The media dispute between London and Beijing over CGTN and the BBC is, unsurprisingly, also being played out on the journalists’ playground Twitter. The EU correspondent of the state-run daily China Daily, Chen Weihua, made fun of the fine imposed on CGTN by the British media regulator Ofcom there: “Is the UK that broke?” he wrote. You can read about the background to the fine in today’s News section – it’s not unlikely that there will be more resentment brewing on both sides of this issue in the future.
Trouble is also looming in the Bundestag, and for Angela Merkel: For a long time, there was talk of a routine procedure when the Bundestag’s investigative committee talked about the German chancellor’s influence on the China business of the scandal company Wirecard. However, it is becoming increasingly clear that this was at best only half the truth. Finn Mayer-Kuckuk has the latest developments in the case.
Shandong and Liaoning are already in the service of the Chinese Navy – this year, a third aircraft carrier is now to be added. Gregor Koppenburg and Jörn Petring present the new ship, its technology, and China’s associated quest for even more world power status.
Trouble is brewing for the chancellor in the Bundestag. In the review of the Wirecard affair, her involvement with the scandalous company during a trip to China in September 2019 was once again the big topic on Wednesday. The opposition MPs presented an interim status of the committee’s work in Berlin – and came back again and again to the disastrous misjudgments of the Chancellery in connection with Wirecard. Merkel must answer the committee’s questions on 23 April.
Florian Toncar, a member of parliament from the FDP, gave his outlook on Wednesday on Merkel’s suspected defense strategy, which he deduced from the interrogations of her staff and confidants during the committee’s work so far. “She will say that her involvement with Wirecard on the China trip was a routine procedure” – after all, she constantly advocates for German companies abroad. In doing so, she will downplay the role of Karl Theodor zu Guttenberg, who, as a lobbyist, had previously promoted Wirecard in the Chancellor’s Office. However, this is the crucial point, she said: It is possible for advisors like zu Guttenberg to bring a company against which accusations of fraud are already mounting to the top of the agenda in the Chancellor’s Office. This raises doubts about the ability of the responsible officials to judge – and sheds light on who the German government believes: windy consultants with interesting sounding names instead of serious media that report critically.
In retrospect, it is clear that Merkel made a mistake by promoting Wirecard in China. At the time, the financial services provider from Aschheim near Munich was still considered a star of the German business world: Finally, a German company that was playing in the world of high finance with algorithms and the like. But the deep fall was already in the offing. Various media, above all the British Financial Times, were already reporting on fraud, money laundering, and inflated balance sheets. In June 2020, the house of cards collapsed. It turned out that billions had lied together through fictitious transactions alone. Today, the name Wirecard stands for the biggest economic scandal in German post-war history.
Zu Guttenberg detailed his approach in supporting Wirecard before the committee in December. An important contact of Guttenberg’s at Wirecard was the company’s head of business development, Georg von Waldenfels; the zu Guttenberg and von Waldenfels families are friends. In March 2018, von Waldenfels brokered a new deal: help Wirecard enter the Chinese market. Wirecard wanted to be the first European company to completely take over a Chinese financial services provider. The takeover target was the company Allscore, which was to receive a license as a payment processor in the same course.
In late summer 2019, zu Guttenberg met with the chancellor in person. “In the course of our conversation, the chancellor mentioned an upcoming trip to China,” zu Guttenberg told the committee – making it sound as if a casual conversation had gone in that direction quite by accident. “I then mentioned that a young Dax company is currently planning to enter the Chinese market.” After the conversation with the chancellor, zu Guttenberg’s staff wrote down facts about Wirecard for the chancellor’s economic advisor, Lars-Hendrik Röller. The result of the lobbying work was a mention to a representative of the Chinese leadership in Beijing.
The Chancellor’s Office is keeping a veil of secrecy about who exactly she spoke to: It is not customary to divulge details of confidential talks between heads of state. But Fabio De Masi (Die Linke), a member of parliament, spilled the beans at the Federal Press Conference on Wednesday: “Anyone who meets the most powerful man in China only presents two or three wishes – and one of them was Wirecard.” The most powerful man in China – that’s not Premier Li Keqiang, but President Xi Jinping. No wonder that the acquisition of Allscore then went through as desired in November 2019.
