influence spreading in the United States via channels such as the Confucius Institutes, and via Chinese grants for or investments in think-tanks, universities, media and business.15 Congress responded to this mood with a number of hearings and legislative pro­posals, including the Foreign Influence and Trans­parency Act and the Countering Foreign Propaganda Act.16 Concerns over Chinese influence go hand in hand with fears of espionage.17 With the trade con­flict in the background, this anti-Chinese mood in politics and business has also coloured public opinion.18

Moderate Voices Unheard in Washington

There are foreign policy specialists and China experts in the United States who draw attention to the dan­gers of a largely confrontative policy, do not regard the earlier China policy as wholly mistaken, and attempt to counteract the narrowing of the discourse. However, they tend to be marginalised. Fundamen­tal discomfort over the trend in US policy towards China was expressed in an open letter to the President and Con­gress initiated by a group of China experts and signed by another hundred individuals including many who worked on China in earlier Administrations. They advise explicitly against treating China as a “an economic enemy or an existential national security threat”. “The fear that Beijing will replace the United States as the global leader is exaggerated,” they say, adding that “it is not clear that Beijing itself sees this goal as necessary or feasible”.19

Proponents of this position, which amounts to a kind of “smart competition”, warn against abandoning all cooperation with China and seeking to prevent any increases in Chinese influence. From this per­spec­tive, US policy towards China with its mixture of co­operation, deterrence and pressure has been broadly successful over the past decades. But in their view there is a need for a correction, a change in the mix towards pressure and deterrence in order to respond to China’s more strongly mercantilist economic policy and its growing assertiveness in foreign policy.20

In terms of German and European interests it would be desirable if US critics of a one-sidedly con­frontative China policy were able to gain a better hearing in Washington. A US China policy that pru­dently weighs the cooperative and confrontative approaches would reduce the pressure on Berlin and other European capitals to choose between the United States and China in many important areas.

Michael Paul and Marco Overhaus

Security and Security Dilemmas in Sino?American Relations

Beijing’s Perspective

China finds itself in a geopolitical environment that is one of the world’s most difficult. It lacks the “insular” security of the United States.2 Its 22,000 kilometres of land border touch on fourteen neighbouring states, four of which possess nuclear arms (Russia, India, Pakistan and the erratic dictatorship in North Korea). With more than 18,000 kilometres of coastline, its waters adjoin those of another six neighbouring states, some of which host US military bases. In recent decades China has peacefully resolved many of its border conflicts. But its rise to become a great power also brings forth complex new security problems.

Beijing promises new strength against historical humiliation by foreign powers.

China is pursuing an ambitious foreign policy and equipping its armed forces to fulfil the security needs of state and party. Growing national prosperity is a development goal of the Communist Party. So politi­cal stability depends heavily on maritime trade routes that need to be secured by an expanded navy. But China’s military build-up stands increasingly in con­tra­diction to the official rhetoric of a peaceful devel­opment path. Its military power enables Beijing to pursue a robust foreign policy that increasingly trou­bles its Asian neighbours and the United States. For example, Japan regards China’s regional policy as “incompatible with [the] existing international order” and as a “serious security concern for the region”.3

The Chinese leadership paints the country as a historical victim, having suffered humiliation at the hands of foreign powers. Beijing promises new strength and vigour, both externally and towards its own population. From this point of view, even its claim on the South China Sea appears historically justified. In other words it invokes a moral exceptionalism to legitimise the unlawful appropriation of territory.

President Xi Jinping has gone as far as making the fate of his country dependent on use of the seas.4 His “Chinese Dream” of a great renaissance of the Chi­nese nation begins at the sea: The only way forward is to break free of the Yellow River – as a metaphor for parochialism and stagnation – and turn to the great blue ocean and the outside world. The Indo-Pacific sea routes are of vital importance for China; its naval build-up is designed to secure them and to project power globally.5

Against this background, China is undergoing a transition from coastal defence to “active defence”. This means first of all controlling the space within the “first island chain”, which includes the Yellow Sea bordered by Korea and Japan, the western part of the East China Sea with Taiwan, and the South China Sea. Beijing would also like to bring under its con­trol the area further east, within the “second island chain” that extends from the Kurils through Japan and then via the Bonins and the Marianas to the Caro­lines. That would leave Beijing in control of the sea routes of East Asia. But its naval thinking is already turning to more distant goals.

The economically plausible expansion of China’s naval activities is already altering the balance of power in the eastern hemisphere. Beijing is pursuing risk mitigation and is concerned – like the United States – to protect strategically important routes in order to safeguard its supplies in the event of crisis. China’s role in the global economy makes securing its sea routes a political imperative and an integral aspect of the national interest, given that 90 percent of its trade in goods and 40 percent of its imported oil are transported by sea.6 To that extent the creation of an ocean-going navy can be regarded as the maritime continuation of the reform policy initiated by Deng Xiaoping in the early 1980s.

Today the Chinese armed forces are capable of con­trolling the waters within the first island chain (at least temporarily). The Taiwan crisis of 1995/1996, when the United States deployed two aircraft carriers to force China to back down, is regarded as the trigger of this capability-building process. The Taiwan crisis was the turning point that exposed the weaknesses of the Chinese armed forces at that time.

In the meantime China has acquired the world’s largest navy in numerical terms – implying a great deal about intentions but revealing little about capa­bilities.7 The Chinese navy possesses more than three hundred warships, while the US Navy’s fleet, with responsibilities around the world, has numbered be­tween 279 and 290 vessels in recent years. Now China’s fleet is to be further modernised and equipped for opera­tions on the high seas. But it is questionable whether it can also become the quali­tative – and not just quantitative – equal of the US Navy. That would require even more naval investment, training and exer­cises. It will be long after the conclusion of the Chi­nese military modernisation programme in 2035 before China can match the United States on the high seas and in complex operations involving carrier groups.

Washington’s Perspective

Seen from Washington, China does not yet represent a direct threat to the continental United States. Never­theless, three aspects of military developments in China are regarded as a danger to America’s security and vital interests. Firstly, the United States sees its role as world power challenged by China’s ongoing naval expansion. The United States has dominated the oceans of the world as Great Britain once did, and has used that power to secure the freedom of the seas. Unhampered navigation is a global common good, comparable to the skies, outer space and cyberspace.

Like China, the United States also regards the oceans and sea routes as the basis for its own eco­nomic strength, accounting as they do for more than 90 percent of long-distance international trade and secure supplies of raw materials and industrial prod­ucts. But the oceans also enable power projection and military intervention. As China steadily upgrades the capabilities of its armed forces, they are increasingly in a position to close down the US Navy’s access to the Asia-Pacific region and thus challenge America’s status as a global power.8

Washington sees China’s growing military capabilities as a threat.

Secondly, the United States regards China’s grow­ing military capabilities as a threat to its military bases in Japan, South Korea and the US territory of Guam. One reason why the Trump Administration withdrew from Intermediate Range Nuclear Forces Treaty with Russia was the hope that this would enable it to better counter the Chinese threat. Admi­ral Phil Davidson, Commander of the US forces in the Indo-Pacific, told a congressional hearing in 2019 that 95 percent of Chinese ballistic missiles would not be permitted under the INF treaty. In his view for the US to have “a land-based component with that kind of capability restores maneuver to the force.”9

Washington maintains a system of alliances and partnerships with countries that feel threatened by China. For example Washington has declared that the Senkaku/Diaoyu Islands, which are administered by Tokyo but also claimed by Beijing, fall under its bilateral defence agreement with Japan. A military conflict between China and an alliance partner would put Washington in a tight spot, at least assuming the Trump Administration continues to value the cred­ibility of American security guarantees.

Thirdly the American perspective on China is strongly shaped by longer-term developments. China is expanding its military capabilities in order to be able to project power through and beyond the first and second island chains.10 This stokes fears in Washing­ton that China could also come to directly threaten the United States.

China opened its first foreign military base in August 2017, at the Horn of Africa, and Washington expects others to follow.11 Finally Beijing is building additional competence and capabilities in precisely those spheres of military operations that are by defi­nition global: space and cyberspace. From the US per­spective, China’s military capabilities in those areas represent an imminent danger.

The Nuclear Component

Nuclear weapons play an important role for Chinese for­eign and security policy.12 They are not as yet cen­tral to the security competition between the United States and China. From China’s perspective they sym­bolise great power status and serve above all as a deterrent to other nuclear-armed states. In the first place this means the United States, to deter it from military intervention or any direct threat to the Chi­nese mainland. China officially pursues a policy of no first use (NFU). But US missile defence initiatives and the expansion of conventional US forces leave Beijing fearing losing its second-strike capability and thus its nuclear deterrent vis-à-vis Washington. This threat perception is strengthened by the fact that the United States does not openly recognise the principle of mutually assured destruction with respect to China and keeps this question intentionally ambivalent.

The nuclear threat from North Korea serves the United States as justification for establishing its own missile defences in North-East Asia. But the Chinese leadership does not regard the existence of North Korean missiles alone as enough to justify the Ameri­can behaviour. Beijing believes Washington’s asser­tions are an excuse to install a system capable of threatening strategic stability, specifically to neutral­ise the Chinese and Russian nuclear deterrents in a military conflict. Finally, Washington’s ability to intervene militarily can also be supported by missile defence systems.

