Josep Borrell’s scheduled speech at CCG on China and EU-China relations

Editor’s Note: Josep Borrell, High Representative of the European Union for Foreign Affairs and Security Policy and Vice-President of the European Commission, was scheduled to deliver a speech in person at 11:00 am Beijing Time (GMT+8) on Friday April 14 at the conference hall of the Center for China and Globalization (CCG).

Unfortuantely, HR/VP had to cancel his visit because he tested postivie for COVID-19. He has published his scheduled speech at CCG on his blog, entitled My view on China and EU-China relations.

HR/VP Blog – I was supposed to be in Beijing today to meet and discuss with Chinese leaders EU-China relations, regional and global issues. Unfortunately, I had to cancel my visit because I tested positive for COVID-19, but I publish here the speech I was going to deliver at the Centre for China and Globalization on Friday.    

My first visit to China was in 1987 when, as Spain’s Secretary of State for the Treasury, I came to sign the first agreement on double taxation for our companies. At that time, China was beginning its impressive economic take-off and its opening to the world. I returned in 2006 as President of the European Parliament. It was already another China, the one that was at the heart of the shift in the centre of gravity of the world economy from the Atlantic to the Pacific. It had in the meantime joined the WTO and was emerging as a central player in global economic relations. I had a long conversation with President Hu Jin Tao, who then invited me to speak at the Chinese Communist Party Leadership School. At that time, China already had a large amount of foreign exchange reserves invested in U.S. government debt. I remember that in my lecture I pointed out that the irony was that the dollar exchange rate depended on the decisions of the Chinese Communist Party. But these decisions were double-edged, because a depreciation of the dollar would automatically reduce the value of these reserves.

Later, in 2019, I also visited Beijing as Spain’s Foreign Minister, invited to the celebration ceremonies of the “Belt and Road Initiative”. During all this time, China has continued its economic development. It is no longer a simple producer of low-cost goods with cheap labour, but a technological powerhouse that has achieved the historic feat of lifting hundreds of million people out of poverty over the past 50 years. This is a great achievement of mankind and was made possible by the policy choices of the Chinese authorities, being also time in favour of open markets and free trade.

The Chinese and US economies have been deeply and increasingly intertwined. So does the European economy. 20% of our imports come from China, which is the destination of 9% of our exports; our trade represents 2.3 billion euros per day. However, the imbalance is continuously getting bigger and our trade deficit has doubled in the last two years. This is of course unsustainable and needs to be addressed, principally through the removal of the myriad of market access barriers that European companies still face in China. As the president of the European Commission said in Beijing only a week ago, we need transparency, reciprocity. In short, a level playing field.

The world has changed and so has China

However, since then, the world has changed and so has China. The time of the “mondialisation heureuse” is over. The benefits of the economic integration are being re-evaluated through the lens of national security. We have to face the climate emergency, the consequences of the pandemic, and Russia’s war of aggression against Ukraine. This war has fuelled shocks on supply chains, and a food and energy crisis. In this context, we believe that China must exercise more responsibility, also for security and peace. It cannot avoid this. If we want an international order where cooperation prevails over confrontation, everyone must fully exercise their responsibilities to ensure respect for international law.

I strongly believe in the importance of public diplomacy, in personal and human exchanges and that both sides gain from knowing each other better. This is why cultural and personal exchanges between Europe and China must be resumed as soon as possible after three years of interruption. The primary foundation of our relations should be mutual knowledge and respect. The Covid-19 crisis and recent international tensions have widened the knowledge gap between Europe and China. We must work together to reduce this gap.

I know that the functioning of the EU, which is a kind of confederation of states, may seem complex. However, when it comes to foreign and security policy it is based on simple principles. The European Council, which brings together the heads of state and government of the member states, defines the strategic choices of the Union, The ministers and the European Commission implement them and the European Parliament monitors its activity.

In this system, the member states retain responsibility for their foreign and security policy. My role as High Representative is to build a common policy, which becomes the external policy of the Union, whether it is in relation to China or any other country, and to represent it in the world at ministerial level.

All this may seem complex. But this complexity has an advantage of creating a supranational and democratic European system that has ensured peace and proserity among Europeans. And this is what counts.