The committee’s work also reveals how communications from the German government to the Chinese leadership come about. Finance State Secretary Wolfgang Schmidt reported on this. In July 2019, an old acquaintance called him: Ulf Gartzke, now a colleague of zu Guttenberg’s in the consulting business. “Dr. Gartzke had enclosed a draft letter to the Chinese government as a service,” summarizes the MP Matthias Hauer (CDU) the file situation. “You sent the letter almost one-to-one to your Chinese colleague.” If the use of such letters pre-written by consultants was common practice? Schmidt said he asked Gartzke “to make his work easier” to help him with the wording. The latter was better versed in the subject.
“Carbon Border Adjustment Mechanism”, “CO2 border adjustment system”, “CO2 border levy” – the name for the project from Brussels is unwieldy, but it nevertheless took an important step yesterday: The European Parliament voted by a large majority in favor of the CO2 limit levy and adopted its report with recommendations to the EU Commission. The next step is the proposal of the Brussels authority, which is expected in the second quarter of this year. Critics argue that the name of the regulation could simply be shortened to what the levy really is: a “CO2 import tax” or a “climate tariff”.
Companies from third countries that produce in a less climate-friendly way than EU companies are to pay a levy on imports into the European Union. Steel, cement, and fertilizer from China, for example, will then become artificially more expensive according to their CO2 content. If a supplier to European companies can prove that its production is just as climate-friendly, the additional levy will not apply. International trading partners such as China are skeptical – they fear trade disadvantages and protectionism.
The border adjustment mechanism serves to protect the climate, EU Economic Affairs Commissioner Paolo Gentiloni said at the beginning of the week in the European Parliament. It is not protectionism. “It allows the EU to achieve its objectives. It is not about gaining unfair advantages over our partners.” Chinese diplomats in Brussels, however, stressed that further discussions on the levy mechanism were needed before it was implemented. “Will it be good for the environment? Will it be good for trade between different nations? It takes time and certainly requires more consultation and discussion among all key stakeholders,” Fei Shengchao, adviser to the Chinese EU mission, told Euractiv.
The EU Parliament also expresses “its deep concern about the erosion of the multilateral trading system” in the adopted report on the CO2 levy. MEPs call on the EU Commission to work actively with the governments of trading partners to avoid disgruntlement.
One thing is clear: The CO2 cap and trade tax will bring more money into Europe’s coffers. What the EU will ultimately do with the revenue will play a big role in its compatibility with international World Trade Organization (WTO) rules. Alan Wolff, Deputy Director General of the WTO, suggested at an online event in January that it would generally be acceptable under WTO rules as long as the revenue was actually diverted to support an EU green policy. If, on the other hand, the “competitive conditions were to be altered for a particular industry or particular companies,” this would likely cause conflicts, Wolff warned.
The EU Parliament stresses in its report that there must be “full transparency” for the use of the newly won own resources. The “budgetary function” is also “only a by-product” – it is about the climate, not about additional money for the EU.
From 2023, the CO2 border tax will initially cover emissions from “energy-intensive steel, cement, and aluminum industries, as well as the electricity sector and the plastics, chemicals, and fertilizer industries,” according to Yannick Jadot, French Green MEP responsible for the report. According to estimates by the European Parliament, these correspond to 94 percent of European industrial emissions. What is certain is that, after a transitional phase, more and more industrial sectors will gradually be added to the list. The mechanism is also to be closely linked to EU emissions trading.
It is incredibly important for the climate that CO2 emissions have a price, Christoph Nedopil Wang, founder of the Green Belt and Road Initiative Center in Beijing, tells China.Table. And the CO2 cap levy is a good way to do that. In China, the markup from Brussels is being watched closely, Nedopil Wang says – and not necessarily positively. “Of course, there are fears that exports from China to Europe will be slowed down as a result.” The introduction of China’s emissions trading scheme could potentially be a first step to deal with the border tax. Whether this will then be sufficient is an open question, Nedopil Wang said.