North Korea’s successful tests of long-range mis­siles have not changed the Chinese assessment. For the United States the specific threat presented by long-range missiles is central.13 That is why Trump refrained from criticising North Korea’s tests of short-range ballistic missiles in August 2019. China’s threat analysis, meanwhile, continues to centre on the ex­pandability of the US missile defence system, spe­cif­ically on flexibly deployable Aegis vessels and land-based systems. Ultimately, if US, South Korean or Japanese radar systems on land and at sea can track the trajectory of a North Korean missile, then they can certainly also do the same for Chinese missiles. Here Beijing’s threat perception coincides with Mos­cow’s. That congruence is one of the foundations of the “comprehensive strategic partnership of coordina­tion” between China and Russia, which is manifested in arms cooperation and joint military manoeuvres.

One American response to the North Korean mis­sile issue is the development of strategic conventional systems. The US Prompt Global Strike programme pro­poses hypersonic glide vehicles (HGVs) capable of conducting conventional strikes anywhere in the world within an hour, ostensibly in order to prevent the launch of an intercontinental missile from North Korea. But such highly advanced technology is not required to overcome North Korea’s primitive air defences. Chinese experts therefore suspect that China’s nuclear arsenal is the real target. They fear that in the event of conflict the United States could launch a preemptive disarming attack.

In the meantime China and Russia have them­selves acquired HGV technologies. From the Chinese perspective the advantage of hypersonic glide vehi­cles, whether conventionally or nuclear armed, is that they cannot be detected and destroyed by any cur­rently available defence system. In other words, China is using a US-initiated technology to counter a challenge presented to its own nuclear deterrent by the American decision to deploy missile defence sys­tems.

The ongoing modernisation of the Chinese nuclear arsenal is also of concern to the United States.14 China wants to introduce new intercontinental missiles, devel­op a new air-launched ballistic missile and with Russia’s support establish a missile early warning system. This generates suspicions over China’s future nuclear strategy. Washington is increasingly clear that it is no longer in a bilateral security dilemma – as in the Cold War – but a multilateral one. The situa­tion is exacerbated by North Korea’s development of long-range nuclear missiles. Instead of arms control the United States is relying in the first place on flexibilising its own options. This further increases the danger of an arms race.

Hanns Günther Hilpert

Trade, Economy and Finance: Rivalries, Conflicts, Escalation Risks

United States and China on Economic Collision Course

Objective economic causes can be identified behind this shift from cooperation to confrontation. The advantages both sides derive from economic cooperation have become smaller. But status competition in the context of the new great power rivalry and increasingly critical perceptions on both sides have also played a major role.

China’s meteoric economic and technological rise has created a situation where economic relations be­tween America and China are today far less com­ple­mentary and much more competitive. It has become harder for US companies to increase sales and make profits in the Chinese market – especially as ad­minis­trative restrictions are increasing rather than decreasing – and many service branches in which US businesses possess competitive advantages remain closed to them. Conversely the United States has become reluctant to transfer technology. And now that China’s purchases of US treasury bonds have fallen in the wake of shrinking current account sur­pluses, Chinese savings have ceased to contribute to financing America’s domestic economy in any significant way.

United States accuses China of unfair competition.

While complementarity is diminishing, competi­tion has become fiercer, especially in manufacturing. China’s rise to become the world’s foremost industrial manufacturer and exporter has accelerated structural change, particularly in the United States, and has trig­gered social upheavals in America’s “Rust Belt”, which are concentrated in particular sectors and regions. The impact of this “China shock” was felt much more strongly in the United States than for example in Germany. An empirically well-founded study by the Massachusetts Institute of Technology (MIT) has shown that imports from China accounted for about one quarter of the decline in manufacturing jobs in the United States between 1990 and 2007.2 The com­petitive challenge posed by China now extends far into the spheres of high-tech. With its industrial policy strategy “Made in China 2025”, Beijing has laid out its intention to achieve global market leadership in ten key high-value-added sectors. Already today US and Chinese companies compete fiercely in the fields of communications technology and artificial intel­ligence for the lead in both development and setting standards and systems. The United States accuse China of unfair competition, for example by closing its mar­kets with protectionist measures, discriminating against foreign suppliers, and exerting direct and arbi­trary influence on markets and crucial businesses.3

Power Shifts and the New US Trade Policy

China’s challenge to the United States is not restricted to industrial competition, but also extends to its posi­tion and status as the leading global trading and eco­nomic power. In terms of purchasing power parity China is already the world’s largest economy. And at market prices China’s gross domestic product already shows the largest gross fixed capital formation and the largest industrial value creation. In absolute terms China is the largest contributor to world economic growth as well as the largest exporter and largest trading nation.4 If current growth trends continue, China will replace the United States as the world’s largest economy by 2030, although this is by no means a foregone conclusion. With reference to this shift in economic power, official Chinese voices counter US criticisms – arguing that the accusation that the People’s Republic is employing unfair trade practices is merely a pretext for a foreign policy of containment.5

Trade conflict is understood as a system-to-system conflict.

Another reason why this geo-economic shift is prob­lematic is that America and China have different ideas about international order. Washington wonders whether the Chinese economic model (a politically authoritarian, interventionist, mercantilist state capi­talism) can be compatible with a world trade and finance system built on liberal principles. The ques­tion has grown in urgency as the expectation in the West that China would become economically and politically liberal has been disappointed, an expec­tation that was linked above all to the country’s acces­sion to the World Trade Organisation. In fact the influence exerted by party and state on the economy has increased under Xi Jinping, and the exercise of power has become more authoritarian and doctrinal. The trade conflict is therefore also understood as a system-to-system conflict.6

At the same time America’s trade policy has wit­nessed a paradigmatic and political turn to protec­tionism. The guiding principle for US trade policy today is no longer free trade, but “fair and reciprocal” with bilateral trade balances becoming the decisive criterion. In his statements and actions, US President Donald Trump casts aside the established tenets of trade theory and the empirical experience of trade policy.7 In political practice his motto is “America First”, prioritising US interests over obligations deriv­ing from international treaties and multilateral rules. And he has no qualms about imposing unilateral pro­tectionist measures to exert pressure on trade part­ners. He accepts the erosion or even destruction of international rules as a price worth paying, and in some cases even actively pursues this.

Trade policy has become a central issue for Trump’s presidency. Here the Administration’s interest is not solely in domestic value creation and employment, but also and above all the overarching category of national security. Washington believes that protect­ing the national interest requires America’s strategic industries to possess supply chains that are independ­ent of China.8 In general, the economic and techno­logical rise of the strategic rival China must certainly not be further accelerated by economic exchange with America. In order to throttle the modernisation of the Chinese People’s Liberation Army, the Trump Administration believes it is necessary to pursue a strategy of economic decoupling from China. Tariffs, investment controls and supplier boycotts are the effective trade policy instruments of such a decou­pling.9

From Integration to Decoupling

The Trump Administration has confronted all America’s major trading partners with unilateral demands and measures. But China has borne the brunt of trade confrontations. The new US National Security Strategy published in December 2017 iden­tifies China’s trade and economic policies as one of America’s central foreign policy and security chal­lenges and threats.10 The investigation report under Section 301 of the Trade Act of 1974, published by the United States Trade Representative, in March 2018, describes China’s industrial and technology policy as “unfair and inequitable”.11 These two government documents mark the definitive end of American engage­ment policy towards China. America’s trade policy towards China is now definitely in “decoupling mode”. In order to correct what it sees as unfair, disadvantageous trade, financial and technology ex­change with China, the Trump Administration has imposed a series of measures directed against China:12

• Incremental and escalating extraordinary tariffs of up to 25 percent on about half of US imports from China.

• State controls on foreign direct investment in secu­rity-relevant sectors have been tightened using administrative measures and legislation, leading to a significant decline in Chinese investment in the United States.

• Department of Commerce controls on export and licensing of security-relevant technologies to China.

• In the area of public procurement Washington has restricted the use of particular Chinese prod­ucts (telecommunications, visual surveillance).

• Chinese businesses and individuals listed in the Department of Commerce’s “Entity List” are prohibited from making purchases in the United States or from US companies. The Chinese technol­ogy supplier Huawei was put on the Entity List in mid-May 2019.

China’s response to these measures has to date been comparatively restrained. China has refrained from pouring additional oil onto the fire, likely out of concern to avoid a further escalation that would harm its own economy. Thus China has “only” im­posed reciprocal retaliatory tariffs on imports from the United States. At the same time, it unilaterally reduced its tariffs on imports from third states, which has the effect of additionally disadvantaging imports from the United States. And Chinese businesses are actively seeking suppliers capable of substituting imports from the United States.13 Beijing has also considered placing an export embargo on rare earths, which are crucial for high-tech manufacturing. China responded to Huawei’s inclusion in the Entity List with an announcement that it would create its own “Unreliable Entities List” of all businesses, organisations and individuals that comply with US boycotts calls, for example against Huawei. The listed entities would face disadvantages in the Chinese market.14 Chinese consumers also launched campaigns calling for boycotts of American goods.

Another escalation of the tariff and trade war cannot be excluded.