In the face of the recent extreme challenges, the EU has been able to show remarkable unity in its foreign and security policy. As a response to the Russian aggression against Ukraine, it immediately took ground-breaking initiatives in record time, providing military and financial support to Ukraine and adopting ten packages of sanctions against the Russian war machine.

How do we see China?

The EU’s current position on China, endorsed by the European Council in 2020, is based on the known triptych: partner, competitor and systemic rival. A lot has happened since then. Bilateral relations between the EU and China have deteriorated in recent years, due to a growing number of irritants (like China’s disproportionate response to EU’s targeted restricted measures, China’s trade measures against Lithuania, with a direct impact on our EU single market, and China’s position on the war against Ukraine). But at the same time, we have remained committed to engagement and cooperation and recognise China’s crucial role in solving global and regional problems. On climate change, for example: despite China’s growing efforts in the fight against CO2 emissions, China still burns as much coal as the rest of the world combined. There is no chance of finding a solution to global warming without a strong partnership with and engagement of China.

Having said that, I will come to my main point. And this comes down to two fundamental questions: how do we see China? And under what conditions can we learn to work together?

How do we see China? We see it as a power with a large population, the rise of which is part of the long history of humanity. With an average annual GDP growth rate of 9% over the last fifty years and a massive eradication of poverty.

However, we know from experience that as soon as a country achieves economic power it also naturally wants to project itself on political and strategic levels. If China has made great progress, it is thanks to its industrious and creative people, but it would not have happened without the introduction of market principles, the economic opening and the existence of an open multilateral system guaranteed by rules such as those of the World Trade Organization.

It is in the interest of all of us to respect these rules. But it is also in our interest to update them. Because between the beginning of the 2000s and today the world has undergone fundamental changes. Many issues as important as export subsidies, energy transition, digitalisation, cyber security or intellectual property protection, which were not as pressing at the time, have become so since then.

And in this new world there are new powers emerging. They demand their place in the world order. We must accept the reality of the advent of a more multipolar world, in which claims with often different and sometimes divergent meanings are expressed. This reality is therefore imposed on us as on others, including of course China.

The need to reduce imbalances

We do not fear China’s rise. However, we know that the history of tomorrow’s world will also depend on how China uses its power. We do not fear the changing world. Even more because, while we are aware of the new realities, as Europeans we also have important political, industrial, scientific and cultural assets. Our normative influence is strong and often original. Our social and political model reflects this originality and strength. It does not blindly trust either the market or the state. It always strives to combine market efficiency with individual protection, good governance and political pluralism. In addition, there is indeed a European voice and a European way. In this, what remains vital is that we all respect the core rules and norms of the international system to which we belong.

As I said, China and the EU have strong economic relations, especially as to trade. The total amount of our trade has reached nearly 850 billion euros in 2022. But these exchanges are increasingly unbalanced to our disadvantage. Our trade deficit has reached a record of 400 billion euros, or 2.3% of our GDP.

This imbalance must therefore be reduced. They must also be addressed by allowing much better access to the Chinese market for Europeans. We all have an interest in maintaining an open system. If imbalances are not corrected, we have to react. Europe will remain the most open major market in the world, but we will not hesitate hesitated to take measures to protect ourselves against practices that we consider unfair. Neither will be permit harmful activities that place at risk the national security of our member states.

The weaponisation of technology and interdependence is a reality to which we have become very sensitive. The pandemic and the Russian energy blackmail have taught us that we cannot be dependent on a single country. We know, for example, that we depend excessively on certain countries, including China, for certain raw materials such as cobalt, manganese or magnesium. In the end, our real dependence stems from the integration of these products in manufactured imports. Hence, the need to diversify our value chains because the strategic importance of a product does not only depend on the place where it is produced, but also on the place where it is refined or manufactured. We must also prevent our sensitive technologies from being used for military purposes.

Our ability to quickly get rid of our energy dependence from Russia shows that we are able to react quickly and strongly when our vital interests are threatened. We have done this successfully, something Russia thought was impossible. We have diversified our supplies, reduced our consumption, increased the share of renewables and supported Ukraine. Europe is not threatening anyone. But it will not let anyone intimidate it.