However, according to Nedopil Wang, the planned levy also has a hidden advantage for China, a positive effect that is often underestimated: The energy transition also requires new technologies, and China is well-positioned to develop them. “Every regulatory change is a huge opportunity for entrepreneurs, and China has many of them.” There are also opportunities for more cooperation between the EU and China. There are definitely advantages for technology producers who are also based in China.
In general, there is an acceleration of investments in the direction of renewable energies in China and also in the Southeast Asian region – of course, also because the companies based there want to continue exporting to Europe, says Nedopil Wang.
In September last year, China announced that it would achieve CO2 neutrality by 2060. At the beginning of February, the People’s Republic introduced emissions trading, which initially only applies to the energy sector. Whether the Chinese and EU emissions trading systems can be linked in view of the CO2 limit levy is still open.
The year of the ox has begun darkly for the people of Hong Kong. On February 16, nine pro-democracy activists, including 82-year-old Martin Lee, the revered long-time leader of the city’s Democratic Party, went on trial facing charges of illegal assembly.
A week later, the Hong Kong government announced that it would enact a law allowing only “patriots” to serve on district councils, the lowest level of the city’s administrative apparatus, with responsibilities ranging from sanitation to traffic. This will likely result in the expulsion of democratically elected council members and the disqualification of future candidates deemed disloyal to the ruling Communist Party of China (CCP).
Then, on February 28, in the most sweeping crackdown yet since China imposed a draconian national security law on the former British colony last July, the Hong Kong authorities charged 47 leaders of the city’s pro-democracy movement with “conspiracy to commit subversion” under the law. Because the law rigs the trial process to ensure conviction, these activists face the prospect of years in prison.
Several considerations may have prompted Chinese President Xi Jinping to escalate the repression in Hong Kong. For starters, indications that the national security law has succeeded in instilling the rule of fear in the once-defiant city may be encouraging Xi to take advantage of the despotic momentum and try to decapitate Hong Kong’s pro-democracy forces.
Moreover, the West’s measured response to China’s imposition of the national security law – until now limited to diplomatic denunciations and sanctions against a small number of senior Chinese and Hong Kong officials – has not really hurt the government in Beijing. Chinese leaders also appear to have drawn a line in dealing with new US President Joe Biden: China’s sovereign prerogatives in Hong Kong and the western province of Xinjiang are non-negotiable. China will do as it pleases in those places, despite Biden’s warning of “repercussions” for human-rights abuses.
But Xi may have underestimated the costs of his actions in Hong Kong. This latest spate of prosecutions of pro-democracy activists, coupled with a lack of goodwill gestures from China to improve ties with the United States, will most likely harden Biden’s stance.
For the time being, the Biden administration wants to avoid a frontal collision with China, because it must first attend to domestic priorities such as tackling the COVID-19 pandemic and fostering economic recovery. As Biden’s advisers weigh the best approach to China, the CCP’s intensifying crackdown in Hong Kong will undermine advocates of a more nuanced and less confrontational US approach while vindicating those convinced that only a hardline position can modify Chinese behavior.
When the 47 pro-democracy activists are convicted and sentenced to long prison terms, the Biden administration will have no choice but to make China pay. The narrow window for stabilizing US-China ties, which should serve Chinese interests, will likely close, and bilateral relations could resume their dangerous downward spiral.
At that point, Chinese repression in Hong Kong will make it much easier for Biden to recruit wavering Western democracies as allies. Currently, many European countries are hesitant about becoming full-fledged partners in a new US-led anti-China coalition. Aside from their extensive commercial interests in China, they worry that an unrestrained US-China geopolitical rivalry could plunge the world into a new cold war, disrupt and fragment the global economy, and doom any hope of combating climate change.
