Initiative for U.S.-China Dialogue on Global Issues

Eleanor M. Albert: Today we are joined by Alijca Bachulska and Francesca Ghiretti.

Alicja is a policy fellow at the European Council on Foreign Relations, based in the Warsaw office. Prior, she worked for over six years as a China analyst at the Asia Research Centre, a think tank based at the War Studies University in Warsaw. Since 2019, she has been part of MapInfluenCE, an international project researching Chinese and Russian influence in the V4 region (Visegrad Group: Czech Republic, Hungary, Poland, and Slovakia).

Francesca is an analyst with Mercator Institute for China Studies (MERICS). Her research focuses on EU-China relations and economic security, the Belt and Road Initiative and development, China's footprint in Southern Europe, and U.K.-China relations. Before MERICS, she worked as a research fellow Asia at the Istituto Affari Internazionali (IAI); as a geopolitical analyst for CQS, a London-based hedge fund; and as assistant to Jaap de Hoop Scheffer, former secretary general of NATO. 

Francesca and Alicja, welcome to the show.

Francesca Ghiretti: Thank you, Eleanor.

Alicja Bachulska: Thanks for having us.

Eleanor M. Albert: I wanted to start off the conversation like I start off most of these episodes, and ask you how you entered this space, looking at the relationship between China and Europe. Let's start with Francesca, and then Alicja.

Francesca Ghiretti: To be honest, it was a bit of a combination of events that I didn't necessarily plan out beforehand. I did my bachelor degree in China studies out of the illusion that learning to speak Mandarin would've given me better chances in the work market. Sort of like, "Oh, I've got this, and surely I will have zero problem in getting a job." Then, of course, I made the huge mistake of doing international relations, which sort of counterbalances every gain that you had with the Chinese.

During my IR master, I focused mostly on the European Union and what the European Union was doing, and I wrote my dissertation on the impact on Chinese investments in Europe. And from there, I was just trapped. Then a Ph.D. on a similar topic, on the securitization of Chinese investments. Then we apply for jobs that are in that area because it's too late to change expertise, right? This is my story.

Eleanor M. Albert: Great. How about you Alicja?

Alicja Bachulska: Frankly, I have a romanticized story of how I ended up being a China researcher. When I was 15, I came upon this book about Alexandra David-Néel; she was this French Belgian explorer in early twentieth century. She traveled alone throughout Asia. She managed to travel to Lhasa, to Tibet, in disguise in 1920s. I think the first female European explorer. She learned eight or 10 Asian languages. So her life was completely crazy, and you
can imagine a 15-year-old me reading a book about her and being completely excited about the whole idea of having such a life. So initially I was actually thinking of studying Tibetan, but as Francesca said, it was around 15 years ago maybe and everybody was saying, "Learn Mandarin and you will be a millionaire." Or whatever narrative that learning Chinese will take you places…

I ended up going to SOAS in London because [of the] opportunity to go to China very early on during your studies. And then I fell in love with China, but I also had this love-hatred relationship as I think many people who study China and have lived in China have similar experiences. I lived in China for a couple of years—I did my masters at Fudan [University]—and then I landed a job in Warsaw. I was very lucky. I also think it's important to be very conscious about the fact that we have this educational background, but also there are sometimes things that just happen by accident. And exactly after I graduated there was this new think tank being established in Warsaw and there was a job opening and the universe collided…

Eleanor M. Albert: That's fantastic. I think everyone's story of studying China when it's something that's geographically so distant from you ends up being such a fascinating tale in some ways. For me it was a total mistake. I originally wanted to study Arabic and the Maghreb because I spoke French. And then I started studying Chinese and my life changed forever and here I am almost 20 years later, as Francesca said, trapped, but in a good way.

So let's dig into all the questions as it relates to China and Europe. China's relation with the entire region —with as many countries as there are in Europe—is very hard to encapsulate in broad terms. But how is China's regional presence viewed across Europe, and are there differences between some of Europe's more dominant players, say France and Germany, and smaller countries in Southern or Eastern Europe? So why don't we start with Alicja?

