- China's push for global economic and technological dominance has left Europe pulled between China and the continent's long-time partner, the US.
- The coronavirus pandemic makes it clear that Europe, particularly Germany, is running out of time to choose between the US and China.
- The democratic values of the US compared to the authoritarian values of China make the choice clear.
- Mathias Döpfner is CEO of Axel Springer SE, the parent company of Insider Inc.
- This is an opinion column. The thoughts expressed are those of the author.
- Visit Business Insider's homepage for more stories.
Crises always have a habit of clarifying things. The coronavirus crisis is no different.
Once a treatment for the virus has been found, the debates about shutdown and easing restrictions have passed, and the recession has reared its ugly head, nothing less than the world order itself must be clarified. Or to be more specific: the matter of alliance. Where does Europe stand? On the side of the US or China?
Let us first look at a few assumptions and a few facts. America, the democratic world power, is currently governed by a narcissistic president — a man seen to be vulgar, uneducated, and with a volatile character who lacks any sense whatsoever for institutions. Half of Americans and three quarters of Europeans have no respect for him.
And yet, whether by accident, thanks to good advisers or a keen instinct, this president has managed to make some correct decisions. He lowered taxes to stabilize the US economy, withdrew from the Iran nuclear deal, supported Israel, increased pressure on Europe to show more solidarity in NATO funding, and pressured the dysfunctional WHO.
China, on the other hand, the non-democratic world power, is currently controlled by a president with a measured vanity — a man who is supposedly sensitive, highly educated and cultivated, a personality who thinks and acts with a highly consistent and long-term perspective demonstrating great sensibility for the interests of China's unitary state.
And because Xi Jinping is said to look a little like Winnie the Pooh, the bear from the eponymous children's book, Chinese censorship forbids the use of either the name or the image of Winnie Pooh. Anyone who explicitly criticizes the government is punished.
Global supremacy thanks to digital surveillance
Xi Jinping has been General Secretary of the Chinese Communist Party and Chairman of the Central Military Commission since 2012, and President of the People's Republic of China since 2013. In 2018, he lifted all limitations on his term of office, meaning he could continue to rule China for life.
He is a politician who, more than anything else, has continued and accelerated the economic reforms that were first introduced by Deng Xiaoping in the 1970s and reached new dimensions under Jiang Zemin. And thanks to tightened digital surveillance, he has been able to push China towards a position of global dominance as part of a seemingly friendly and peaceful international expansion.
The key date of this strategy is December 11, 2001, when China was accepted as a full member of the WTO following 15 years of negotiations. A great decision for China. But perhaps the biggest mistake made in recent history by the western market economies.
Since then, the US's share in the gross world product (GWP) dropped from 20.18% in 2001 to 15.03% (2019). Europe's share dropped from 23.5% to 16.05%, a drop of 7.45 percentage points in less than two decades. While China's share increased from 7.84% to 19.24% in the same period, with an average annual growth rate of around 9%.
The big mistake was to expose democratic market economies to a non-democratic state capitalism that exploits easier trading and competitive conditions without subjecting itself to the same rules. Asymmetry instead of reciprocity was the result.
The process of "change through trade" actually did take place. However, not quite in the way expected by the West. China has become even more authoritarian and economically stronger, while the West has become weaker.
What is our conclusion from all this? America has clearly decided to pursue a policy of 'decoupling' from China. If Europe does not want to see its freedom subverted by Beijing, it must decide which of the two countries to ally with, and it must do so soon.
We are told time and again that it is not a case of either-or, that it's about having the best of both worlds. The opposite is true. There is no need for finely crafted rhetoric here, we need to make a fundamental political decision. China or the US. It is no longer possible to go with both. The issue has come to a head under Trump. But it is ultimately not about him.
The truth is that US policy towards China would likely not change if the Democrats were in power. The issue of China is now a bipartisan one.