But European leaders ultimately must respond to voters, many of whom care deeply about human rights and are demanding tougher policies toward China. It will not be long before Germany and France, in particular, find it untenable to maintain a policy that relies on strategic neutrality in the unfolding US-China duel to preserve their economic interests in China. When European democracies finally join the Biden administration’s nascent anti-China coalition, the credit should go not to America, but to Xi.
Such a coalition could impose painful costs on China for its actions in Hong Kong. True, in the short term, the US and its allies cannot easily undermine Chinese efforts to build Hong Kong into a financial center capable of rivaling New York and London; after all, financial sanctions, such as a ban on investing in companies listed there, would cause chaos in global markets. But they still have a wide array of other options to squeeze China.
Decoupling China from global technology supply chains currently seems inconceivable, but could become a reality if the coalition agrees to a new arrangement similar to the Coordinating Committee for Multilateral Export Controls, which choked off Western technology transfers to the Soviet bloc during the Cold War. Western democracies could also deny Chinese leaders the international prestige they seek by curtailing high-level exchanges and vigorously contesting Chinese influence in multilateral organizations. And sheltering victims of China’s crackdown in Hong Kong would be both a humanitarian gesture and a forceful rebuke of Chinese policy.
Chinese leaders are most likely already aware of these consequences as they weigh their options in Hong Kong. They have settled on an ultra-hardline course in the belief that its costs are bearable; arguably, their gambit has paid off so far. But, by throwing down the gauntlet to a new US administration and its allies, China may be overplaying its hand.
Minxin Pei, Professor of Government at Claremont McKenna College, is a non-resident senior fellow at the German Marshall Fund of the United State Copyright: Project Syndicate, 2021.
www.project-syndicate.org
More knowledge about China in German schools: On Wednesday, the relaunch of the website of Bildungsnetzwerk-China went online. The network was founded at the beginning of last year as a joint initiative of Stiftung Mercator and the Goethe-Institut. In close cooperation with school ministries and authorities, it aims to support schools in becoming particularly involved in the education of China competence in Germany and to facilitate encounters in order to structurally strengthen and improve international understanding between Germany and China.
The media dispute between London and Beijing over CGTN and the BBC is, unsurprisingly, also being played out on the journalists’ playground Twitter. The EU correspondent of the state-run daily China Daily, Chen Weihua, made fun of the fine imposed on CGTN by the British media regulator Ofcom there: “Is the UK that broke?” he wrote. You can read about the background to the fine in today’s News section – it’s not unlikely that there will be more resentment brewing on both sides of this issue in the future.
Trouble is also looming in the Bundestag, and for Angela Merkel: For a long time, there was talk of a routine procedure when the Bundestag’s investigative committee talked about the German chancellor’s influence on the China business of the scandal company Wirecard. However, it is becoming increasingly clear that this was at best only half the truth. Finn Mayer-Kuckuk has the latest developments in the case.
Shandong and Liaoning are already in the service of the Chinese Navy – this year, a third aircraft carrier is now to be added. Gregor Koppenburg and Jörn Petring present the new ship, its technology, and China’s associated quest for even more world power status.
Trouble is brewing for the chancellor in the Bundestag. In the review of the Wirecard affair, her involvement with the scandalous company during a trip to China in September 2019 was once again the big topic on Wednesday. The opposition MPs presented an interim status of the committee’s work in Berlin – and came back again and again to the disastrous misjudgments of the Chancellery in connection with Wirecard. Merkel must answer the committee’s questions on 23 April.
Florian Toncar, a member of parliament from the FDP, gave his outlook on Wednesday on Merkel’s suspected defense strategy, which he deduced from the interrogations of her staff and confidants during the committee’s work so far. “She will say that her involvement with Wirecard on the China trip was a routine procedure” – after all, she constantly advocates for German companies abroad. In doing so, she will downplay the role of Karl Theodor zu Guttenberg, who, as a lobbyist, had previously promoted Wirecard in the Chancellor’s Office. However, this is the crucial point, she said: It is possible for advisors like zu Guttenberg to bring a company against which accusations of fraud are already mounting to the top of the agenda in the Chancellor’s Office. This raises doubts about the ability of the responsible officials to judge – and sheds light on who the German government believes: windy consultants with interesting sounding names instead of serious media that report critically.