Alicja Bachulska: Being based in Warsaw, I feel I have quite a good perspective to focus on the so-called New Europe. There has been a tendency to group Central and Eastern Europe as this one, monolithic grouping of countries that allegedly have a shared history and identity, and this kind of thinking is prevalent not only in China with the 16+1 platform for cooperation, which initially was aimed at somehow bringing together all these countries that are actually very different in terms of history, in terms of their relationship with the ex-Soviet Union and so on. But also Western European countries also have this tendency to orientalize Eastern Europe.

There are many different perspectives on China within what we refer to as Central and Eastern Europe. It's a spectrum. On the one side of the spectrum, we have for example the Baltic states and the Visegrád Four, which is Poland, Czech Republic, Slovakia, and Hungary.

If we think about the perspective of these countries, for a long time China was seen as an opportunity given different development levels of Eastern European countries and Western European countries. Central and Eastern Europe wanted to catch up with what Germany or France or Italy have been doing for many years and past decade; with the BRI (Belt and Road
Initiative), 16+1 platform, it was this honeymoon period of expectation towards China.

There was a lot of political will, but China hasn't really managed to deliver and in retrospect that's very visible. Despite all these high-level meetings, BRI summits, Chinese experts, and also regional CEE experts traveling to China, we haven't really managed to build any kind of a coherent platform for cooperation between the region and China.

Simultaneously, we've seen all these geopolitical changes with Donald Trump in the U.S., we all know the story, but a couple of years later now we have a shift, both, I think within the CE region and also Europe more broadly from seeing China as an economic partner, but also a shift towards seeing it more as a strategic rival and also a threat, a systemic threat, related to how it operates, how China looks under Xi Jinping.

Eleanor M. Albert: Great. Francesca?

Francesca Ghiretti: I want to say a couple of things. The first one is the European Union has a lot of differences when it comes to approaches to China. There’s a reason why we have this sort of three-pronged approach that puts together partner, economic competitor, and systemic rival is because it gives you a lot of space to maneuver when it comes to your own national policy towards China.

At the same time, if you put aside for a moment the differences between the leaders of Germany and France, what you see is that approach wise, they do not differ that much in the sense that they're still seeking to optimize the economic relationship between their countries and China, while shifting in the political narrative. We’re still seeing that and we saw that with the visit from [Olaf] Scholz. We’re probably going to see that when [Emmanuel] Macron goes, and in part we saw that when Wang Yi was in Paris.

But sometimes it’s referred to as the periphery, which is anything but the other member states, that are particularly interesting is how important the countries in Eastern and Central Europe have become in shaping the European narrative and debate vis-à-vis China, especially after the invasion of Ukraine. Because otherwise, the other countries were a little bit slower… Now Wang Yi has proposed this peace plan [for Ukraine] and you still have quite a few countries in Western Europe sort of playing with the idea that it's not too bad, but you need still one more wake up call.

What we're going to be faced now in terms of the approach towards China is the policy of zero COVID is over. And that was the main push for many countries, and especially many businesses, to change their view and approach towards China. Now that is over, I'm afraid that there is a window in which things are not going to go back as they were before because we've seen a little bit more resistance from the usual charm offensive by the Europeans. We should be proud of that. 

But at the same time, I'm not 100% convinced that that will not work with the businesses. To be honest, they are a major player in how European countries shape their approach towards China. We have to be transparent about this because the relationship is mainly economic; they do play a major role.

Eleanor M. Albert: You provided a really good segue, because it's one thing to have countries with macro-level approaches in thinking about China, but it's a lot more complicated than that. There are a diverse array of policy areas through which China and European countries engage. We've talked a little bit about the economic portion and business relations are a massive facet of this regional relationship with China. What policy areas bind China to Europe? Are there certain economic sectors that are more important than others? Does that vary across countries? And then what are the wedge issues? Let's turn to Francesca first to dig into some of this and then we'll turn back to Alicja.

Francesca Ghiretti: I think there are very few policy areas that bind the European Union and China together. One of the main challenges that we face these days is when we try to look into a cooperative agenda. It's exactly the partner aspect of the relationship, and everyone struggles majorly. The one that everyone goes to immediately is climate. But then when you actually look into it, there is very little, even CBAM [Carbon Border Adjustment Mechanism], [it] is a major point of contention with a lot of global actors to be honest, but definitely with China.