On 13 December 2019, both sides agreed on a par­tial Phase One agreement. In it, the United States (and China) renounce the announced increase in special tariffs, while China promises additional imports from the United States amounting to $200 billion for the years 2020 and 2021. China also promises better pro­tection of intellectual property, an end to forced tech­nology transfer and better market access in financial services. The previous special tariffs will remain in place, however. And the controversies over subsidies, state enterprises and technology remain unresolved. It is unlikely that it will be possible to resolve these points as planned in a second partial agreement before the US presidential elections. But even if this were to occur, the fundamental political conflict would remain unresolved and a new trade policy escalation would be possible at any time. What is more, China’s additional US imports are likely to lead to correspondingly lower imports from Brazil, the European Union, Japan, etc. and trigger new con­tro­versies. Furthermore, Washington is still undecided on the extent to which the US economy should decouple from the Chinese. And China, too, has lost confidence in the reliability and integrity of the American president and is therefore unlikely to be pre­pared to make concessions.

Consequences and Escalation Risks

The expected continuation of the conflict, and even more so its potential escalation, threaten the very institutional foundations of the world trade and finance system. The Sino-American trade, economic and technology conflict has already caused consider­able economic harm, affecting third parties as well as the antagonists themselves.

The tit-for-tat extraordinary tariffs imposed by the United States and China have led to significant reduc­tions in bilateral trade and in some cases drastically increased the cost of the respective imports. Importers have switched to alternative suppliers, to the benefit of states such as Vietnam, Mexico and the European Union. To some extent production has also been relocated. Altogether the supply and sales risks of for­eign trade have increased the world over. Investors play for time, investments are being reduced to a risk-limiting minimum. This uncertainty has contributed significantly to the economic slow-down in 2019.

Both China and the United States have caused damage to the WTO and the multilateral world trad­ing system through their trade policies: China by its disregard of the fundamental WTO principles of non-discrimination and transparency, the United States through its repeated violations of core terms of the WTO treaty and not least through its punitive tariffs. The indifference of the world’s two largest trading powers towards the WTO rules casts a shadow over the organisation’s future viability and legitimacy as a multilateral system. The unappetising prospect is a gradual dissolution of the WTO trade framework through bilateral and multilateral trade agreements that are agreed, enforced and broken by virtue of arbi­trary political power. A new trade world of that kind might offer some advantages to the United States and China as major political powers, but harm all the others.

It is possible – if not in fact likely – that the struggle over techno-political spheres of influence will see the United States impose further sanctions and supplier boycotts against other Chinese compa­nies and step up its pressure on third states to do the same.15 Companies in third states could soon find themselves facing the uncomfortable choice of doing business with either America or China. In the case of critical technologies this would create a world divided between Chinese and US standards and systems.

European Union should defend the paradigm of rules?based multilateralism.

The trade war could escalate into the financial mar­kets, too. In August 2019 the US Treasury Depart­ment accused China of currency manipulation after the renminbi had devalued significantly over the course of the year. If economic growth declines or even a recession develops, China and the United States (and other states) could be tempted to stimulate their domestic economies through currency devalua­tion. More broadly, China’s threat to sell off all its US treasuries (worth more than $1 trillion) is still in the air, notwithstanding the harm China would do to itself. That would put America’s key interest rates under severe pressure. Much more concrete are Beijing’s plans to introduce a digital currency that could challenge the international dominance of the US dollar (and the euro). Washington is in turn exploring ways to exclude Chinese businesses from the US financial markets and impose financial sanc­tions against particular Chinese companies and individuals.

Europe’s Positioning16

As a result of the Sino-American conflict, world trade and the global division of labour are in retreat. Pro­duction, income and innovation are suffering globally. The trade practices of America and China and the welfare losses caused by the conflict also affect Ger­many and Europe, both directly and indirectly. China and the United States each threaten the European Union and European businesses with disadvantages if they fail to take the positions they respectively demand.

Even if there are good foreign policy and security reasons why Europe cannot adopt a position of equi­distance to America and China, the European Union should uphold its independent position in the trade disputes and defend the paradigm of rules-based multi­lateralism. In view of America’s and China’s breaches of rules and principles, partisanship would run counter to the principles of the European Single Market (non-discrimination, rules-orientation, multi­lateralism). The European Union would only lose its credibility on trade policy vis-à-vis third countries. Europe’s negotiating position as honest broker be­tween the adversaries would be unnecessarily weak­ened. And even if it did take a side, the European Union would never be more than a junior partner whose own interests always come second.

Orientation on liberal values and multilateral prin­ciples is no obstacle to vigorous advocacy for Europe’s economic interests. Brussels must insist that future Sino-American trade agreements do not create dis­crimi­natory disadvantages for the European Union. In the ongoing bilateral talks with the United States (about an agreement on trade and tariffs) and with China (about an investment agreement) the European Union must demand adequate concessions. And vis-à-vis China it will be necessary to expand the existing trade and investment defence instruments to ensure that European businesses no longer suffer disadvant­ages from the activities of Chinese state-owned enter­prises or excessive Chinese subsidies. Beyond this the European Union should invest in cooperation with like-minded trade partners, for example with Japan, the Association of Southeast Asian Nations (ASEAN), Australia and the Mercado Común del Sur (Mercosur). This could allow the European Union to strengthen its negotiating weight and hedge against systemic risks in world trade.

Matthias Schulze and Daniel Voelsen

Digital Spheres of Influence

Technopolitical Spheres of Influence

In classical geopolitics the term sphere of influence is understood territorially, as a clearly defined area with­in which an actor exercises exclusive influence. Technopolitical spheres of influence differ from this on account of the characteristics of digital technologies. Firstly, digital products and services are based on various combinations of hardware and software, where no individual state and no single company is in any position to control all the levels of the tech­nology stack. As a result, digital spheres of influence frequently overlap, for example when Chinese net­work hardware is combined with an American operat­ing system to run European applications.

Secondly, many of the decisive digital technologies at issue here are subject to a network logic. National borders and territoriality are less significant in global communication networks like the internet; what mat­ters, instead, is the centrality of the actors. Central network actors are able to control data flows and access to digital goods and services. They can thus exert eco­nomic and political influence on other less central network actors, be these states or businesses. In this understanding, technopolitical spheres of influence are not necessarily exclusive.

Digital spheres of influence follow a network logic.

The United States has treated technological superi­ority as an important element of national security since the 1940s. Initially, the Soviet Union was the greatest threat, joined in the 1980s by the rapid rise of the Japanese computer industry.1 During the first wave of digitisation in the 1990s, the United States was again in the lead and could thus secure a domi­nant role in many core technologies of digitisation. Numerous states and businesses became dependent on market leaders from the United States (see figure 1). Today, China is pursuing the twofold goal of first becoming independent from the United States in core digital technologies, and then disseminating its own technologies globally. That approach is articulated unambiguously in the “Made in China 2025” strat­egy.2 One decisive instrument to achieve these goals is the digital component of the Belt and Road Initiative, which underlines China’s ambition to create its own technopolitical sphere of influence as a counterweight to the American. The first successes of this strategy can be seen in the growing global importance of Chi­nese firms operating social media platforms, pro­vid­ing cloud services and selling network tech­nologies.

The US sphere of influence has so far been de­signed to enable as many states and companies as possible to use the products and services of American companies. In principle, the United States opens its markets to foreign firms, although it does also em­ploy targeted instruments to restrict foreign invest­ment and to control exports. China goes further in this respect: While the state supports the international activities of Chinese enterprises, it strictly regulates, and often limits, access to its own markets.

Figure 1 

The two spheres of influence overlap, especially in Europe, where numerous American and Chinese services are present. It is unclear how the spheres of influence will develop in future, for example whether the establishment of trade barriers may make them more closed and exclusive. The future development will depend on domestic factors and, more importantly, the future relationship between the two states. The more they regard their relationship as a zero-sum game the more likely it is that the struggle over tech­nopolitical influence will intensify and lead to further conflicts.

Technopolitical Spheres of Influence as a Means to Project Power

Technological dependency is unproblematic as long as all parties involved see it as a desirable interdepend­ence that increases welfare. Matters become more tricky when central actors like the United States and China leverage dependencies to further their own egoistic interests. Spheres of influence provide these actors with distinct possibilities to exert political and eco­nomic influence over states and businesses that depend on them.3

Firstly, central actors can define normative stand­ards through their technologies, in a sense conducting a “politics by default”. Technologies are not value-neutral, but always permeated by political ideas, values and norms.4 These become embedded in a tech­nology as standard (“default”) configuration, for example in the software code, and as such create political and economic effects. Social networks like US-based Facebook and China’s WeChat are influenced by both the values and the legal frameworks of their respective home countries, for example con­cerning the limits of freedom of expression or the requirements concerning the protection of personal data protection. Amazon’s global logistics system and Uber’s mobility platform represent concrete expressions of – in this case Anglo-Saxon – ideas about how economic competition should be organised. Through these platforms, their ideas and norms have disseminated across the globe. China in turn is at­tempting to shape the economic affairs of other states with the global reach of, for instance, the Alibaba Group or the marketplace functions of WeChat.