In retrospect, it is clear that Merkel made a mistake by promoting Wirecard in China. At the time, the financial services provider from Aschheim near Munich was still considered a star of the German business world: Finally, a German company that was playing in the world of high finance with algorithms and the like. But the deep fall was already in the offing. Various media, above all the British Financial Times, were already reporting on fraud, money laundering, and inflated balance sheets. In June 2020, the house of cards collapsed. It turned out that billions had lied together through fictitious transactions alone. Today, the name Wirecard stands for the biggest economic scandal in German post-war history.
Zu Guttenberg detailed his approach in supporting Wirecard before the committee in December. An important contact of Guttenberg’s at Wirecard was the company’s head of business development, Georg von Waldenfels; the zu Guttenberg and von Waldenfels families are friends. In March 2018, von Waldenfels brokered a new deal: help Wirecard enter the Chinese market. Wirecard wanted to be the first European company to completely take over a Chinese financial services provider. The takeover target was the company Allscore, which was to receive a license as a payment processor in the same course.
In late summer 2019, zu Guttenberg met with the chancellor in person. “In the course of our conversation, the chancellor mentioned an upcoming trip to China,” zu Guttenberg told the committee – making it sound as if a casual conversation had gone in that direction quite by accident. “I then mentioned that a young Dax company is currently planning to enter the Chinese market.” After the conversation with the chancellor, zu Guttenberg’s staff wrote down facts about Wirecard for the chancellor’s economic advisor, Lars-Hendrik Röller. The result of the lobbying work was a mention to a representative of the Chinese leadership in Beijing.
The Chancellor’s Office is keeping a veil of secrecy about who exactly she spoke to: It is not customary to divulge details of confidential talks between heads of state. But Fabio De Masi (Die Linke), a member of parliament, spilled the beans at the Federal Press Conference on Wednesday: “Anyone who meets the most powerful man in China only presents two or three wishes – and one of them was Wirecard.” The most powerful man in China – that’s not Premier Li Keqiang, but President Xi Jinping. No wonder that the acquisition of Allscore then went through as desired in November 2019.
The committee’s work also reveals how communications from the German government to the Chinese leadership come about. Finance State Secretary Wolfgang Schmidt reported on this. In July 2019, an old acquaintance called him: Ulf Gartzke, now a colleague of zu Guttenberg’s in the consulting business. “Dr. Gartzke had enclosed a draft letter to the Chinese government as a service,” summarizes the MP Matthias Hauer (CDU) the file situation. “You sent the letter almost one-to-one to your Chinese colleague.” If the use of such letters pre-written by consultants was common practice? Schmidt said he asked Gartzke “to make his work easier” to help him with the wording. The latter was better versed in the subject.
“Carbon Border Adjustment Mechanism”, “CO2 border adjustment system”, “CO2 border levy” – the name for the project from Brussels is unwieldy, but it nevertheless took an important step yesterday: The European Parliament voted by a large majority in favor of the CO2 limit levy and adopted its report with recommendations to the EU Commission. The next step is the proposal of the Brussels authority, which is expected in the second quarter of this year. Critics argue that the name of the regulation could simply be shortened to what the levy really is: a “CO2 import tax” or a “climate tariff”.
Companies from third countries that produce in a less climate-friendly way than EU companies are to pay a levy on imports into the European Union. Steel, cement, and fertilizer from China, for example, will then become artificially more expensive according to their CO2 content. If a supplier to European companies can prove that its production is just as climate-friendly, the additional levy will not apply. International trading partners such as China are skeptical – they fear trade disadvantages and protectionism.