One of the main issues that we have been facing for a long time is the technology for the green transition and how that would actually increase our dependencies on China. In the framework of the export controls imposed by the United States in October and now the discussion with Japan and the Netherlands, if indeed China is venting the idea of imposing its own export control on the technologies for photovoltaic (solar) panels, then you do see that even the areas where in theory we should be collaborating or the areas of collaboration on the agenda, what we see is again competition, if not rivalry.

The same goes with food security. We saw that at the beginning of the invasion of Ukraine. Same with health. The pandemic has taught us that these major global issues have not necessarily translated into cooperative agenda between the European Union and China.

Now, I don't want to be too pessimistic. I do still think that there are some specific areas within these broader frameworks where the two can find some small areas for collaboration. I'm one of those people, illusioned, it is an illusion to be honest, that in development and connectivity and very specific projects, there are areas where the two can try to collaborate. The past has proven me wrong multiple times. Even now, if we think about the debt relief issue and that renegotiation, we're seeing a lot of pushback from China, and even when the EU and China tried to collaborate for projects of connectivity within Europe, didn't work out too well. But one can still hope.

Eleanor M. Albert: Alicja, binding issues, wedge issues—where does your analysis take us?

Alicja Bachulska: One thing that we should also highlight is the difference between the actual interdependency between separate European markets—or even not necessarily markets but sectors of economy in specific countries—and China, and on the other hand, what some people who might not necessarily be following China very closely believe are these interdependencies or their actual projections of what China could potentially be if the political relations were better.

We are all very familiar with the narrative of the chance of Chinese market opening up to small- and medium-sized enterprises in Europe. In Poland, this has been a very lively debate about how we should create a strategy to have good, correct, friendly political relations with China in order to be able to open this huge mythical market, Chinese market. And the past decade, the whole 16+1 story, has been actually about exploiting this narrative on the side of local stakeholders.

For example, in Poland, that's producers of apples, milk products, so small or medium sized businesses that had really high expectations toward China, but were not really aware of the fact that China might not necessarily be interested in the same kind of corporation they were expecting.

There are so many myths and misconceptions about what China wants from Europe. And now because we have a very quickly changing perception of threat coming from China, we are just starting to realize that for example, the areas of cooperation that we might have seen as problematic—political corporations between Central and Eastern Europe and China—are not necessarily the actual places where this Chinese influence plays out most strongly.

Here I will point towards the German automotive industry, which is the usual suspect, but this is a dynamic that is not necessarily related to bilateral relations between different respective European countries, but rather about long-standing relationships that are built between national elites in specific sectors.

We still don't know how these relations will play out in the future and what kind of impact they will have on the long-term EU policy making towards China. And these are crucial. We have very different perceptions of threat within different countries, within different political and business groups, and it's a huge mess. I don't want to be too pessimistic, but overall, I definitely see that there is a shift towards being much more realistic towards China at the European level, if you look at the media, public debate. But if you really look at what people are saying in specific, for example, business groups, the story might be very different. And this is something that we also have to bear in mind when thinking about the future of China relation.

Eleanor M. Albert: On that note, I'm curious if you could both help us understand the role that the European Union plays in shaping a more regional relationship with China. This has always been the big question. You have this kind of supranational organization that is full of bureaucrats and has moved towards having a more empowered foreign service sector, right? All these countries that have their own priorities and interests, plus the European Union. How does policy towards China get worked out? What are the levers or the entities that steer the most influence in terms of shaping policy towards China within the EU?

Alicja Bachulska: It depends what level we want to look at [in] Europe-China relations. In [the] broadest terms, there is no one single coherent EU policy toward China. We don't even have many countries which have China strategies; that's the initial problem.

If separate, respective EU member states don't know how they want to approach China in the long term. It's very hard to have a discussion about how all European member states should deal with the challenge posed by China. Again, there is a lot of fragmentation; there is raising awareness. We can also see that these dynamics can be very, let's say, violent.

For example, we had the sanctions imposed on Chinese entities over human rights violations in Xinjiang. We've seen a very asymmetrical Chinese response. The European Parliament is currently, I think, one of the most vocal European entities when it comes to pointing towards certain problems in relations between Europe and China. And I don't see much room for maneuver to change this course.

