Global Power Politics between China and USA: Where is the EU?

By Nora Zabel

China’s rapid economic growth and increased power have the potential to disrupt the global order, with President Xi Jinping demonstrating ambitions for global political influence. Expectations that China’s entry into the World Trade Organization would lead to domestic reforms and a market-based economy have not been met. Instead, China pursues a geostrategic foreign policy, projecting an image of multilateralism while prioritizing its own interests. The US-China trade war reflects a changing world order, where conflicts unfold outside traditional institutions. China, as a vital trading partner for many countries, including in Europe, seeks to expand its international dominance. Through initiatives like the Belt and Road Initiative, China diversifies its economic and political relations, reducing dependence on the US and entering new markets. This accumulation of power raises concerns for both the US and European Union, compelling them to navigate their positions in a rapidly evolving geopolitical landscape.

The rise of China and the Changing World Order 

The deal was tough to be done: the Chinese shipping giant Cosco wants to take a 35 percent stake in the operating company of a container terminal in the Port of Hamburg in Germany. At the very least, reservations can be heard from the Chancellor’s Office. This current example represents the cluelessness with which the European Union is reacting to China’s economic expansion. Trust in relations with China has been damaged at least since the Russian invasion of Ukraine. Europe is currently being shown what autocracies are still capable of in the 21st century, despite global networking. This also makes China more unpredictable than ever. China’s rapid economic rise in recent decades and the resulting increase in power have led to a gradual change in the world order as we used to know it. From a European perspective, these changes were long reduced to economic development. Under State and Party leader XI Jinping, however, China’s claim to be a global political power is unmistakable.

Today, the Western world is confronted with the People’s Republic, which it finds increasingly difficult to define and, as a result, to confront in diplomatic and economic relations. In this context, it is safe to say that Europe and the United States hoped that China’s entry into the World Trade Organization in 2001 would have an influence on the domestic Chinese economy. In general, China’s inclusion in the multilateral organization was intended to be a catalyst for far-reaching structural reforms: paying more attention to fighting corruption, making the government’s tasks transparent, and promoting free enterprise. Trade and cross-border investments would have hopefully linked China to the rest of the world in a closer relationship.

Looking back over the last two decades of China’s membership in the WTO, the People’s Republic has worked through many of its accession commitments, but European expectations for the country’s development into a market-based economy have not been fulfilled. Instead, the West is confronted with China’s geostrategically motivated foreign policy. At the same time, the People’s Republic often presents itself as an advocate of multilateralism promoting an opening policy. 

How can this divergence between the Western vision and China’s self-presentation to the public be explained? In order to explain the People’s Republic’s economic and geopolitical stance, the behavior of its counterpart, the United States, must be included in the analysis: the trade war between the global players which has been raging since 2018 is just one indicator of a changing world order. For the most part, conflicts are no longer channeled and mediated within institutions; they take place apart from them.

Looking at the situation today, China didn’t break away from the World Trade Organization, but it is nonetheless striving to further expand its own dominance on the international stage, amid its growing rivalry with the United States. China is now the most important trading partner for many countries around the world. Among them are some European countries. Under the Belt and Road Initiative, Beijing has diversified its economic and political relations. Not only its dependence on America has been reduced, but new markets have been opened in recent years, for example on the African continent, in Latin America, in the Middle East and in the Arctic, where China makes security policy claims. The increasing accumulation of power not only worries the US, it also forces countries of the European Union to face the question of how to position themselves vis-à-vis China in a world undergoing major geopolitical changes.

Economic Openness and Great Power Competition: U.S. and China

In “Economic Openness and Great Power Competition: Lessons for China and the United States,” political and social scientist David A. Lake describes the dynamics that led from multilateralism to economic nationalism. In the abstract, Lake predicts bilateral economic and military competition between the United States and the People’s Republic. The purpose of international power, according to Lake, is to gain privileged access to markets or to prevent other countries from securing it first. This race for economic privileges – using Lake’s words – has the potential for dividing the world in blocks. To explain the dynamics of bloc formation, the author undertakes an analysis of the actions and reactions of the two great powers. A great power gains influence in a foreign country by securing special rights that favor its enterprises based there: imperial preferences, such as higher prices for exports. Thus, the adversary retaliates by securing privileged access in another country, fueling the division of the world into exclusive economic blocs. As a result, both great powers find themselves in a competition for exclusive economic zones: the multi-sum game now becomes more like zero-sum one. Economic competition thus influences the geopolitical strategy of the great powers and motivates militarization in three ways. 

