There are many China's think-tanks' analyses on the Russia-Ukraine cross-border conflict and its impact upon EU economies and geopolitical dimensions. There are also European analyses on EU's push for strategic autonomy, under EU Global Strategy including by the European Commission.
In the beginning, Chinese experts tend to agree that Russia’s incursion of Ukraine may have initially created a certain amount of unity among EU member states and increased their desire for greater strategic autonomy.
However, as the conflict progresses, there are various factors that have been preventing this quest from moving forward. Two oft-cited factors have been: on the one hand, the EU's greater dependence on the US; and on the other, the increased influence that US-leaning countries have now acquired within the EU since the outbreak.
The general understanding in China appears to be that so long as the Russo-Ukrainian situation is not resolved, then EU's dependence on the US will continue and the prospects for greater EU strategic autonomy will remain bleak.
In other words, this scenario prospect is not so often welcomed in China from the geopolitical dimension.
China's assessment and most Chinese analysts view of the EU’s economic and political prospects - as seen from afar -are pessimistic.
This week, we choose an article by Zhang Jian (张健), who is the director of the Institute of European Studies at China Institutes of Contemporary International Relations (CICIR) which is a think tank that is considered to be linked to China’s Ministry of State Security.
It is, therefore, not unusual - or is it a coincidence - that a long version of this particular piece was first published in December 2022 before the FEPS Publication in March 2023. and then an abridged edition was later reposted.
There shall be a summary for those who only needs the gist of Zhang Jian's reflection
Further, only the first two parts of the abridged version shall be reproduced here for the time being.
Summary:
On the EU’s economy:
Prospects are bleak, de-industrialisation is set to continue and protectionist policies are expected to increase.
Germany’s economic woes and their potential spill-over effect on the eurozone are particularly worrying.
Debt levels within the EU are rising and are becoming increasingly unsustainable.
On the EU’s strategic autonomy:
Dependence on the US (militarily, economically and with regards to energy) has increased and will probably continue to increase for the foreseeable future.
“Strategic autonomy” is no longer a buzzword in Brussels.
The emergence of a third pole within the EU consisting of pro-US countries from eastern and northern Europe will continue to hamper the EU’s quest for strategic autonomy.
On EU integration:
Economic tensions between northern and southern European countries combined with political tensions between eastern and western European countries are set to increase.
Such rifts, economic difficulties, rising populism and a weakened Franco-German tandem are weakening cohesion among member states and hindering further integration.
With a weaker economy, Germany is expected to become more focused on its own national interests and less willing to support France in its efforts to reform the EU.
On the EU internationally:
The EU’s image and influence are declining.
The EU is losing its balancing role in international affairs and risks becoming a mere follower of US policies.
Geopolitically, the EU and its member states are set to remain focused on their neighbourhood and their ability to project power globally will continue to decline. This also applies to the Indo-Pacific which is increasingly becoming a mere “bargaining chip” for the EU in its relationship with the US.
“The Ukraine crisis is the biggest geopolitical event to hit Europe since the Cold War. Will it accelerate or undermine the future development of the EU? This is both an important theoretical and practical question. This paper will attempt a preliminary analysis of the EU’s future development prospects over the next 3-5 years using three dimensions: the economy, strategic autonomy and integration.”
I. Prospects for economic development
“In view of the relevant ppdevelopment trends, the Ukraine crisis will have a more serious long-term effect on the EU than previous crises, such as the debt crisis.”
Long version: Zhang predicts that “economic development in the EU will be extremely difficult for the next 3 to 5 years at the very least.”
“First, the EU, and especially Germany, may experience a new round of de-industrialisation. The complete rejection [完全排斥] of Russian gas has meant a huge, structural change for the EU and European countries. The consequences are obvious: not only are a large number of energy-intensive companies cutting production or closing down, but the whole manufacturing sector is also experiencing higher production costs and reduced competitiveness due to higher energy prices. To make matters worse, the US not only has low[er] energy prices, but it is also able to provide more subsidies than the EU thanks to a greater availability of capital. This will have a strong siphoning effect [虹吸效应] on the EU manufacturing industry.”
“Second, the eurozone and Germany could enter into an era of deficits. In the first three quarters of 2022, the eurozone recorded a trade deficit of 266.6 billion euros, compared with a surplus of 129.2 billion euros over the same period in 2021. It is very likely that 2022 will be the start of an era in which Germany and [the rest of] the eurozone will most likely face a new situation of long-term trade deficits. The first reason for this is that the price of energy imports will remain high. The second is a shrinking market after the loss of [its trade relationship with] Russia. The third is the depreciation of the euro and a decline in manufacturing competitiveness. A trade deficit is not necessarily a negative phenomenon but for a currency like the euro, which is not backed by a central government, it will inevitably increase financial risk in the eurozone.”