For example now with Fu Cong, new Chinese ambassador to the EU, being very open about trying to bring back the Comprehensive Agreement on Investment (CAI) back to the table, but also suggesting at the same time that EU as a whole should drop any attempts to make Ukraine win the current war. Maybe some of our listeners are not aware of what [the] comprehensive agreement on investment is. [It’s] a long-awaited investment agreement between Europe and China that had been negotiated for seven years. The negotiations were finally concluded almost three years ago. Its ratification has been blocked by the European Parliament after the sanctions that I mentioned. This is a very symbolic issue. So we are talking about an agreement that was supposed to be win-win for both China and EU.

It had been negotiated for years. Right now, probably most of the things that were discussed in the process, throughout these years, are irrelevant, given the changes and the speed of changes that have taken place in China at the same time. So the China of the initial phase of CAI negotiations is not China of 2023. So even if you want to bring back the CAI on the table is still irrelevant to the actual challenges we are facing in our relations with China.

So I'm afraid that European Union is a great, great entity, and we have to remember about all the advantages that the whole institutional setup gives us. But at the same time, it's very slow. There are reasons why it's slow, and it's understandable, but at the same time, if you have to tackle such a big challenge and the challenge that is very quickly changing, just as China is, this is not very effective. I feel that this will still be one of the biggest problems when it comes to really creating any kind of collective response towards China.

Eleanor M. Albert: Francesca, on the role that the EU plays in the overall relationship?

Francesca Ghiretti: I’ll try to be a little bit more optimistic.  But before that, I think that the relationship at the moment is very well represented by the fact that as soon as China opened
[German Chancellor Olaf] Scholz went, and of course [European Council President Charles] Michel as well, but the level of engagement of China with the European Union always goes through Germany first.

That explains why often when it comes to France, for example, who in theory is the other major partner, France always tries to do things with the European Union. They did so in 2019 when Xi Jinping was in Paris. So having at the time [Jean-Claude] Juncker and while of course [Angela] Merkel and this time for the state visit of [Emmanuel] Macron asking [Eursula] Von der Leyen to join. They try to Europeanize the process, also for [their] own gains,but there is an advantage in Europeanizing the positive agenda so that you can then bring home national gains when it comes to the economic side of the relationship.

Eleanor M. Albert: Politics at every level.

Francesca Ghiretti: Yes, exactly. At the same time in Italy, I have experience firsthand how effective the European framework can be. For example, in 2019 [Italy] signed the memorandum of understanding and became the first G7 country to be part of the BRI [Belt and Road Initiative]. When we did an analysis of all the agreements and the wording that was used from the Italian MFA [Ministry of Foreign Affairs], so the bureaucracy, a lot of attention was paid to make it as embedded as possible in European wording.

So this is silly, of course. it didn’t prevent them from signing, but you do see that there is sort of a useful side of having a European position, even though it is very loose, even though large number of member states don’t necessarily follow it or support it the whole time. But it’s still useful.

Now this said, one big problem of the European Union influencing of the China policy of member states and of the EU itself is that large part of it is still driven by DG Trade [Directorate-General for Trade of the European Commission]. DG Trade has had, for the longest time, a positive agenda in the idea of opening the Chinese market, increasing trade, increasing investments. Now, of course they’re developing a little bit more the idea of how to manage overdependencies, protect economic security, etc., etc… But it is a 180-degree change for a body that was previously very much driving a very different agenda. Them driving a large part of the China policy, of course, creates some of the obstacles that also Alicja mentioned.

Second point is EEAS, the European External Action Service. They have a China desk. The number of people with actual China expertise background in there is very low. This obviously creates also an information gap. Of course, they have information we don’t have because they’re in the room. I’m not saying that we know more than they do about the processes. But when it comes to China, maybe we know a little bit more, and it would be best to have somebody in there with China expertise and the diplomatic expertise that they have.

And last point, the counterbalance to all of these would be to have a strong security community that is able to have a debate. I’m not saying we should do what the security community says we should be doing, but not having that strong counterbalance means that the conversation is the largely skewed on the economic and diplomatic side of things. And that shows.

Eleanor M. Albert:  In the European context, the EU is not the only regional entity, right? We’ve talked a little bit about 16+1 initiative. There was so much fanfare when that first rolled out to foster Central and Eastern European relations with China. In hindsight, was this an effective vehicle, and where does this dialogue platform stand today? It seems to perhaps be dying, be very sick. I don’t want to diagnose it with a medical condition, but it seems to be having some clear obstacles given the overall change in dynamic that the EU and other influential states are having.