First, since the establishment of exclusive economic zones requires concessions from subordinate countries, the great power must adjust to dominate the so-called target countries. Target countries have the possibility to negotiate with great powers to pick the bloc that best serves their interests. Therefore, military intervention may be necessary to consolidate regional dominance through puppet governments. In doing so, there is a constant conflict between the great power struggling for control with the target country striving for freedom.

Second, the great power must not only take control of local government, but it also needs to deter potential rivals from entering the region. This may well degenerate into military crises, as happened in the Cold War.

And last, the unclear delineation of economic zones and the questioning of these boundaries, as power and influence evolve, make competition between great powers difficult and potentially dangerous. Uncertainty about capabilities and commitment can lead to negotiation failures and the use of force.

Where does this leave the European Union?

What is striking here is that the European Union does not play a role in this competition because it seems to be more concerned with internal issues. Many demonstrations of power come to nothing because there is no unified foreign and economic policy in the EU. Recently, the Commission’s President Ursula von der Leyen and the French President Macron met with Xi Jinpingin in Beijing. Among other topics, they also discussed what goals China was pursuing in its relationship with the European Union and the rest of the world.

Political scientist Tim Ruhling of the German Council on Foreign Relations comes to the following assessment:

A “Ms. von der Leyen’s course now strengthens all those in Germany who advocate a much tougher policy toward China – a policy that puts the risks first.”

The China expert believes it is right for the EU to openly name the risks of trade with China and also advocate for government controls, for example on investments in sensitive areas such as artificial intelligence. Ruehlig continues:

“There are some large industrial companies in Germany in particular that will certainly not take very kindly to this.”

The point here is to reduce the risk in the policy towards China. Ursula von der Leyen is not concerned with fundamentally questioning trade with China, but rather with the targeted reduction of economic dependencies. However, a unified strategy, even though it has been put on paper several times, has not yet been implemented to any degree. Only the Russian invasion of Ukraine led to a serious rethinking of how to deal with autocracies.

Will the EU remain a punching ball between China and the United States?

What is certain is that Washington sees China as a thoroughly revisionist power striving for regional hegemony in the Indo-Pacific region and, in the long term, global hegemony. Initiatives such as the Silk Road or China’s involvement in Central Asia or Africa, which goes hand in hand with the opening of new markets, also lead America to see its claim to leadership in the global community as threatened. Before the US-China conflict peaked in the trade war, American foreign policy consisted of a mix of political and economic cooperation accompanied by military risk hedging and deterrence. As a result of the power-political and ideological conflict with China, which the Trump administration has taken on the offensive, the People’s Republic found itself confronted with a new situation. While Beijing’s strategy toward Washington was “same bed, different dreams,” this view proved to be naïve with the start of the trade war. Since then, the People’s Republic has increasingly found itself in a process of diversifying dependencies and thus attempting to decouple itself ever further from the US. The ideological difference between the two powers, on the one hand the United States, which proclaims Western liberal values, and on the other the People’s Republic, which continues to develop into an autocratic state, also plays an important role in this conflict. Thus, a hardening of the conflict between the Western European world and the new superpower China is to be expected. 

Even if Beijing pursues a new role in international politics as a partner in challenges of global responsibility, the Chinese one remains a rival system which puts into question the community of States. Nevertheless, everyone is aware that global problems such as climate change mitigation can only be solved with China, one of the most populous countries in the world. The People’s Republic therefore finds itself in a contradicting position: on the one hand, it strives to obtain a new role of global responsibility, and on the other hand, its revisionist and autocratic features pose a threat to other regional powers that may not be willing to share their power with China. Moreover, China’s closing ranks with Russia – a country that demonstrated how little it thinks of the Western world through its invasion of Ukraine in violation of international law – appears to be a demonstration of how Benijin considers military invasions to be a legitimate means.  This also shows that the Western world has not been able to use the WTO as an institution to bind China to a rules-based economy

In order to equip itself for this geostrategic competition, the European Union should consider the following in the coming period.

First, we need to maintain a dense network of global economic relations, a constant willingness to engage in dialogue, an active involvement in multilateral institutions, and a willingness to promote sustainable development. Away from trade with autocracies.

Second, we must equip ourselves more comprehensively for a world that is once again dominated by classic power politics’ rationales.

Third, we should urgently get ready for todays’ wars, which are fought differently from the past: from cyberattacks to the spread of fake news to attacks on our critical infrastructure. It is the task of policymakers to devise a holistic strategy for such challenges of the years to come.