Category: ReConnect China policy brief

Reconnect China Policy Brief 23: Drinking Xi Wine

Executive summary:

At the opening of the ‘Summit of the Future Action Days,’ held in New York on 20 and 21 September 2024, United Nations Secretary-General António Guterres stated the following: “Four years ago […] we saw our multilateral institutions ailing—unable to respond to contemporary challenges, let alone those of tomorrow. We saw faith in multilateral solutions eroding. And we saw trust in each other dissipating just when we needed it most. So, we began a journey to reform to renew the international system so that it meets the moment and is fit for the future. We need multilateralism that is more inclusive, more effective and more networked—with stronger links between international institutions and with the people. That means greater representation of developing countries. And it means a stronger voice for all of you and what you represent”.1 This call reflects the realization that the world’s economic balance is shifting towards the Global South and that, concomitant with this development, the countries of the Global South aspire a greater say in the existing institutions of global governance. This Policy Brief addresses the question of the ‘universality of values’ such a change raises, hereby focusing on the alternative strategic narratives of the People’s Republic of China (PRC), the second-largest global economy in nominal terms.

Policy recommendations:

This Policy Brief argues that, for the European Union (EU), it is necessary to:

  • Differentiate between the audiences targeted by the Chinese narratives;
  • Stand firm with the European values in a context in which the United States (US), the chief architect and defender of the liberal international order, has started to contest the major international institutions it once created to sustain this order;
  • Coordinate strategic communication within the EU.

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Reconnect China Policy Brief 22: Responding with data to China’s supposed divide-and-rule diplomacy in the EU

Whether or not the People’s Republic of China (PRC) engages in divide-and-rule diplomacy vis-à-vis the EU can be investigated empirically. Based on unique databases of Beijing’s diplomatic engagement created by the author, and secondary literature, this policy brief describes what Chinese state and political level engagement with Europe actually looks like – and what lessons can be drawn from that for EU foreign policy on China.

The paper first discusses two tools of China’s foreign affairs work that owe their unique features to the Chinese party-state: Chinese ‘new type of great power relations’ and the use of ‘friendship’. Second, the paper looks at empirical data on state-to-state interactions that makes clear the friends and great power counterparts in Europe. Third, the paper discusses Beijing’s party diplomacy targeting European elites and finds different permutations of the same groupings.

The brief concludes with a consideration of possibilities for the EU to deal with Beijing’s diplomacy among member states as it really exists. It takes two hands to clap: compatibility with member states’ own foreign policy decisions is vital.  The issue is not so much the quantity of interactions with China as it is the quality.

Policy recommendations:

Moving forward, the EU needs to take steps for:

  • Exposure – so that methods and ideology behind Beijing’s actions are understood and member states receive clear signals about EU policy.
    • Public education on ideology.
    • Public education on the party-state.
    • Regular reports tracking visits.
  • Restraint – so that EU member states and institutions do not create opportunities for weakening of unity and EU competences.
    • National self-discipline.
    • Protect EU competences.
  • Compensation –to increase European strength by relying on the options for coordination that the EU as a group has.
    • Share reports with member states.

Ensure party contacts include member state officials.

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Reconnect China Policy Brief 21: The China-led AIIB, a geopolitical tool?

The establishment of the Asian Infrastructure Investment Bank (AIIB) in 2016, on a Chinese initiative, constituted an attempt to bridge the gap in infrastructure financing in Asia. However, it was also perceived in the West as a potential vehicle for China’s geostrategic agendas, fueling the suspicion that the institution might compete rather than align with existing multilateral development banks (MDBs) and impose its own standards.

After almost a decade of existence, the AIIB seems to have proven such critics wrong. It has managed to establish its credentials, has cooperated with other MDBs as well as with national development assistance agencies and aligned with their standards and operating practices. The bank has also expanded its scope of activities both geographically and in terms of sectors. Going beyond infrastructure financing, the AIIB has established a special facility to help developing countries recover after the Covid-19 pandemic.

Despite these positive achievements, several of the initial concerns have not been fully placated, and some signs point to possible dangers in the years to come.

While the AIIB could not be shown to be the main financing instrument of President Xi’s flagship project (Belt and Road Initiative – BRI), the conditions may now be in place for China to turn the institution into a geopolitical tool.