Path dependencies and lock-in effects play an im­portant role here: If an actor becomes existentially dependent on the products of a central network actor because processes have been optimised for these prod­ucts, it becomes very difficult and costly to switch. For example, almost all governments are dependent on the Microsoft Windows operating sys­tem (see figure 1, p. 31). In the case of network-based technologies like social media and online platforms (app stores and online marketplaces) the effect is amplified by net­work effects and economies of scale. The stronger the associated path dependencies, the harder it becomes to deviate from the defaults set by digital services, or at least to limit their effects. Even in cases where actors share similar values, such as liberal democratic principles, this can lead to friction. The European Union’s long-running conflicts with American firms over their compliance with European data protection rules and labour rights in the so-called gig economy, represent a prominent example.

Digital spheres of influence enable “politics by default”.

Secondly there is a power differential manifested in technopolitical spheres of influence. In the described network logic, actors in control of central nodes can manipulate the technologies upon which other states and businesses depend.5 This is glaringly obvious in the case of cyberespionage and surveillance. Many of the most important internet service providers such as Amazon, Google and Microsoft are based in the United States. That means that the data of their cus­tomers outside the United States – in particular the users of cloud services – is often stored in US data centres. As Edward Snowden revealed, US intelligence services also exploit the fact that most of the world’s internet communication passes through servers and fibre-optic cables located in the United States, and can therefore be eavesdropped upon. Under court orders, security agencies can also access the cloud data of global enterprises stored in US-based data centres. These opportunities are not available to states that do not have such a central position. This regularly creates political conflicts, for example where Euro­pean law enforcement authorities wish to access data in the United States for their investigations.

China has responded to these developments by enhancing its own ability to monitor important fibre-optic internet exchange points. Moreover, China, Russia and the European Union are seeking to re­pat­riate their citizens’ data from the United States through various data localisation initiatives, as a step towards regaining control. China forces foreign com­panies to store their customers’ data within Chinese territory, where the Chinese security authorities can access it. Recently this has even been expanded to en­crypted communication by Western companies that use VPNs (Virtual Private Networks).

Thirdly, technological dependency means that cen­tral actors can use their power for acts of sabotage, disrupting or even preventing data flows or the avail­ability of digital services in dependent states. This can include the simple denial of access to services hosted by central actors, restrictions on particular digital products in marketplaces (such as software in major app stores), the suspension of over-the-air software updates, or even the deliberate sabotage of IT systems. An outage of Amazon web services or the major Google services, for example – whether through deliberate attack or accidental failure – would paralyse numerous European companies and web­sites. The debate over the role of the Chinese tech­nology company Huawei reflects the concerns of Western governments that China could sabotage the new 5G mobile networks. And with its restrictions on exports to Huawei, the United States also demon­strates how production processes within a digital enterprise can be disrupted by interrupting global supply chains.

Options for Third-Party States

No other state can be expected to match the techno­logical prowess of the United States and China in the foreseeable future. Both will attempt to expand their technopolitical influence. That is problematic for tech­nologically dependent states, as the economic pressure grows and their political space shrinks. Essentially, third-party states have the following three options:

Firstly, they can join either China or the United States and place their faith fully in the technologies of one of the two spheres of influence. That would increase their dependency in one direction but not the other. Although this restricts their overall leeway, it also creates possibilities for influence within the relationship. One example of this is the close co­opera­tion between the intelligence services of the United States, the United Kingdom, Australia, Canada and New Zealand (“Five Eyes”), specifically with regard to technological methods of espionage; indications of closer technological cooperation between Russia and China are open to the same interpretation.6

Secondly, states can make greater strategic use of existing interdependencies by choosing deliber­ately and selectively to rely on technologies from both spheres of influence. For Europe, where the two spheres already overlap, this route is the most likely. But in order for this bi-directional interdependence to become truly strategic, Europe needs to review its actual dependencies and decide which are acceptable, and which are not. On this basis it must then consider how dependency in core digital technologies can be compensated by strengths in other economic sectors.7 Although Europe may be largely dependent on the United States and China for digital technologies, the latter rely on European skills and expertise in other sectors, for example chemical and medical research and industrial manufacturing technologies. In times of escalating political conflict, the European Union could use this as a “bargaining chip”. Beyond this, a strategic policy could try to shape the interdepend­ence in such a way that it lies in the interests of both sides to avoid escalation, conflicts and certainly the breaking off of relations.

The attractiveness of the European Single Market is a source of political power. The European General Data Protection Regulation provides an illuminating example. Because the Single Market is so important to American IT businesses, Europe has been able to force them to adopt stricter data protection practices. A similar effect was seen in the past with EU anti-trust cases against internet giants like Google and Microsoft that had abused their quasi-monopoly position.

If the confrontation between the two spheres intensifies, strategic interdependence generates more friction and pressure. Today both the United States and China are exerting strong pressure on third states like Germany over the Huawei issue, and further con­flicts over digital technologies must be expected. These include technology for intelligent traffic manage­ment, smart cities (where China has a pilot project in Duisburg) and smart grids.

Thirdly, states can attempt to disentangle dependencies. The basic version of this is to reduce dependency in individual technology sectors. In terms of political practice, Estonia is probably the country that has gone furthest down this road. Almost all of its public administration relies on locally developed digital technologies. Russia has also been working for some time to become more autonomous by establish­ing its own equivalents to dominant US services like Google (Yandex) and Facebook (vKontakte). The plan to place Russia’s entire internet infrastructure under state control is also driven by the idea of escaping dependency on the United States.

A more comprehensive version is to develop home-grown alternatives for all key technologies and to begin creating one’s own technopolitical sphere of in­fluence. This option requires considerable financial expense. In high-tech fields such as semiconductor manufacturing or quantum computing a country might have to invest billions over several decades in order to develop its own viable alternatives. Because of the aforementioned network effects and strategic market restrictions it will also be considerably more difficult for latecomers to catch up in digital tech­nologies. If Europe wanted to establish its own third technopolitical sphere of influence, however, this would be required.

Hanns Günther Hilpert

Values and Orders: Ideological Conflicts and Challenges

The West’s Liberal Ideas as Threat to the Chinese Communist Party’s Claim to Power

Despite the many manifestations of erosion, liberal Western values likely continue to exert a great fas­cination on Chinese intellectuals and society and possess great appeal – even if there is no reliable empirical research on this. The calls for reforms in spring 1989 were Western-inspired, those who raised them were brutally cut down and silenced on Tianan­men Square. Charter 08 was also orientated on West­ern values; Liu Xiaobo, recipient of the 2010 Nobel Peace Prize, played a central role in drafting it. Its cen­tral demands are: observance of human rights, legis­lative democracy, division of powers, independ­ence of the judiciary and protection of private prop­erty. For China, Western values constitute a real alternative system. Liberal ideas and principles have already been successfully implemented in the Chi­nese states and entities of Singapore, Taiwan and Hong Kong. Currently the student movement in the Hong Kong Special Administrative Region is de­fending them vehemently against political assault from China.

Party and state in China identify liberal universalism as a subversive challenge.

Although China currently need not fear a colour revolution, not least on account of its stunningly successful economic development, the ruling party and state have certainly identified the liberal world view and its claim to universality as a subversive challenge. The system responds to threats to its own claim to power with repression, propaganda and censorship. Political dissent and regional autonomy strivings are decisively rejected, in some cases by repressive means including imprisonment and re-education. Religions like Christianity and Islam are forced to Sinicise their symbolism, liturgy and lan­guage. Since 2018 the work of domestic and foreign NGOs has been subject to sweeping legal and ad­ministrative restrictions. It is practically impossible to use foreign-controlled social networks like Facebook, Twitter and Google in China. A school and textbook reform realised in stages between 2004 and 2010 now propagates less favourable views of Western democ­racy and liberal capitalism.1 State-controlled media dismiss the Western democracies – especially the American one – as dysfunctional while trumpeting China’s economic, social and political progress.2 China’s “Great Firewall” permits extensive censorship of the internet, with IP range bans preventing access to particular websites. Content filtering of keywords blocks access to information the regime wishes to suppress. About fifty thousand censors monitor dis­cussions in chatrooms and social networks and inter­vene wherever individual complaints appear to be coalescing into collective dissatisfaction.

