The relationship between China, Russia and Europe

 John Lough: As we’ve heard from the panel and we can read in the NEST Centre report, the Russia-China partnership is founded on a congruence of interests on the part of two powers that are trans­ac­tional and oppor­tunistic. In an increas­ingly unstable world, it looks like a solid partnership, at least, for now, even if its asymmetry is growing to the disad­vantage of Russia. There is also no shortage of contra­dic­tions in their interests and the way they pursue them. Given the fluidity in global affairs at present, and the extreme unpre­dictability of US foreign policy, can you see shifts of power that could change the dynamic between Beijing and Moscow? 

Ralf Fücks: First, I would underline the congruence of interests between Russia & China, despite their mutual mistrust and Moscow‘s deeply rooted fear of Chinese supremacy over Russia. They may not build a strategic alliance, but for now and the foreseeable future, both regimes share common strategic interests. First and foremost: Breaking US-political, military and economic dominance and replacing the global liberal order by what they call a multi­polar world. The defining element of this brave new world are not rights and rules, but power. Maybe China wants to establish a new normative order — but defin­i­tively according to its own rules.

Neither Beijing nor Moscow sees Europe as an equal. Even worse: They see us as a bunch of declining small and medium nations. They share a lack of contempt for liberal values — and for European democ­racies as the guardian of the liberal idea. This morning, on the stage of the MSC, the Chinese Foreign Minister rejected the notion of strategic rivalry between Europe and China. But this is not just a pragmatic relationship. The systemic conflict between liberal democracy and author­i­tar­i­anism is the under­lying dynamic.

With regard to the US: For now, Trump is assisting Putin and Xi in achieving their wildest dreams:  Demol­ishing the inter­na­tional order essen­tially created by the US; separating the US from Europe (which was always the strategic goal of Russia) and discred­iting the US as a reliable ally all over the world. But I doubt, if Moscow and Beijing would risk their alliance in exchange for a realignment with Washington. Russia and China remain strategic rivals to the US. This will not change in the foreseeable future.

John Lough:  Does Europe have agency? The EU is under pressure from three direc­tions: It has lost the US security blanket and faces a US admin­is­tration that regards it as a hostile actor. It has broken off trade relations with Russia at consid­erable cost and is now having to carry substan­tially more of the weight to keep Ukraine in the fight and ensure that it remains a viable independent state. At the same time, the EU is trying to re-balance trade with China and de-risk in areas criti­cally important for security. Is Europe really as weak as it is being made to feel by China, Russia and the US?

Ralf Fücks: If we take into account Europe’s economic and military potential, we are definitely stronger than Russia and could also act confi­dently toward the US and China. But I’m afraid that we are still a long way from realizing this potential. Europe is not a political entity, but a colourful bunch of nations with different and sometimes conflicting interests and political prefer­ences. Econom­i­cally, we are in danger of being left behind by both China and the US. With a few excep­tions, Europe lacks dynamism, innovation, and entre­pre­neurial spirit. And, above all, we lack political determination.

Nowhere is this more evident than in Ukraine. Although Europeans are now almost single-handedly providing military and financial support to Ukraine, we are not sitting at the table when the Americans negotiate with Putin and Zelenskyi about ending the war. And we have still not been able to put Ukraine in a position of military strength by a joint European effort. After four years of war, we are still in the ‘too little, too late’ mode.

There is also a lack of strategic consis­tency when it comes to China. Instead, European govern­ments and the Commission are pursuing a zigzag course: On the one hand, they proclaim a policy of de-risking, reducing our depen­dency on China with regard to critical raw materials and technologies, and the protection of core European indus­tries against Chinese predatory compe­tition. At the same time, in the face of Trump’s threats, European leaders are making pilgrimages to Beijing to improve bilateral relations. Suddenly, China is seen as the lesser evil compared to Trump’s aggressive behaviour.

I consider this a fatal mistake: Just because the Chinese leaders appear more rational than Trump, that does not make them a reliable partner. Beijing is seeking economic and political dominance; depen­dency is weakness. Instead of jumping out of the US frying pan into the Chinese fire, we must rely on our own strengths and strike new alliances with like-minded partners around the globe.

Germany’s role

John Lough: Germany — It’s easy to see a dark scenario of continued low growth despite the fiscal stimulus from increased defence spending, and the strength­ening of the far right and the far left that will make governing the country increas­ingly difficult. Germany’s business model has been progres­sively upended over the past five years. Does the German political class see the scale of the change required? What should the strategy be vis a vis China, Russia and the US?

Ralf Fücks: Well, it is now widely accepted that Germany needs a U‑turn (‘Zeiten­wende’) in its security policy. But when it comes to the equally urgent economic take off, a large part of society and politics is still in a state of denial. Our economy has been stagnating for three years, investment is signif­i­cantly lower than in the pre-COVID years, produc­tivity stands still, and Germany’s capital account is negative. More capital is flowing out than is being invested from abroad.

We are losing compet­i­tiveness, especially to China, which is attacking German core indus­tries: automotive, machine engineering, and chemicals. This calls for a bold move: Companies’ energy and labour costs must be reduced, bureau­cracy must be cut back, and we must catch up in terms of digital­ization and infra­structure. Chancellor Merz under­stands this and says so, but his agenda is being trans­lated too slowly into real policy.

Up to now, the German economy has been heavily focused on China and the US. Added to this were the special relations with Russia. In future, we will need to diversify on a global scale, deepening our exchange with Asia, Latin America, and Africa. The European single market remains the basis of our economic strength. National barriers must be dismantled here, including in the financial sector. Macron is right when he talks about a “make or break” moment for Europe. Either we quickly build up our strength both econom­i­cally and in terms of security policy, or we will become a punching ball for the big powers.

Germany and Russian sanctions

John Lough:  We hear occasional noises from the German indus­trial lobby about the desir­ability of restoring gas supplies from Russia when the war is over in Ukraine. These are arguments based on economic pragmatism rather than the old vision of business relations constraining the Kremlin’s great power instincts. Wholesale gas prices have dropped signif­i­cantly since the early days of the war, but they’re still over 30% higher than in 2021. It’s difficult to see how NordStream2 can be brought into operation any time soon given the first Trump administration’s opposition to it. Do you think there will be a push to normalize Germany’s relations with Russia regardless of whether there is really an end to the war in Ukraine?

Ralf Fücks: I am reasonably confident that there will be no return to the old energy partnership with Russia, even after the end of the war in Ukraine. The shock of 2022 runs too deep.

After a ceasefire, there will certainly be calls to revive business with Russia – a demand that is already being made by the far right and the far left. But the majority of the political class and business leaders do not want to become dependent on Moscow again. With the construction of several LNG terminals, we now have a diver­sified gas supply. NordStream is no longer needed.

The key point is to link the lifting of sanctions against Russia to clearly defined condi­tions. A ceasefire alone is not enough. As long as Russia continues to occupy Ukrainian territory, there can be no ‘business as usual.’

We should also talk about additional demands to be made of Putin, such as the withdrawal of Russian nuclear weapons from Belarus and the withdrawal of Russian troops from Georgia. If Russia wants to do business with Europe again, it must accept the European peace order.