The border adjustment mechanism serves to protect the climate, EU Economic Affairs Commissioner Paolo Gentiloni said at the beginning of the week in the European Parliament. It is not protectionism. “It allows the EU to achieve its objectives. It is not about gaining unfair advantages over our partners.” Chinese diplomats in Brussels, however, stressed that further discussions on the levy mechanism were needed before it was implemented. “Will it be good for the environment? Will it be good for trade between different nations? It takes time and certainly requires more consultation and discussion among all key stakeholders,” Fei Shengchao, adviser to the Chinese EU mission, told Euractiv.
The EU Parliament also expresses “its deep concern about the erosion of the multilateral trading system” in the adopted report on the CO2 levy. MEPs call on the EU Commission to work actively with the governments of trading partners to avoid disgruntlement.
One thing is clear: The CO2 cap and trade tax will bring more money into Europe’s coffers. What the EU will ultimately do with the revenue will play a big role in its compatibility with international World Trade Organization (WTO) rules. Alan Wolff, Deputy Director General of the WTO, suggested at an online event in January that it would generally be acceptable under WTO rules as long as the revenue was actually diverted to support an EU green policy. If, on the other hand, the “competitive conditions were to be altered for a particular industry or particular companies,” this would likely cause conflicts, Wolff warned.
The EU Parliament stresses in its report that there must be “full transparency” for the use of the newly won own resources. The “budgetary function” is also “only a by-product” – it is about the climate, not about additional money for the EU.
From 2023, the CO2 border tax will initially cover emissions from “energy-intensive steel, cement, and aluminum industries, as well as the electricity sector and the plastics, chemicals, and fertilizer industries,” according to Yannick Jadot, French Green MEP responsible for the report. According to estimates by the European Parliament, these correspond to 94 percent of European industrial emissions. What is certain is that, after a transitional phase, more and more industrial sectors will gradually be added to the list. The mechanism is also to be closely linked to EU emissions trading.
It is incredibly important for the climate that CO2 emissions have a price, Christoph Nedopil Wang, founder of the Green Belt and Road Initiative Center in Beijing, tells China.Table. And the CO2 cap levy is a good way to do that. In China, the markup from Brussels is being watched closely, Nedopil Wang says – and not necessarily positively. “Of course, there are fears that exports from China to Europe will be slowed down as a result.” The introduction of China’s emissions trading scheme could potentially be a first step to deal with the border tax. Whether this will then be sufficient is an open question, Nedopil Wang said.
However, according to Nedopil Wang, the planned levy also has a hidden advantage for China, a positive effect that is often underestimated: The energy transition also requires new technologies, and China is well-positioned to develop them. “Every regulatory change is a huge opportunity for entrepreneurs, and China has many of them.” There are also opportunities for more cooperation between the EU and China. There are definitely advantages for technology producers who are also based in China.
In general, there is an acceleration of investments in the direction of renewable energies in China and also in the Southeast Asian region – of course, also because the companies based there want to continue exporting to Europe, says Nedopil Wang.
In September last year, China announced that it would achieve CO2 neutrality by 2060. At the beginning of February, the People’s Republic introduced emissions trading, which initially only applies to the energy sector. Whether the Chinese and EU emissions trading systems can be linked in view of the CO2 limit levy is still open.
The year of the ox has begun darkly for the people of Hong Kong. On February 16, nine pro-democracy activists, including 82-year-old Martin Lee, the revered long-time leader of the city’s Democratic Party, went on trial facing charges of illegal assembly.
A week later, the Hong Kong government announced that it would enact a law allowing only “patriots” to serve on district councils, the lowest level of the city’s administrative apparatus, with responsibilities ranging from sanitation to traffic. This will likely result in the expulsion of democratically elected council members and the disqualification of future candidates deemed disloyal to the ruling Communist Party of China (CCP).
Then, on February 28, in the most sweeping crackdown yet since China imposed a draconian national security law on the former British colony last July, the Hong Kong authorities charged 47 leaders of the city’s pro-democracy movement with “conspiracy to commit subversion” under the law. Because the law rigs the trial process to ensure conviction, these activists face the prospect of years in prison.
Several considerations may have prompted Chinese President Xi Jinping to escalate the repression in Hong Kong. For starters, indications that the national security law has succeeded in instilling the rule of fear in the once-defiant city may be encouraging Xi to take advantage of the despotic momentum and try to decapitate Hong Kong’s pro-democracy forces.