Although there is no evidence so far of Chinese Communist Party’s (CCP) interference in the internal governance of the bank, the concentration of power in the hands of the bank’s President (at the expense of the board of directors) is a source of concern. Moreover, the increasingly heavy-handed assertive China should not be taken lightly and calls for utmost caution on the part of the bank’s members.

Lastly, the AIIB’s performance in terms of environmental and social standards calls for tighter oversight.

Policy recommendations

The AIIB has proven its usefulness as a complement to other MDBs. EU member countries should keep cooperating with the bank while making full use of their oversight capacity over its activities.

  • First, more EU member states (smaller EUMS in particular).  should be encouraged to join. With more EU countries as members, they will have more of a say.
  • Secondly, it is desirable to maintain or even enhance coordination among European countries within the Eurozone and the wider Europe chairs of the board of directors.
  • Thirdly, European countries should push for synergies with other MDBs and national development finance institutions (DFIs), making sure that the AIIB stays aligned with other MDB’s operating practices and standards, with regard in particular to social and environmental standards.
  • Lastly, EU countries should lobby to get the bank’s presidency to rotate in the next election due in January 2026.

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Reconnect China Policy Brief 20: The China-Russia partnership and the Ukraine war: aligned but not allied

Executive summary:

China and Russia maintain a strategic partnership rooted in shared opposition to the U.S. and liberal democracies, but their relationship is shaped more by pragmatism than trust. While Putin and Xi declared a “friendship without limits” before Russia’s 2022 invasion of Ukraine, China has since avoided repeating the phrase. Their cooperation remains strong, yet historical tensions, diverging priorities, and mutual distrust prevent a formal alliance.

China’s claims of neutrality in the Ukraine war are undermined by its economic and political support for Russia, its selective criticism of Western military aid, and its silence on North Korea’s involvement. Beijing promotes peace rhetoric but does not offer any concrete proposal and provides negligeable humanitarian assistance. Meanwhile, the 2024 North Korea–Russia alliance creates additional challenges, as it contradicts China’s stated positions and risks further destabilizing East Asia, strengthening regional US alliances.

For Europe, expecting China to mediate or distance itself from Russia is unrealistic. Despite significant EU-China trade, Beijing has shown no inclination to influence Putin.

Moving forward, the EU must adopt a firm and clear-sighted approach in its dialogue with China:

  • Reaffirm Core Principles – The EU must consistently stress the fundamental importance of upholding the UN Charter, Ukraine’s sovereignty, and territorial integrity, emphasizing the direct security risks for Europe.
  • Expose China’s Double Standards – Brussels must challenge Beijing’s self-proclaimed neutrality and call out its contradictions, demanding that China refrain from criticizing countries that legally support Ukraine while tacitly backing an illegal aggressor.
  • Adopt a Holistic Strategy – The EU must avoid compartmentalizing its relationship with China. Instead of treating the war in Ukraine separately from other political and trade matters, Brussels should pursue a holistic approach, integrating security, political, and economic considerations—just as China does in its own diplomatic strategy.

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Reconnect China Policy Brief 19: Technical Standards, Soft Connectivity and China’s Belt and Road: Towards greater convergence or fragmentation?

Executive summary:

As the intensification of geopolitical competition points toward increased global fragmentation, the definition of technical standards for future markets and industries will play an important role in determining just how deep the fissures will run. China has been a proactive contributor to the development of global standards via established international forums for more than a decade. Its participation has not been without friction, but nevertheless helps to ensure a meaningful level of technological and market convergence across the global economy.

Running in parallel to its engagement in global standards forums, China has multiplied its pathways of engagement in the field through bilateral and regional standards cooperation and “mutual recognition” agreements. Today, Beijing has concluded 108 such agreements with 65 national, regional and other institutional partners. Such developments have raised concerns about the potential for fragmentation of regional standards and the development of economic spheres of influence organized around competing technical standards regimes. The Belt and Road Initiative (BRI) serves as a framework for concluding many of these agreements, but ultimately has little value as a platform for cooperation in and of itself. So far, on standardisation, the BRI is rather a patchwork of distinct bilateral, regional, and often sector-specific collaboration efforts between China and a diverse range of partners. Yet, as Beijing angles to present alternative pathways for global development, seeking to position itself as the voice of the Global South, outreach and technical assistance in areas such as standardisation have an important diplomatic role to play.