Abroad too, China also vigorously defends its power and interests. The goal is pro-China media coverage – and policy – in foreign countries. The international presence of Chinese state media has visibly expanded (newspapers and international pro­gramming from China Global Television Networks, CGTN). Less well known is the mobilisation of the roughly sixty million ethnic Chinese living abroad – regardless of their citizenship – for China’s positions and interests in the scope of a sophisticated diaspora policy.3 Important channels for expanding influence abroad include the Confucius Institutes and the Chi­nese Students’ and Scholars’ Association. Pressure is occasionally placed on foreign companies operating in China, for example to show Taiwan as part of China on maps (United Airways, Christian Dior), to remove politically sensitive images from advertising (Daimler, Leica), to keep staff who participated in the demonstrations in Hong Kong off flights to China (Cathay Pacific), or to avoid critical political statements (National Basketball Association). Decision-makers abroad are influenced by means of a broad spectrum of instruments, beginning with attractive invitations to China and the intermediation of luc­ra­tive business deals but also including intimidation, bribery and blackmail.4

China’s New Paradigms for International Cooperation

Although vague in substance and indeterminate in its objectives, the Belt and Road Initiative (BRI) initiated by President Xi Jinping reveals the contours of a new Sinocentric world order. In fact, though, the Chinese see the BRI not as a counter-model to the West’s glob­al order but a necessary complement. It is in­tended to secure and guarantee markets and resources in an international environment that is politically stable and China-friendly. It should also enable open, flex­ible and inclusive cooperation with foreign countries in the scope of economic, political and cultural net­works. In bilateral and multilateral contexts China vigorously presses for international political recognition of the BRI. The objective of the BRI is not to sup­plant Western ideas and institutions; after all, rising China has profited enormously from the stability and openness of the Western system. But the end of that journey could be a new world order inspired by Chi­nese civilisation into which the existing multilateral institutions would then be incorporated. Indeed Chi­nese universalism is based not on values and norms, but on the conviction that Chinese civilisation – rooted in Confucian morality – is superior to all others.5

China may not be working actively to supersede the Western system, but that does not mean it has become a stakeholder either. On the contrary, given the opportunity China has no qualms over measures and policies that undermine the Western order or delegitimise multilateral institutions. Two examples: China refused to recognise the 2016 ruling of the Permanent Court of Arbitration in The Hague in its dispute with the Philippines; it also flouts fundamen­tal principles of the World Trade Organisation, such as non-discrimination and transparency. Other prob­lems include China’s support for repressive regimes with loans, investment, arms, surveillance technology and in some cases a veto in the United Nations Secu­rity Council, as well as the de facto undermining of constitutional and civil society structures in the course of commercial engagement abroad. But China strictly observes the principle of non-interference and refrains from actively promoting authoritarian regimes.6

China’s symbiosis of growth and stability offers developing countries and emerging economies an alternative to the Western model.

More critical (from the Western perspective) than China’s ambivalent diplomacy and foreign policy is the exemplary nature of its transformation and modernisation process. For developing countries and emerging economies, and especially their ruling elites, China’s successful symbiosis of economic growth and authoritarian political stability represents an attrac­tive alternative to the Western model. The Chinese example shows how development on the basis of given local circumstances is possible – but also how repression creates internal political stability, how societies can be prevented from forming a critical public sphere and how nationalism can be used to consolidate power in a system. China shows state leaders and developments planners in Asia, Africa and Latin America very clearly that economic pro­gress and globalisation must not necessarily rely on the Western paradigm.7

Facing a New Systemic Competitor?

China’s seemingly unstoppable economic rise has shaken the West’s self-image of its democratic market economy as the most successful and humane system. Even if China might be a special case on account of its size, dynamism and culture, its development does demonstrate that a combination of authoritarian rule and oligarchical capitalism not only functions but can also produce outstanding results in terms of income and productivity growth, political stability and inter­national status.8 Moreover this realisation hits a West that is experiencing growing doubts about its own ability to generate growth, innovation and prosperity, at a time where stagnating wages, social inequality, climate change and technological transformation cloud the prospects of creating a positive, hopeful future for the people. The West is also having to deal with a situation where its own leading power, the United States, is consistently undermining the nor­mative foundations of the liberal order in its actions at home and abroad.

China contradicts – at least provisionally – the widely shared liberal expectation that growing pros­perity will automatically bring in its wake a political liberalisation towards democracy, pluralism and rule of law. In China the opposite appears to be the case: successful economic development has strengthened the power vertical and forms a narrative component of identity-building Chinese nationalism. The party, the state and society are undergoing a phase of ideo­logisation, disciplining and caderisation. China’s authoritarian state capitalism has become a powerful alternative to the democratic capitalist societies of the West. But where China is going, and how, remains uncertain. On the one hand it is conceivable that the regime can reinforce its resilience by employing digi­talisation to efficiently expand its social control and minimise the systematic deficits of state eco­nomic planning. On the other, China could be brought crash­ing down by the consequences of its dysfunctional policies, if it fails to get a grip on the problems created by internal debt, industrial overcapacity, growing inequality, pollution and corruption. The result would be a systemic crisis.9

Germany and Europe must take systemic competition with China seriously.

In conclusion, the trajectory and outcome of the systemic competition between China and the West are fundamentally open. It cannot be excluded that two different systems can be compatible and coexist in a networked global economy – but it is unlikely. In the long run, it is more likely that one system will prevail or even displace the other. The systemic com­petition with China is definitely of great relevance. Germany and Europe have a vital interest in up­hold­ing their liberal values internally and preserving a liberal order internationally. In the fields of foreign policy and external economic policy, Germany and Europe cannot regard the systemic competition with China as a trivial matter of opinion. Instead they must place European values and interests where they belong – front and centre in relations with China.

Günther Maihold

Trump and Xi: Clash of Leadership Styles

Donald Trump’s Transactional Leadership Style3

US President Trump presents himself as a “deal-maker”, a “hard negotiator” who trusts his own negotiating skills more than those of the diplomatic corps. He pulls out all the stops in pursuit of the self-aggran­disement he flaunts above all for his followers at home. In such a “transactional” approach to foreign policy, the mixing of political agendas makes every­thing “negotiable”.

Personal arrangements and rituals of reciprocal recognition supplant treaties between states.

Here personal arrangements with other heads of state and rituals of mutual recognition supplant treaties and agreements between states and ministries.4 The method depends on transversal linkage of all possible policy areas in order to generate political pressure and demonstrate personal autonomy of action. Where the inherent logic of individual policy areas is ignored or sight is lost of the associated side-effects, tried and tested corridors of action become closed off. Trump’s leadership style therefore reflects all the contradictions of the heterogeneous expectations placed upon his behaviour, which he must fulfil in domestic politics and vis-à-vis his supporters. The diplomatic apparatus has little chance of moderating this, still less correcting.

Xi Jinping’s Transformative Leadership Style

By carrying through an extreme centralisation of the foreign policy apparatus, the Chinese head of state has succeeded in melding institutional action with personal power.5 Xi presents himself as the “chairman of everything” at home and abroad, securing this role by seeking and finding strong support in the party and government hierarchies.6 By virtue of his central position in both party and state Xi holds all the cards.7 He took control of the field of foreign policy by establishing the Central Foreign Affairs Commission of the Central Committee of the Com­munist Party and placing it under his authority. Xi’s streamlining of the government and party apparatuses represents part of the process by which the Chinese system has transitioned from a fragmented form of authoritarianism to an autocratic one.8 Xi Jinping’s leadership style and cult of personality can be de­scribed as “transformative”. This applies not only to his domestic power base, which Xi has strengthened in the course of the party reform and the associated shift from collective to personalistic leadership.9 The transformative aspect is also visible externally: The Belt and Road Initiative (BRI) established an overarching global narrative that supports China’s claim to an outstanding role, under which many actors that have to date operated only nationally are now expected to operate internationally. The BRI is perceived in inter­national politics as a “grand strategy” and has had the effect of causing numerous actors to orientate on China. Even in dealings with regional neighbours in East and South-East Asia, Xi has chosen a risk-taking style of diplomacy dedicated primarily to achieving China’s objectives.

Collision of Leadership Styles: Loss of Trust and Compliance

With their different leadership styles, Trump and Xi are plainly and increasingly turning out to be incom­patible. From the Chinese leadership’s perspective Trump is personally unreliable and largely unpredict­able. In the eyes of the White House Xi’s leadership style confirms existing reservations, with his great concentration of power, strong internal control, an economic trajectory perceived as expansionist, and the corresponding strategic narrative. In view of the centralisation and personalisation of power in the field of foreign policy, the specific styles of leadership determine which corridors of action are open to the actors, under consideration of the institutional and political circumstances. The clash of the two leader­ship styles implies high costs to generate and preserve mutual trust.

The logic of the kind of “transactional leadership” Trump adopts rests largely on an understanding that in a situation of mutual dependency, a relationship of recognition and trust requires a (not necessarily sym­metrical) exchange of positions in order to reach an understanding. Here norms, standards and principles are relatively marginal. What is more important is to select situational responses that are regarded as appro­priate where particular goals and interests are being pursued. In this leadership style the stability of a relationship is valued less highly than short-term positional gains.10 The substance of “the deal” re­mains largely open and negotiable. But if compliance between the two sides is weak – in the sense of the expectation that the other side will actually implement agreements that have been reached, for exam­ple in the trade sector – it is impossible to develop a viable relationship. If the actors tend – sometimes for domestic political reasons – to overload the rela­tion­ship with issues from other policy areas, such as the North Korea problem, this directly endangers the entire relationship model. This injects uncertainty into the realisation of achieved agreements and calls their durability into question. It is also a challenge to consolidate agreements that are heavily characterised by personalised leadership styles and at the same time to take into account the interests and reserva­tions of institutional actors such as the Senate and State Department (to include them and their positions in formulating “the deal”).