Alicja Bachulska: Long story short, 16+1, or actually any number plus one, because there are less members of initiative.

Eleanor M. Albert: 14 now maybe, right?

Alicja Bachulska: Yeah. And I think there will be less probably. With Czech Republic, it might be next in line, but the initiative is dying a natural death, very slowly. But the direction is quite not good. Different countries have different calculations when it comes to either staying in the initiative or leaving it, which is related to different cost-benefit calculations.  

For example, the Baltic states, given what’s been happening with Ukraine and with Russia’s invasion, are now really focused on strategically reorienting completely towards the U.S. For them, exiting 16+1 at some point became a rather obvious option, especially given the fact that the scope of economic ties between them and China was really minimal. It wasn’t delivering, it hasn’t created any real changes when it comes to economic opportunities, but it was more of a political liability. In this context it was an easy choice.

On the other hand, Poland is a little bit more difficult to assess because it seems that the current government doesn’t want to rock the boat too hard. Also for China, Poland as a quite big country, it’s important for the PR [public relations] of the whole initiative for Poland to stay in it. But also there’s no substantial exchange between Poland and China, both bilaterally and within 16+1, happening at the moment. So they’re just staying in because it is there, but we’re not doing anything.

The situation is quite different in the Western Balkans and it has been different from the very beginning, from the onset of this format, because Western Balkan countries, which are not part of the EU, have very different economic opportunities when it comes to getting specific funding, for example, for infrastructure projects. And in this context of a very different legal and economic setup of the Western Balkans, China’s offer was, and has been, and still is quite attractive. So that’s the major difference. EU member states of the 16+1 have very different calculations and different options available, while Western Balkans don’t have these options.

That’s why China has been relatively successful when it comes to expanding its footprint both economically and politically in Western Balkans, especially in Serbia. Within EU member states of 16+1, we only have Hungary, which is rather an exception rather than the rule, with [Viktor] Orbán’s policy being openly pro-Russian and pro-Chinese, which now situates him in quite a particular position. In general, I think that 16+1 will remain with us for some time, but it’ll be a zombie format that China is trying to revive with certain groups of people.

One important thing to add is that quite ironically what China has managed with this format is to connect regional experts who were, prior to the existence of this format, they were very fragmented, they didn’t know each other, but over time, Beijing was organizing the 17, 16+1, think tank forums, bringing together many people from the whole region and networking them, but not necessarily in line with what Beijing had envisioned when they were planning this kind of event. So definitely there is this people-to-people development of relations, and people have really effectively networked to be more aware of what China is actually doing here in Central and Eastern Europe.

Eleanor M. Albert: That’s probably an unexpected spillover effect that they definitely didn’t anticipate. I want to turn a little bit to the U.S. and its presence. How does the U.S.’s relationship to Europe shape European perspectives and views on China?

Francesca Ghiretti: The U.S. is a major variable in how the European Union, and especially the Europeans, approach China in both ways, to be honest. So in one way is almost negative. If we look at France, often the U.S.-France relationship is a complicated one, and therefore France tries to do not the opposite, but something different from what the U.S. is doing… In that regard, it has a sort of negative impact, if you will.

But the major impact is definitely in terms of having a positive spillover…  At the end of
the day, more or less, the U.S. gets what it wants out of the European approach to China. I'll explain what I mean...

First of all, [let’s] take export controls, the October export controls on semiconductors to China. Without the U.S. coming to the Netherlands and starting that conversation, it is very unlikely that we would have ever faced the question of "What do we do with our policies when they need to target China? How do we approach China specifically when it comes to economic security policies?” Without the U.S., we wouldn't have the economic security agenda that we have today, but also because without the Trump administration, probably we wouldn't have an anti-coercion instrument. So originally it was born out of defending ourselves from the Trump administration.

The second example of how the U.S. influences positively Europeans is, I would take Italy and the current government of Giorgia Meloni. The government is composed and the populist parties that are part of it, you would've expected them to have very different positioning, not only towards China, but also towards the Ukrainian conflict, the Russian invasion of Ukraine. Because from the beginning they needed the support of DC and they needed to have closer relationship with Washington, their foreign relations agenda has been massively influenced.