Yet the de-facto pathway to an internationalization of Chinese standards ultimately runs through concrete investments, wherein the “soft” connectivity of standards accompanies the “hard” connectivity of infrastructure and technology. Herein, Chinese firms play a vital role in carrying Chinese standards overseas, and while companies are increasingly central in defining China’s own national standards, they also have a keen interest in ensuring that their standards are compatible with global partners and competitors alike.

Policy recommendations:

  • In this context, the EU must strengthen its own standards diplomacy, deepening engagements with overseas partners, particularly across the Global South.
  • Such engagements must serve to complement and strengthen global standards frameworks, better integrating partners into the international standards ecosystem, rather than reinforce fragmentation.
  • Investing in European technological and industrial competitiveness is ultimately the most important pathway to ensuring Europe remains a global standards leader.

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Reconnect China Policy Brief 18: Partner, competitor, or both? Thoughts on derisking in EU-China economic relations

Executive summary:

The EU and its member states are gradually clarifying what the concept of derisking means for its economic relationship with China. Derisking is a useful concept to frame EU-China relations since there are risks in close ties to a powerful external actor with a state-led economy. However, in the current debate surrounding China, derisking could easily translate into an overly broad rejection of economic interactions with this country. We urge the EU to be pragmatic and realistic in determining where to derisk economic ties to China which in our view includes considering at which point risks have been sufficiently covered, and which interactions do not carry political or geopolitical risks. The EU should consider which kinds of trade and investment between the two sides should be limited for geopolitical reasons, but also which can be left open to corporate actors and even which ones are still worth actively supporting.

Policy recommendations:

Establish where the limits of derisking lie; at what point do we consider ties to China derisked? Economic interactions with China could be conceived as falling in one of the following categories:

  • Red light: the EU should introduce measures discouraging or prohibiting cooperation initiatives;
  • Yellow light: the EU is indifferent and leaves interactions with China to sub-state actors;
  • Green light: the EU sees public benefits resulting from interactions with China and actively encourages linkages.

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Reconnect China Policy Brief 17: How China’s EV Dominance is Shaping EU Trade Strategy

Executive summary:

Over the past years, China has propelled itself as the world’s biggest car manufacturer and exporter, overtaking Germany and Japan. Most notably, China has become the world leader in electric vehicles (EVs). In response to this rising EV production and export capacity, several countries have implemented tariffs on Chinese EVs in an attempt to localise manufacturing. The EU has also imposed tariffs on Chinese EVs despite internal and external opposition. American and European policymakers have justified this stronger trade stance on the basis of so-called “overcapacity” and the argument that Chinese carmakers are propelled to market dominance due to excessive subsidies. This paper refutes this narrative in the specific case of electric vehicles, arguing that while direct subsidies did play an important role, they are not the singular reason why China’s EVs have become globally competitive. Furthermore, there is currently no overcapacity in EV manufacturing. Rather than purely subsidy-oriented, China’s momentous rise is due to wide-spanning policy measures. This strategy included tariffs, local content requirements, and measures inducing vertical integration within the value chain as well as internal competition between Chinese car manufacturers. Nevertheless, European tariffs on EVs – used in a strategic and considerate manner in combination with increased investments in local value chains – can be a useful policy tool to localise manufacturing and create a level playing field, contributing to European and Chinese competitiveness in EVs alike.

Policy recommendations:

  • Implement tariffs to provide European automakers with breathing room to innovate, build up, and commercialise EV supply chains.
  • Keep European automakers exposed to global competition and innovation, particularly from China, to enhance competitiveness.
  • Encourage Chinese investments in Europe’s EV sector, ensuring value-added production and technology development locally, rather than mere assembly.
  • Leverage China’s Li-ion battery overcapacity to reduce short-term production costs while improving EU battery production and innovation capacity.
  • Invest in local battery and chip ecosystems to reduce long-term dependencies.

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Reconnect China Policy Brief 16: AI and Technical Standardization in China and the EU

Executive summary:

Given the highly disruptive potential of AI, global cooperation on AI safety and governance is imperative, and yet the deeply transformational potential of AI also ensures that a high level of competition and systemic rivalry is likely unavoidable. How can the EU best manage its complex relationship with China in the field of AI so as to ensure a necessary level of cooperation in spite of competition and rivalry?