By contrast the “transformational leadership” rep­resented by Xi’s leadership style offers the opportunity to generate a degree of long-term engagement and com­mitment – above and beyond specific agreements – through a strategic narrative like “Belt and Road”, which is capable of fostering permanent rela­tionships between states. This applies not only to the United States and China, but also to third states, as the latter are included in the logic of the narrative and subject to its imperatives. But that can also have negative consequences. In the perception of partners the narrative is closely tied to a leader whose position has been strengthened by a concentration of power. For this reason it also supports the assumption that China is seeking sweeping hegemony and to that end exerting influence or pressure on decisive societal forces in the prospective partner countries. Rigid in­ternal procedures aiming to secure party control also harm external relations by disincentivising cooperation. At the same time the United States fears that China might be harbouring expansionist intentions. The consequence of this is that all concrete agree­ments are immediately interpreted in a different light, as in the case of Huawei. This erodes mutual predictability and removes the basis of trust.

Competition of Leadership Styles

The ramifications of the contrasting leadership styles are visible both in the direct relationship between Trump and Xi and in their relationships with third states. There is no lack of evidence showing how Trump has instrumentalised foreign policy issues for domestic political ends, one example being his plan to build a wall on the Mexican border to stem migra­tion and violence. China has also been affected by this approach to politics, where the US President called China a “currency manipulator” and “rule breaker” (in relation to both trade rules and intellec­tual property rights). Trump sees China both as a strategic adversary on trade questions and as a useful factor in specific situations like North Korea. But the decisive yardstick is always US domestic politics. China is regarded as a “revisionist power”, as a “rival” seeking to “shape a world antithetical to US values and interests” – to displace the United States and restructure the world order.11

With this thrust Trump is pursuing an approach that is strongly oriented on bilateral relationships and tailored to the concept of “deal making”. Trump makes agreements contingent on his personal esteem for his counterpart. This underlines the – politically desired – rejection of multilateral formats, in which the President tends to participate only reluctantly. His uninhibited style of communication and the strongly emotional appeal of his politics are incompatible with Chinese etiquette and create disconcertion in the Beijing leadership – especially when China finds itself dragged into US election campaigns. From the Chinese perspective this is disrespectful both to the customs of international relations and personally towards Xi.

Xi’s foreign policy activism signalises a clear change of course.

All these elements are regarded as “anti-diplomatic behaviour”, not only because Trump rejects diplomatic forms and niceties, but also because he presents his positions in a confrontative manner interspersed with threats. His attempts to force compliance through (trade) sanctions must inevitably elicit a harsh re­sponse from his Chinese opposite number because they violate the fundamental principles of status rec­og­nition and respect in Chinese foreign policy and self-image. Trump’s aversion to multilateralism is in accordance with his transactional approach, which is orientated on straightforward bilateral relationship models. Trump’s predilection for top-down solutions thus also fits with his emphatic rejection of bureau­cratic coordination processes, which boosts his cred­ibility among his supporters.

Unlike his immediate predecessor Hu Jintao, Presi­dent Xi Jinping is willing to take certain risks in inter­national relations, even if this involves standing up to the United States. Channelling the national confidence he himself propagates, Xi’s foreign policy activism and intense interactions with other states signalise a clear change of course from that of his predecessor.12 The growing “hard balancing”, as pursued in maritime and territorial questions by certain states in the closer neighbourhood – including Japan – tests China’s rhetoric of partnership and cooperation. But it changes nothing in Xi’s maxim that his foreign policy should first and foremost serve core national interests.13 His “major country diplomacy with Chinese characteris­tics” departs from past doctrines of a cautious and almost “invisible” foreign policy and instead posits a clear leadership role for China including a greater say in international affairs.14 Mutual respect is the central value – especially in the relationship with the United States – in relation both to territorial integrity and to recognition of different development models. China under Xi expects its own importance to be adequately acknowledged. Xi desires greater visibility and en­hanced international status for his country – and for himself. This shift is underlined by China’s presence on the multilateral stage and in multilateral organi­sations such as the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (BRICS Bank). Xi’s personal relationship with his American counterpart is secondary to the desire for concrete improvements for his country.15 This is the absolute opposite of Trump’s approach, where good personal relations are the precondition for working through the long list of problems on the bilateral agenda. Xi’s leadership by contrast relies on a “highly scripted style”,16 from which one does not deviate on account of personal relationships. Although the strategic competition is cast in the form of “consultation and coope­ration” in the sense of close partnership, it is driven by the unspoken model character that China claims for itself.17

Strategic Competition

The collision of leadership styles is part and parcel of the strategic competition. The person-centredness of foreign policy action and formal authority deter­mine the leadership style applied. The clash of these con­trary styles not only creates or deepens conflicts in the direct relationship, but also erodes the basis of trust between the affected states. This may even create openings for third states, and opportunities for gains if they seek a balance between the leadership styles and their protagonists. This competition of leadership styles creates a disadvantageous context that makes it difficult to find viable solutions for overarching issues and global problems, for example in climate protection or arms control.

The European Union clearly favours multilateral formats for order and cooperation. These demand investment and preparation if they are to prevent Trump’s unilateralism or compensate his lack of con­sideration for alliance interests. Moreover Europe has only limited ability to bilaterally contain the status conflicts between the United States and China that have sharpened with the end of the collective leader­ship model in China and the ensuing concentration of power in Xi’s hands. The reason for this is that both countries, as the Huawei case demonstrates, immediately slot such status conflicts into the con­flict-laden bilateral relationship model.

Laura von Daniels

Repercussions of the US-China Conflict on the Multilateral Order

Growing Rivalry between Beijing and Washington

Washington has had a sceptical eye on China’s eco­nomic rise for some time. After the global financial crisis of 2008 American decision-makers grew in­creas­ingly concerned that China’s enormous eco­nomic success would create a geopolitical challenge. It was Washington’s willingness to lead the process of estab­lishing and running the international order and the ability to bear significant financial burdens that formed the basis for America’s almost unchallenged dominance of the multilateral organisations since the Second World War.

Until the financial crisis the United States dominated the multilateral organisations almost unchallenged.

The financial crisis marked a turning point where the costs to the public budget restricted Washington’s ability to maintain its dominance in central multi­lateral organisations. Although Barack Obama’s Ad­ministration continued to support the international institutions and threw its weight behind multilateral conflict-resolution processes, it also significantly pared back its financial commitments, above all under pressure from Congress.2 At the same time China, which emerged from the financial crisis large­ly unscathed, poured massive fiscal resources into ex­panding its influence in multilateral organisations. From Washington’s perspective – and that of the rest of the West – the global geostrategic centre of gravity has followed the economic east to Asia, above all China, during the past decade. Among the areas of the global multilateral order displaying the growing rivalry between the United States and China, two stand out: firstly, the Bretton Woods institutions (World Bank and International Monetary Fund) and the World Trade Organisation, which promote co­operation on economic, financial and monetary policy; and secondly the United Nations.

The Bretton Woods Institutions and the US-China Conflict

Under the surface of the visible trade dispute between the United States and China lurks a conflict over par­ticipation in global decision-making, whose origins date back to the early 2000s. That is when China began demanding a larger say, commensurate to its eco­nomic importance, within the Bretton Woods in­stitutions. But the United States, supported by the other G7 states, blocked a significant expansion of China’s influence in the IMF and the World Bank. China responded by employing its enormous re­sources to found new formats and organisations, which it dominates as the largest single donor. This applies above all to the Asian Infrastructure Invest­ment Bank (AIIB), the New Development Bank (formerly known as the BRICS Development Bank) and the Belt and Road Initiative.

At the same time, China has declined to obey a number of important trade rules ever since it joined the WTO in 2001. To this day some of the reforms promised in its accession protocol remain unimplemented, above all in the areas of market opening, market-distorting subsidies and protection of intel­lectual property. Unlike his predecessor Obama who maintained the multilateral rules while criticising China’s neo-mercantilist economic policy, President Trump set a different course from day one. His Admin­istration demanded that China implement reforms that would have completely upended its economic model. The United States – along with the European Union, Japan and Canada – accuse China of sys­tem­atic theft of intellectual property and com­plain about competition-distorting requirements placed on West­ern companies in the Chinese market. But rather than conducting its economic conflict with China within the multilateral WTO framework, the Trump Admin­is­tration actively weakens it in two ways.

Firstly, Washington itself overrides the agreed multi­lateral rules of the WTO by imposing comprehensive unilateral import tariffs on steel and alumin­ium and threatening further protectionist tariffs on other goods. This behaviour could serve as a model for other countries that – for domestic political reasons – want to protect their economy from for­eign competition using tariffs. Washington’s actions could set off a vicious circle of unilateral tariffs and other rule-breaking.

Secondly, the Trump Administration has been blocking the WTO’s Appellate Body since June 2017. On 10 December 2019 it had to be suspended because it was impossible to replace two judges whose terms had expired. To this day the Trump Administration has refused to state any concrete conditions, such as particular changes to the rules, that would persuade it to lift its blockade. Instead it has worked to block a joint initiative by the European Union, Canada and Norway to establish an interim appeal arbitration arrangement without US participation. In mid-No­vem­ber 2019, shortly before the adoption of the WTO budget for 2020/2021, the Trump Administration blocked future financial support for the Appellate Body Secretariat to express its dissatisfaction with the initiative by Brussels and its partners. Because the WTO operates under the consensus principle Wash­ing­ton was thus able to both prevent necessary appointments to the Appellate Body and paralyse its Secre­tariat.