Moreover, the West’s measured response to China’s imposition of the national security law – until now limited to diplomatic denunciations and sanctions against a small number of senior Chinese and Hong Kong officials – has not really hurt the government in Beijing. Chinese leaders also appear to have drawn a line in dealing with new US President Joe Biden: China’s sovereign prerogatives in Hong Kong and the western province of Xinjiang are non-negotiable. China will do as it pleases in those places, despite Biden’s warning of “repercussions” for human-rights abuses.
But Xi may have underestimated the costs of his actions in Hong Kong. This latest spate of prosecutions of pro-democracy activists, coupled with a lack of goodwill gestures from China to improve ties with the United States, will most likely harden Biden’s stance.
For the time being, the Biden administration wants to avoid a frontal collision with China, because it must first attend to domestic priorities such as tackling the COVID-19 pandemic and fostering economic recovery. As Biden’s advisers weigh the best approach to China, the CCP’s intensifying crackdown in Hong Kong will undermine advocates of a more nuanced and less confrontational US approach while vindicating those convinced that only a hardline position can modify Chinese behavior.
When the 47 pro-democracy activists are convicted and sentenced to long prison terms, the Biden administration will have no choice but to make China pay. The narrow window for stabilizing US-China ties, which should serve Chinese interests, will likely close, and bilateral relations could resume their dangerous downward spiral.
At that point, Chinese repression in Hong Kong will make it much easier for Biden to recruit wavering Western democracies as allies. Currently, many European countries are hesitant about becoming full-fledged partners in a new US-led anti-China coalition. Aside from their extensive commercial interests in China, they worry that an unrestrained US-China geopolitical rivalry could plunge the world into a new cold war, disrupt and fragment the global economy, and doom any hope of combating climate change.
But European leaders ultimately must respond to voters, many of whom care deeply about human rights and are demanding tougher policies toward China. It will not be long before Germany and France, in particular, find it untenable to maintain a policy that relies on strategic neutrality in the unfolding US-China duel to preserve their economic interests in China. When European democracies finally join the Biden administration’s nascent anti-China coalition, the credit should go not to America, but to Xi.
Such a coalition could impose painful costs on China for its actions in Hong Kong. True, in the short term, the US and its allies cannot easily undermine Chinese efforts to build Hong Kong into a financial center capable of rivaling New York and London; after all, financial sanctions, such as a ban on investing in companies listed there, would cause chaos in global markets. But they still have a wide array of other options to squeeze China.
Decoupling China from global technology supply chains currently seems inconceivable, but could become a reality if the coalition agrees to a new arrangement similar to the Coordinating Committee for Multilateral Export Controls, which choked off Western technology transfers to the Soviet bloc during the Cold War. Western democracies could also deny Chinese leaders the international prestige they seek by curtailing high-level exchanges and vigorously contesting Chinese influence in multilateral organizations. And sheltering victims of China’s crackdown in Hong Kong would be both a humanitarian gesture and a forceful rebuke of Chinese policy.
Chinese leaders are most likely already aware of these consequences as they weigh their options in Hong Kong. They have settled on an ultra-hardline course in the belief that its costs are bearable; arguably, their gambit has paid off so far. But, by throwing down the gauntlet to a new US administration and its allies, China may be overplaying its hand.
Minxin Pei, Professor of Government at Claremont McKenna College, is a non-resident senior fellow at the German Marshall Fund of the United State Copyright: Project Syndicate, 2021.
www.project-syndicate.org
More knowledge about China in German schools: On Wednesday, the relaunch of the website of Bildungsnetzwerk-China went online. The network was founded at the beginning of last year as a joint initiative of Stiftung Mercator and the Goethe-Institut. In close cooperation with school ministries and authorities, it aims to support schools in becoming particularly involved in the education of China competence in Germany and to facilitate encounters in order to structurally strengthen and improve international understanding between Germany and China.