House Speaker Nancy Pelosi does not cede an inch to the US President. And yet, responding to my question at the Munich Security Conference whether she agreed in substance to Trump's China policy, she answered they had "agreement in that regard" to the surprise of everyone present.
Pelosi described China as a "government that does not share our values" and spoke of an authoritarian "form of aggression." Many in the room that day do business with China. It suddenly seemed a little naïve that they hoped a Democrat in the White House might be more China-friendly.
A Democratic president might distance the US distance even further from China, despite Trump's attempts to discredit the presumptive Democratic presidential candidate Joe Biden by accusing him of being soft on China. "China wants Sleepy Joe soo badly" the president cajoled on Twitter. But there is little evidence to support this.
Biden was one of the first and few international politicians to speak out against the Chinese re-education camps holding hundreds of thousands of Uighurs.
The rise of China to become a global economic power is increasingly seen as a threat to US interests. A friend of the enemy soon becomes an enemy itself. If Germany decides to expand its 5G infrastructure with Huawei, that will place an enormous strain on transatlantic relations. It would be a turning point, as America could no longer trust Germany.
The transatlantic alliance would be at risk
Washington has made it clear that there will be no cooperation on intelligence matters with the secret service of a country that allows highly sensitive data to end up in the hands of the Chinese Communist Party.
If Washington gave up its close intelligence cooperation with Europe, this would have devastating consequences. A decoupling from the US would hit us much harder than a decoupling from China, both in terms of our economy and security.
Decoupling Germany and the US would mean relegating to the dustbin of history the alliance that helped rebuild a democratic Germany after World War II, that secured supplies to the city during the Berlin Blockade by organizing the airlift guaranteeing West Berlin's survival, and which directly and indirectly made German reunification possible.
Europe has been avoiding the alliance question for a long time, but is the time to make that decision. This does not directly have to do with the coronavirus crisis. And it certainly has nothing to do with the question of where the virus originated.
The crisis focuses the way we look at long-standing dependencies, even those in so-called vital supply chains, how we see fundamental differences in communication and crisis management, and our regard for what is ultimately a completely different concept of humanity. Employees from the Robert Koch Institute estimate that China kept the virus secret during very decisive weeks, then played it down and, by doing so, facilitated its spread worldwide.
Companies in the crisis at bargain prices
However, it is the global recession unleashed by the pandemic that has brought vital questions to a head. Should we allow the state capitalism of a totalitarian global power to continue to infiltrate or even take over key industries like banking (Deutsche Bank), automotive (Daimler, Volvo), robotics (Kuka) and trading hubs (Port of Piraeus)?
That is precisely why the alliance question must be clarified now, and fast! The current crisis is massively weakening the European economy, which could very soon place us before extremely unpleasant decisions: Should we offer our companies to China in the post-corona era for bargain prices driven downwards by economic depression? Our should we finally draw a clear line in the sand?
If we do not assert the principle of true reciprocity now — that is, China can only do here what we are allowed to do in China — then we never will. If we do not manage to assert ourselves, then Europe could suffer a similar fate to Africa, on a gradual descent towards becoming a Chinese colony.
Or, to put it in Henry Kissinger's words: If America and Europe do not manage to become a community of interest again, America will become a giant island. And the European Union will become "an appendage of Eurasia."
However, Europe has failed so far to clearly state where it stands, preferring to play piggy in the middle, able to tip the scales either way. Even believing its opportunism to be a sign of independence and courage. However, Europe will never be able to hold onto its position as everybody's darling. When it comes to questions of world order, you cannot have your cake and eat it.
Europe's economy likes making deals with China and does not want to be interrupted in those pursuits. Politicians are dithering. The Italians have even been willing to subjugate themselves to China's ridiculous euphemism of the "New Silk Road."
We increasingly hear words of admiration in Europe about the speed and efficiency of the Chinese market economy, the rigorous nature of its crisis management. All the time gladly ignoring the fact that China's successes rest on a highly perfected system of digital surveillance that translates the perversions of the KGB and Stasi into the 21st century.