An incapacitated WTO could come at a significant cost for the European Union. A number of recently concluded trade agreements with important trading partners – among them Japan and the Mercosur states – will indeed allow the European Union to conduct about 40 percent of its trade in goods under bilateral and plurilateral agreements.3 But for more than half of its trade, including with the crucial part­ners United States, China and India, there would – at least initially – be no possibility of binding rules-based dispute resolution as currently exists in the WTO framework.

The United Nations and the US-China Conflict

The rivalry between the United States and China is also felt in the United Nations, where it obstructs vital decision-making processes. While China has quad­ru­pled its contributions to UN organisations over the past decade, the United States has been gradually scal­ing back (not just since the Trump presidency).4

China is the second-largest contributor to the United Nations.

China is today the second-largest individual contributor to the United Nations, both in terms of the regular budget and funding for peacekeeping mis­sions.5 Of the five permanent members of the Security Council, China provides the most personnel for peace­keeping missions. Currently Beijing has 2,500 soldiers and police deployed, most of them on missions in Africa. In 2019 China was in tenth place in the list of countries contributing personnel to UN missions.6

China has recognised the value of the UN as a politi­cal platform, and makes deft strategic use of this. Since 2013 China has assumed a leadership role in four of the fifteen specialised agencies of the United Nations: the Food and Agriculture Organisation (FAO), the United Nations Industrial Development Organisation (UNIDO), the International Tele­communication Union (ITU) and the International Civil Aviation Organisation (ICAO).7 According to scholars studying Chinese activities in the United Nations, China uses these organisations to influence political debates and establish its own political terms in official documents, which then flow into the general UN discourse on peace and development.8 China’s activities in the Human Rights Council illus­trate how it works to sway the UN discourse.9 Since 2013 Beijing has repeatedly used the Council as a plat­form for its own propaganda. Chinese represen­tatives justified the internment of an estimated one million members of the Uigur minority in the Xin­jiang autonomous region as a necessary measure for fighting Muslim extremism.10 In verbal and written submissions to the Human Rights Council the Chi­nese government calls into question the value of individual human rights and emphasises the signifi­cance of state-led development programmes and the principles of national sovereignty and non-inter­vention in internal affairs. In July 2019 China’s del­egates to the Human Rights Council disrupted a dialogue with opposition activists from Hong Kong.11 China also attempted in September 2019 to prevent another appearance by opposition activists from Hong Kong before the Human Rights Council, where they intended to report on violence by security forces against demonstrators.12

The US Administration has not to date responded in a decisive way to China’s policy towards the United Nations.13 In 2018 the United States withdrew from the Human Rights Council. In late November 2019 President Trump signed a bill enabling economic sanctions against individuals and the Hong Kong government in the event of human rights violations. Another bill banned the sale of crowd control soft­ware by American companies to the Chinese gov­ern­ment. But the President had little choice, as a two-thirds majority in Congress would have overturned any presidential veto against China-critical legislation.14 In earlier statements on the protests in Hong Kong, Trump had indicated that he regarded the treatment of the opposition as an internal matter for China.

In other cases that caused a great stir, Trump has reduced America’s financial contributions to the UN. One example is Washington’s withdrawal from the United Nations Relief and Works Agency (UNRWA) after almost seventy years of membership. China on the other hand increased its contributions to UNRWA from about €300,000 annually to more than €2 mil­lion in 2018.15 In 2019 the Trump Administration again threatened repeatedly to make swingeing cuts to Washington’s financial contributions to the United Nations. Even in cases where US Congress prevented budget cuts, the Administration indirectly denies funds by declining to actually transfer approved pay­ments. At the beginning of December 2019 Washing­ton’s arrears at the UN amounted to more than €950 million.16 Although Washington eventually transferred more than half of its outstanding debt, the delay by its biggest single contributor forced the UN to initiate spending cuts.

Outlook

Neither China nor the United States behave consistently and exclusively destructively towards multi­lateral organisations. But both bypass multilateral organisations and rules. Both prioritise bilateral nego­tiations for resolving pressing conflicts. This harms the international organisations, which increasingly find themselves outmanoeuvred. The power rivalry between the two states is increasingly impinging on the interests of the European Union and Germany.

The EU initiative is therefore on the right track in seeking to uphold the WTO’s multilateral dispute settle­ment system jointly with other states. But this is not enough. In its own interest the European Union must work with other states to support and protect the existing multilateral institutions.

Annegret Bendiek and Barbara Lippert

Positioning the European Union within the Sino-American Rivalry

European Unity and Disunity over China

The European Union’s relationship with China is char­acterised by cooperation, competition and con­flict. It is this ambivalent and issue-driven inter­regional cooperation in which diverging individual interests of market participants and member states need to be reconciled with the Union’s overall inter­ests and legal foundations. As a basic principle, the more unified the member states are, the greater the Union’s negotiating power and the more effective its ability to pursue European interests vis-à-vis Beijing. But the member states are not (yet) ready to relin­quish the corresponding powers or central coordination in relevant fields of policy towards China to the EU level. There are various reasons for this. Europe may be the world’s biggest exporter, but is market leader in only a handful of digital technologies.2 As it increasingly finds itself forced to import strategically crucial technologies and resources, certain member states react with great sensitivity to this dependency. This delays decisions in the Council and weakens the European Union’s political impact. Especially in human rights question this frequently prevents the European Union from formulating a coherent policy towards China. Poland and Hungary have taken a different line at the United Nations, preventing the EU states from presenting a united front. At the EU-China summit in April 2019 certain member states opposed a common EU stance on China because they feared that Beijing might respond with economic reprisals or other sanctions to perceived affronts such as human rights criticisms. In March 2019 Italy became the first G7 state to sign on to China’s “New Silk Road” (the Belt and Road Initiative). In so doing, Rome subverted the wish of the other member states to conduct talks about participating in the BRI only as a European block.

Disunity towards China – and the United States.

Disunity weighs all the heavier where the EU states also fail to pull together vis-à-vis the United States, which Washington is quick to exploit. Poland for ex­am­ple has signed bilateral treaties with the United States on missile defence and promised Washington that it will exclude Chinese technology from its 5G network.3 Such specific commitments are hard to reconcile with a united front of all member states. The European Union naturally shares a very broad range economic, security and normative interests with the United States while the distance to China remains fundamental. But a European policy towards China cannot build on the transatlantic relationship as it could in the past. It now exists within a new sys­tem of coordinates determined principally by the axis of conflict between the United States and China, and in which the European Union must find and hold its own position.

Foreign and Security Policy

The European Union is not a fully-fledged foreign policy and security actor in the Asia-Pacific region, but all the member states have external economic interests there, which would certainly have to be defended in the event of crisis. France and the United Kingdom in particular maintain their own naval pres­ence in East Asia, relying on ties dating back to their time as colonial powers.4 The South China Sea is an important transit route for international movements of goods and raw materials, so a military conflict there would have massive repercussions on the Euro­pean Union’s economic and security interests. France and the United Kingdom have already announced their intention to expand their security presence in the Far East. They assist states bordering the South China Sea in modernising their armed forces with technology transfer and arms sales, offer to support their efforts to secure free access to the seas through an expanded naval presence, and provide assistance with disaster relief, cyber-defence and counter-terror­ism.5 Paris and London see themselves as “custodians of Western and European interests in the region”.6 The French would like to see Europe taking on some of their commitments in the region, for example through EU flotillas including the United Kingdom.7 From 2020 it is planned to send a German naval officer to the Singapore Navy’s Information Fusion Centre.

Security and economic concerns are becoming ever more closely interconnected. A prime example of this is the modernisation of mobile phone networks using components from the Chinese technology firm Hua­wei. In connection with European infrastructures, Huawei is not per se excluded from the single market. The question of the reliability of telecommunication components is subsumed under the logic of market regulation. Under the new EU Toolbox for 5G Security and the EU Cybersecurity Act all providers and sup­pliers of information and communication technology will be subject to graduated controls and will have to fulfil strict certification criteria for hardware and soft­ware. All the major internet platforms – whether Ameri­can or Chinese – potentially enable surveil­lance capitalism (Shoshana Zuboff), so they are all of interest to EU data protection, data security and com­petition law.8

If a data leakage by Huawei were to be identified or cases of cybersabotage against digital infrastruc­tures occurred, the consequence would be the com­pany’s exclusion from the Single Market. That in turn would decisively accelerate the European Union’s efforts to achieve digital sovereignty vis-à-vis China. In the NATO context the European Union and the United States share an interest in protecting critical infrastructures and defending them against attack. An incident could set in motion a race where both the West and the Chinese attempt to exclude all pos­sible social and technical vulnerabilities. The threat­ened consequence is a military arms race and massive economic losses.

The European Union as Trade and Regulatory Power

The European Union’s position in international politics rests to a great extent on its strength as a trade and regulatory power, as even China must ac­knowledge. The economic is the dominant factor in the increasingly conflictual Euro-Chinese relationship. In many respects the European Union shares Washington’s criticisms of unfair Chinese competi­tion practices. But Brussels and Washington have their own disagreements about trade questions and WTO principles, which in turn makes it harder to hold a shared transatlantic line towards Beijing.