Eleanor M. Albert: It's not all warm and fuzzy: sometimes there have been feelings of American strong-arming. There was a lot of debate about this when it came to Chinese technology, Huawei in particular, ZTE issues. It's not to say that there aren't economic security considerations; it's just whether the U.S. is right to force wholesale adoption and appreciation of the DC perspective. How that plays out? How does it get filtered through domestic considerations?

Alicja Bachulska: Again, Poland might be a good case study of this kind of process. This reframing of the Polish position toward China and CEE's position towards China, being more assertive or more realistic, there were at least two factors that influenced this process.

First of all, there were definitely domestic considerations and the fact that China hasn’t delivered.

But there was Trump’s administration taking a very different turn towards China. This definitely had some impact on the way China is being perceived in Poland. I don't know whether you remember, but a month after Meng Wanzhou, the CFO of Huawei, was detained in Canada, in Poland, in Warsaw, the Huawei regional manager was also detained on allegations of spying for China. This was back in early 2019. His trial is still ongoing. So we don’t know what kind of evidence there is to support or knock his case, but definitely the kind of emotional load associated with such a big scandal. Because in the end, it was a scandal, it was an alleged espionage scandal [that] has translated into a debate about strategic implications of cooperation with China, including in high tech, 5G, and so on. Huawei is very active here in the region, lobbying for its interests.

But overall, Poland is extremely pro-American and it has been, with the U.S. being the only security guarantor of Poland, and especially now in the context of the war in Ukraine. Poles love Americans, really. This is something that is very visible at the level of domestic debate. There are some fringe political parties that are anti-U.S., but these are also most of the time seen as pro-Russian people and they're marginal. They don't really have a lot of impact on what's going on in Polish politics. Again, I think this might be an exception, so I wouldn't really extrapolate when it comes to other European countries. But definitely, the U.S. factor is especially important.

Francesca Ghiretti: I mentioned the export controls and I mentioned them in a positive framework. It is not positive that the United States forces the European hand when it comes to this issue. At the same time, I think they force us to face issues that we would be presented with anyways. It is important that somehow the debate is triggered; whether then we end up in the same position as the U.S. or not is a different story, but is often thanks to the U.S. if we manage to start this sort of conversation.

Eleanor M. Albert: It forces the Europeans into a debate that it can then figure out and manage on European terms… To conclude, I wanted to ask each of you, if you had to pick of just one aspect in Sino- European ties to watch in the short to medium term, what would it be and why?

Alicja Bachulska: I'm personally very interested in what we refer to as discourse power, China’s discourse power - the way China is trying to influence the international debate about its own rise, its own role, and its implications for the global order. We often talk about Chinese disinformation, but we're not necessarily at the level of civil society, where “what Chinese disinformation is” and whether we should be talking about information manipulation, how it actually looks, and where we can find it in our local context. This is something that will be more and more important.

China officially wants to build its discourse power all around the world. And it hasn't been that successful so far, but it's definitely on the learning curve, trying to localize its narratives, its approaches, the way it's trying to build bridges to nurture CCP [Chinese Communist Party] friendly elites. We really have to understand these dynamics to be able to also understand how China is trying to influence Europe. So, definitely discourse power and information manipulation.

Eleanor M. Albert: Great. Francesca?

Francesca Ghiretti: The most important thing that we need to watch in the next few months, years is how the business community moves. What I mean and what concerns me a little bit is that we hear a lot of businesses thinking about a model that is “we work in the rest of the world for the rest of the world, and then we work in China for China,” and they propose this as a solution to the many issues that we have in terms of overdependencies and an unreliable policy environment within China. But it's not a solution. If we take the extreme scenario, which I hope it will never happen, in which we actually have to have an exchange of sanctions, heavy sanctions between the EU and China. If that is the scenario, whether you are in China for China or whether you are in China for Europe, you're still going to find yourself between a rock and a hard place.

The views and opinions expressed are those of the speakers and do not necessarily reflect the position of Georgetown University.

Outro

The U.S.-China Nexus is created, produced, and edited by me, Eleanor M. Albert. Our music is from Universal Production Music. Special thanks to Shimeng Tong, Tuoya Wulan, and Amy Vander Vliet. For more initiative programming, videos, and links to events, visit our website at uschinadialogue.georgetown.edu. And don’t forget to subscribe to our podcast on Apple podcasts, Spotify, or your preferred podcast platform.