Europe has two options in terms of an alliance. It can continue to expand on the traditional transatlantic alliance despite Trump, including the explicit and closer involvement of a post-Brexit UK and other allies such as Canada, Australia, Switzerland and the democratic countries of Asia. Or it can decide in favor of closer economic ties to China, bearing in mind the economic ties are always political ties as well.
If this latter path is chosen, then we might all wake up one day to find ourselves in a gruesome society, on the side of China and the states loosely associated with it — like Russia, Iran and other autocracies. A shifting world order.
Economic relations with China might seem harmless to many Europeans today, but they could soon lead to political dependence and ultimately to the end of a free and liberal Europe. The European Union has the choice. But above all Germany, Europe's economic motor, has the choice.
Should we make a pact with an authoritarian regime or should we work to strengthen a community of free, constitutionally governed market economies with liberal societies? It is remarkable that German politics, with its love of moralizing, seems to throw its values out the window when dealing with China. What is at stake here is nothing less than what kind of society we want to live in and our concept of humanity.
Germany and Europe should decide to remain with the US and pursue a strict process of decoupling from China. The exact details of this decoupling will be one of the most interesting questions of the future.
It would happen late, but not too late. It would be expensive, but not too expensive. Germany, for example, has an annual trade volume of around 200 billion euros with China. All German trade is valued at 2.4 trillion euros, so the loss of Chinese trade would be massive, but not insupportable. The coroanvirus recession is already bringing Germany to a new and devastating bottom line, but that gives us a unique opportunity to get us back on the right track.
The question as to which leader — Trump or Xi Jinping — is presented by the media as a more likeable figure is of little import in this decision. And there is no question that the American president is making it difficult for us.
But the transatlantic alliance, our community of interests and values that has grown historically over time, should be more important in the long term than our widespread frustration about the current American administration. We must concentrate on the post-Trump era. For all its weaknesses, America is still the free world's largest and most successful power.
Just as misleading are references to the fact that America also violates data protection rights, or the principles of the rule of law, that it disregards human rights and makes many other terrible mistakes. There is a difference: China has no data protection for its citizens at all, no rule of law. China has no opposition in parliament, no freedom of the press, no freedom of opinion. And China has no human rights as we understand them.
Democracy dies in darkness
When both sides make mistakes, that does not mean that the truth automatically lies somewhere in the middle. It depends on the context in which these mistakes are made, whether they can be called mistakes at all or recognized as such.
States need a suitable constitution as a self-correcting mechanism. Democracy may die in darkness, but dictatorship thrives in it. In America, people laugh at their president. Something that is forbidden in China. And the authoritarian power of the latter even stretches as far as Germany. When the Daimler Group (whose biggest single shareholder is Chinese) quoted the Dalai Lama – an enemy of the state in China – in an Instagram post, the company's CEO Dieter Zetsche had to apologize twice to the government in Beijing.
Is that Europe's future?
If current European and, above all, German policy on China continues, this will lead to a gradual decoupling from America and a step-by-step infiltration and subjugation by China.
Economic dependence will only be the first step. Political influence will follow. In the future, whoever dominates the field of artificial intelligence will dominate first economically and then politically.
At the present time, this race is between the US and China alone. China's great advantage is that it does not have any regulation as a democratic corrective. Whatever serves to strengthen the unitary Chinese state is allowed. This makes the Chinese state more unscrupulous but, more than anything, it makes it faster.
It is no small probability that Beijing will eventually overtake Silicon Valley. This is where European research excellence can become a decisive factor. On what side do we want to use it?
In the end, it is quite simple. What kind of future do we want for Europe? An alliance with an imperfect democracy or with a perfect dictatorship? It should be an easy decision for us to make. It is about more than just money. It is about our freedom, about Article 1 of Germany's Basic Law, the greatest legal term that ever existed: human dignity.