Trade: The European Union is China’s largest trade partner, while China is the European Union’s second-largest trade partner after the United States. Since 1975 trade between China and the European Union has expanded by a factor of 250, to reach a volume of $680 billion in 2018.9 Within the European Union the most competitive and largest exporters are the drivers of China policy. The European Union suffers both directly and indirectly from Washington’s policy of punitive tariffs towards China: directly in the case of aluminium and steel, indirectly where trade flows are diverted (for example soybeans). After the United States imposed tariffs on steel and aluminium the Euro­pean Union was forced to introduce import quotas for steel products from third countries – to the chagrin of the European car industry, which is reliant on imported steel. And in July 2018 US Presi­dent Trump and then EU Commission President Juncker agreed that the European Union would rather support America’s trade interests than those of Brazil, traditionally the European Union’s largest supplier of soybeans, as a concession to Washington. The Euro-American trade disputes threaten to obscure the shared interest in multilateral solutions in the trans­atlantic relationship. And this makes it impossible to use the WTO mechanisms to effectively enforce free trade principles – such as intellectual property pro­tections and reciprocity of market access and invest­ment terms – vis-à-vis Beijing. Especially in EU coun­tries like Germany and France, which have important economic relations with China, companies and organi­sations call for a strong and assertive stance against Bei­jing’s unfair practices.10 The European Union accuses Beijing of systematically subsidising Chinese private and state-owned enterprises in order to give them competitive advantages on a global scale. In response, especially France and Germany are in favour of the European Union developing an indus­trial strat­egy dedicated to catching up in digitalisation and infra­structure modernisation, to strengthen the com­petitiveness and market position of Europe’s small and medium-sized enterprises which form the back­bone of the (digital) internal market and the Euro­pean economic model. At the same time Brussels should reform competition law in relation to market-relevant national and European enterprises, such as to promote a strategic sustainability agenda for climate and environmental technologies. This should also make the conditions of competition for these firms fairer in comparison to the often partly state-directed corporations in China.

Investment: The European Union has recently reformed its foreign investment control regime with an eye to Chinese activities in the single market. Following the example of the US legislation, it strengthens the state’s rights to intervene vis-à-vis market participants. Here Brussels has succeeded in bridging the different preferences of the member states to adopt a regulation to which even countries like Portugal, Greece and Hungary were able to agree.11 The latter had feared disadvantages if the new rules for foreign investment screening had been too strict. Here the European Union specifically has China in its sights as an economic competitor, because China is seeking to buy its way strategically into segments of the Euro­pean Union’s high-tech research and manufacturing, such as artificial intelligence, robotics and biotech­nology. The new EU regulation is a compromise. It provides for creating a binding legal framework within which the member states conduct their own foreign investment screening before making the final decision themselves. The common criteria cover secu­rity and public order but leave aside broader eco­nomic issues such as those relating to competition law or industrial policy. The unity of the EU states in rela­tion to investment controls contrasts with differ­ences over regulatory preferences of the kind that exist between France and Germany. Specifically it is evi­dent that there is no consensus among the EU states concerning Huawei’s wish to participate in the crea­tion of 5G infrastructure in the European market. Those that would not exclude participation stand opposed to the Trump Administration, which regards Huawei as a Trojan horse sent by a hostile government whose policies are irreconcilable with US secu­rity interests. Here Washington’s clear geostrategic perspective collides with the European Union’s pri­marily economic one. However, for reasons of secu­rity or vulnerability of critical infrastructure, the United Kingdom and Germany have also defined strict security criteria for suppliers. France already applies more restrictive security tests on foreign suppliers. The European Commission has published its own 5G Toolbox consisting of clearly defined recommendations for security and reliability standards.

Supranational geopolitics builds on the EU’s resources as a trade and regulatory power.

Regulation in the Digital Single Market: The European Union’s efforts to define and implement rules for the Digital Single Market meet their limits in relation to China and to an extent also the United States. The growing mistrust between America and Europe is reflected, for example, in Trump’s response to the repeated fines imposed by the European Commission on US-based Google for violations of European com­petition law. The US President sees this as an act of retribution by a “tax lady [who] hates the US”, as he called EU Competition Commissioner Margrethe Vestager.12 It is indeed the case that the regulatory philosophies on both sides of the Atlantic are becom­ing ever harder to reconcile. In the Treaty on the European Union the member states commit to a competitive social market economy (Article 3, TEU) and democracy (Article 2, TEU) and emphasises the universal rights of the individual (also concerning their personal data). The European Union integrates various stakeholders and market participants in its processes, in which fundamental rights are also observed. This multi-stakeholder approach is also found in current position papers by European insti­tutions on the opportunities and challenges of the (Digital) Single Market and its agenda. EU organs com­mit to the idea of a (digital) society that is demo­cratic and both community-based and inclusive. From this, the European Union defines interests, preferences and also instruments for a regulatory policy towards China and the United States. This policy is expressed through the General Data Protection Regulation, through merger controls and through restrictions on the generous tax policies of individual member states such as Ireland towards US-based Apple. If the Euro­pean Union cannot succeed in working with the other major powers including China to establish permanent security- and confidence-building measures for cyber­security and Industry 4.0, there is threat of a global collapse of the digital commons. Cooperation is also a precondition for tackling global challenges such as securing social peace and justice under the (working) conditions of digitalisation. Prosperity and stability on the regional and global scale depend decisively on observance of shared minimum standards in IT secu­rity as well as norms for state action in cyberspace and for the creation of shared governance structure.

Supranational Geopolitics

What makes the European Union strong in dealings with China and other great powers is the democratic disposition of its member states, its supranational institutional order and autonomous legal order, the size and potential of the Single Market, the common currency area, and the common trade and competi­tion policy. These factors offer immense potential; to make full use of it demands the following: Firstly, the European Union’s policy towards China is most effec­tive where it is conceived not as a purely country-based strategy but embedded in a comprehensive and overall strategy for the European Union’s self-asser­tive­ness. Secondly, under the conditions of a new great power rivalry the European Union can best assert itself by further supranational integration and strengthening its collective actorness. Supranational geopolitics starts from the resources the European Union possesses as a trade and regulatory power. This represents the central source of its negotiating power on a global scale. Logically then, topics like industrial policy, market access and data security are high on the agenda of the new “geopolitical Commission” (Ursula von der Leyen).13 It would also be important for the new multi-annual financial framework to re­flect these priorities and for the European Union to strengthen the Eurozone and the logic of integration in foreign and security policy.

As the world’s largest internal market, the Euro­pean Union has every reason to encounter China with confidence and to join neither the US strategy of containment nor that of the decoupling of entire eco­nom­ic spaces. Cooperation and competition are legiti­mate modes for a policy of self-assertion, as is self-protection through a modern industrial policy design­ed to close the technology gap. It plays into the European Union’s hands that China operates above all in the geo-economic arena, which is also where Europe’s power resources lie. Standing up to Beijing over WTO rules while at the same time engaging in the Asian Infrastructure Investment Bank and BRI projects are important elements of a strategic interdependency with China. At the same time Europe’s self-assertive­ness could be boosted by the EU-Asia Connectivity Strategy: strategic interdependence – rather than decoupling – is the more promising approach to dealing with China. This also includes the European Union offering third states alternatives to Chinese direct investment, through cooperation that will need to be lucrative for the recipients. The European Union has always seen Asia as more than just China. The Euro­pean Union should therefore put more diplomatic and political weight into its cooperation and free trade agreements with Japan, India and ASEAN and its member states. Its collective Asia diplomacy needs to be expanded above all in the fields of rule of law, democracy and human rights, ideally – as in other questions – together with the United States. In order to be able to stand up to China in the long term the European Union will have to strengthen its capabili­ties for supranational geopolitics, again ideally with transatlantic coordination and backing. The German government, together with France, the Commission and the Eurozone states, should explore the possi­bilities of a transatlantic trade agreement to remove industrial tariffs and non-tariff barriers in order to reinforce the Union’s bargaining power towards Bei­jing in the light of upcoming negotiations about an investment protection agreement. The next EU-China summit is scheduled for the second half of 2020, during the German EU presidency, and should be sup­plemented by a parliamentary component. Independ­ently of the concrete agenda, the most important mes­sage to China would be that the EU member states stand firmly united behind their priorities, above all principle-based policies and reciprocity on all levels and in all policy areas.

Abbreviations

The Authors

Dr. Annegret Bendiek

Senior Associate in the EU / Europe Division

Dr. Laura von Daniels

Head of The Americas Division

Dr. Hanns Günther Hilpert

Head of the Asia Division

Dr. Barbara Lippert

Director of Research of SWP

Prof. Dr. Günther Maihold

Deputy Director of SWP

Dr. Marco Overhaus

Senior Associate in The Americas Division

Dr. Michael Paul

Senior Fellow in the International Security Division

Prof. Dr. Volker Perthes

Director of SWP

Dr. Peter Rudolf

Senior Fellow in The Americas Division

Dr. Matthias Schulze

Associate in the International Security Division

Dr. Daniel Voelsen

Associate in the Global Issues Division

Dr. Gudrun Wacker

Senior Fellow in the Asia Division