As agreed by the European leaders at their Informal summit of Versailles in March 2022, Europe must now assume its responsibilities in all areas in order to assert its sovereignty by increasing its defence capabilities, reducing its dependencies and designing a new model of growth and investment by 2030.

You can call it as you prefer: increasing our strategic autonomy or de-risking, but it all comes down to the same thing. But let me emphasize that these measures that we are adopting to defend ourselves are not directed against a country and are compatible with WTO rules.

Work together for the common good

I also believe that there is a multilateral space in which the European Union and China can manage to work together for the common good. For instance with the agreement of the Kunming Montreal Framework to protect biodiversity and terrestrial and maritime ecosystems, or with regard to tackling the excessive debt of the least developed countries in the framework of the G20 Debt Service Suspension Initiative. This will also be the case with the draft international treaty on pandemics proposed by the European Union. And above all we need to work together on the crucial issue of climate change, where we do need a higher level of ambition on China’s side to progress. Working together concretely to tackle such global issues is one important way to restore the trust that has been eroded between us.

But this trust will only return if we manage to understand each other on major international political issues and make progress towards a peaceful resolution of conflicts. I know that from your point of view a key issue is Taiwan. I am fully aware of this. On this subject, you should know that the European Union’s position is consistent and clear. It has not changed. We remain fundamentally committed to EU’s One China Policy. We see no reason to question it. We must lower the tension; avoid verbal outbursts or provocations that can only fuel mistrust.  However, any attempt to change the status quo by force would be unacceptable.

For our part, we have a major security concern, Ukraine. The sovereignty and territorial integrity of a European country has been brutally and flagrantly violated by Russia. It has been condemned by 141 member states of the United Nations, which shows how Russia has seriously damaged the international order.

I am not here to give lessons or advice to China. I have too much respect for its independence and sovereignty. However, I would like to say this in all friendship: it will be extremely difficult, if not impossible, for the European Union to maintain a relationship of trust with China, which I would like to see, if China does not contribute to the search for a political solution based on Russia’s withdrawal from the Ukrainian territory.  Neutrality in the face of the violation of international law is not credible. We do not ask anyone to align with our own position. We simply ask to admit and recognise that in this case there was a serious violation of international law. This is why I believe that it would be helpful if President Xi spoke to President Zelenskyy, and if China provided more substantial humanitarian aid to the battered Ukrainian people.

Take on responsibility and help Russia to listen to reason

Russia is in great difficulty. The lightning war that Putin imagined has ended in failure. And because it is in trouble, it obviously wants to involve China on its side. Right after committing with China not to deploy nuclear weapons outside their territory, it announced that it would do so in Belarus, increasing the nuclear risk. China rejects the block mentality. So do we. This is why we will be particularly attentive to any steps that China might take to finally make the Russian leaders listen to reason. As a permanent member of the UN Security Council, China has major responsibilities. We hope that it will take on more of them, as it has for instance done in the Middle East by facilitating the re-establishment of diplomatic relations between Saudi Arabia and Iran.

Europe is defending Ukraine and prepares to welcome it one day in its family. But today, Europe’s security is also at stake in Ukraine. This why we will continue supporting Ukraine in every conceivable way: militarily, financially, politically, diplomatically and humanitarian. Our support is in no way the expression of a form of allegiance or submission to another great power, as I hear some say, but the expression of our own will. Please, understand this. It is our own destiny we are fighting for.

Come to Europe, you will see how much spontaneous support there is for Ukraine and its people. Near my home for example, in Madrid, surrounded by Ukrainian flags. It was not the government that demanded this. It is the people and the municipalities that have spontaneously mobilised alongside the Ukrainian people.

For us, human rights are universal and should be respected everywhere

I have not the space to discuss here in detail all the relevant issues, some that bring us together and some that separate us. The issue of human rights, for example. We have deep and serious differences here. We must not hide this fact. However, this is also why we must speak frankly, calmly and resolutely. We have resumed the dialogue on human rights between the EU and China after a four-year interruption. For us, human rights are universal and should be respected everywhere.