This Policy Brief offers insights from the field of technical standardization for AI. Technical standards are crucial for defining the parameters of AI systems, from basic reference architectures to security and ethics requirements to the technical functioning of specific applications in a wide diversity of fields including healthcare, education, advanced manufacturing, energy, and agriculture. In their efforts to harness and channel the development of AI, both China and the EU have turned to technical standard setting as a means to mitigate risks and achieve broad political goals.

The EU’s AI Act has placed technical standards at the heart of the AI governance conversation by aiming for the development of European “harmonized standards” around risk criteria that AI systems and products must meet in order to comply with EU regulations. China meanwhile has aimed to establish itself as a global leader in AI standardization and is working to balance two, often competing priorities of ensuring control while facilitating innovation and boosting competitiveness. The EU and China seem to be at odds, and yet, common standards are needed to ensure space at the foundational, technical level for necessary cooperation on AI safety and governance and to avoid a more structural slide into de-coupling.

Policy recommendations:

Ensuring a baseline of synergy on technical standards requires that Europe and China, but also key global partners starting with the United States, come to a common understanding at two levels, as further explored below:

Standard-setting at the domestic level:

  • The parameters and red lines of domestic standards participation by foreign entities in the AI domain in China, in the EU and elsewhere must be clarified.

Standard-setting at the international level:

  • International standardization of AI should be channeled toward established forums such as the ISO/IEC.
  • Greater synergies on AI and standardization between the EU and its key partners, notably the United States, must be prioritized.

The rules meant to shield technical standards development from malign influence must be reinforced and respected.

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Reconnect China Policy Brief 15: China’s Quest for a Quantum Leap

The global race to harness quantum science is intensifying. Recognizing the strategic potential of quantum technology for economic, military, and scientific advancement, China is focusing on quantum breakthroughs as a way to shift the balance of power, especially in its competition with the United States. President Xi Jinping has emphasized the importance of scientific innovation, particularly in quantum fields, to fuel national development and ensure security.

Chinese researchers, led by figures like Pan Jianwei, have made significant strides in quantum communication and computing. China is particularly advanced in quantum communication, building secure networks that use quantum key distribution (QKD), which is virtually unhackable. China has also launched quantum satellites, like Mozi and Jinan-1, to bolster its space-ground quantum network.

Despite its achievements, China may face challenges in keeping up with competitors. The quantum industry lacks robust private investment and relies heavily on state support, while geopolitical tensions, particularly with the U.S., risk isolating China from essential technologies. The coming decade will be crucial as China continues to navigate these obstacles in its quest for quantum supremacy.

Policy recommendations:

  • Given the strategic reach and military potential of quantum technologies, and given the central role of the Party and state in the quantum industry in China, any European partnership with and investment in China should be scrutinized carefully.
  • Europe must keep up with quantum application developments and standardization so that it does not entirely rely on technology and norms developed by foreign powers in the future.
  • Europe may play a constructive role in preventing the fragmentation of norms between the US and China.

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ReConnect China Policy Brief 14: Getting China Onboard a Global Debt Governance System

China has become the number one provider of development finance in the world. Because of its significant share in Low and Middle Income Countries’ (LMICs) external debt, China should take up responsibilities and cooperate with traditional development finance providers, but its particular lending style and distinct approach to debt management pose many challenges and do not make international cooperation straightforward. Although some progress could be observed over the past couple of years under various initiatives such as the Debt Service Suspension Initiative, the Common Framework and the Global Sovereign Debt Roundtable, more remains to be done. But as China is increasingly faced with the same difficulties as other lenders, and in particular with rising risks of default, one may be reasonably confident that China will behave increasingly like other lenders.

Policy recommendations:

  • In concrete terms, the EU should push the topic of debt management on the G20 agenda so as to encourage a constructive discussion with China. It is also important to avoid ill-founded criticisms that are simply counterproductive. The EU should call for more transparency and encourage the streamlining of lending practices and approaches to debt restructuring.  It is in all countries’ interest to design an effective multilateralized debt management mechanism.

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