“Third, the spill-over effect of the [aforementioned] risks in Germany will gradually appear. The short and long-term impact of the crisis in Ukraine on Germany is very pronounced. Its economy is already on a downward trend. Germany's economic problems will first affect neighbouring countries such as Poland, the Czech Republic, Hungary and Slovakia, which are deeply enmeshed in Germany’s supply chain. When one suffers, the rest suffer too; when one triumphs, the rest triumph too [一损俱损,一荣俱荣]. They will also affect the eurozone’s stability. If Germany were to follow Italy’s path (economic stagnation, rising debt, political instability), this would mean the end of the eurozone.”
“Fourth, debt risks will become more pronounced. Even before the outbreak of the Ukraine crisis, European countries’ debt-to-GDP ratios had increased significantly. After the Ukraine crisis broke out, European countries introduced huge subsidies for businesses and the [broader] population. Much of the financing came from unsustainable debt. Paradoxically, [despite] the expansion of spending and borrowing, the EU economy is experiencing a new downturn or even recession. In other words, it will be difficult in future for EU countries to reduce their debt levels through economic growth. The debt burden of EU countries, especially for more vulnerable countries, will become even more difficult to sustain.”
II. The prospect of strategic autonomy
“The crisis in Ukraine has rendered the already unpromising prospects of the EU's strategic autonomy even bleaker.”
“In the field of defence, the EU's aspiration [意愿] for strategic autonomy has clearly declined. Central and Eastern European countries, especially Poland and the Baltic states, have become more dependent on the United States and NATO. They have asked the US to establish permanent military bases and to increase its military presence on their soil. The neutral countries of Northern Europe, Finland and Sweden, have [now] applied to become NATO members.”
Long version: Zhang defines EU strategic autonomy as “breaking away from US control and gaining the power to make strategic decisions on its own.” He continues by expressing surprise at the fact that since the outbreak of the Ukraine crisis the buzzword “strategic autonomy” rather than increasing in frequency has actually “almost disappeared from internal discussions within the EU.”
“Most of the increased military spending by European countries is still likely to go to the US rather than European countries’ [own] military industries. The first outlay of Germany's 100-billion-euro military modernisation fund was for the acquisition of 80 US F-35 fighter jets. This is clearly not a good sign for [European] strategic autonomy. Most EU member states, which still purchase American weapons in order to express their loyalty to the US, aim to win US goodwill rather than build the EU’s defence autonomy.”
Long version: Zhang talks about the risk of this becoming a “vicious circle” in which rising US weapons sales to Europe will end up strengthening the US’s defence industry at the expense of Europe’s.
“In the economic sphere, the EU's capacity for strategic autonomy is also trending downwards in the long term. Over the past few decades, the contrast in economic power between Europe and the US has been moving in favour of the US In 1995, the EU's GDP was $8.3 trillion, accounting for 26.9% of the world economy, while the GDP of the United States was $7.64 trillion, accounting for 24.7%; in 2020, the EU's GDP was $15.19 trillion, accounting for 17.9% of the world [economy], and the GDP of the United States was $20.95 trillion, still accounting for 24.7% of the world economy. The economic disparity between the EU and the United States is widening.”
“The damage of the Ukraine crisis on the EU economy far exceeds the damage done to the US economy. This will accelerate the difference in economic power and the two-way dependence between Europe and the US The EU will become more and more dependent on the US, while the US will become less and less dependent on the EU, such as in the fields of security and defence. The economic relationship between the US and Europe will become [increasingly] unequal.”
Long version: Zhang highlights the EU’s loss of the Russian market, the weakening of the euro and Europe’s growing dependence on American gas as further increasing the EU’s dependence on the US. He worries that rifts in the Franco-German relationship may also hamper the EU’s push towards greater strategic autonomy.
“The changing power landscape within the EU is also not conducive to building strategic autonomy. The Central and Eastern European [hereafter CEE] as well as Nordic EU member states have traditionally been more pro-US and [more] enthusiastic in their embrace of NATO. They are suspicious of or even opposed to the EU’s strategic autonomy for fear of angering the United States. The outbreak of the Ukraine crisis has allowed these countries to occupy the moral high ground. In their view, the crisis proves that their way of seeing things was correct and that France and Germany’s approach was wrong. That is why these countries [now feel] more justified [理直气壮) in criticising France, Germany and others.”
“At present, the voices of the CEE and Nordic countries in the EU have become significantly louder. Their political stance [政策主张], such as being pro-US and anti-Russia [亲美遏俄] is becoming the mainstream in the EU. As long as the crisis in Ukraine continues and the confrontation between Europe and Russia remains unchanged, the hard-line policies of the CEE and Nordic countries will remain the prevailing EU policy towards Russia. The US and NATO will therefore continue to guide the EU’s foreign and security policies, thus making it difficult for the EU's idea of strategic autonomy to become the mainstream.”
Long version:
Zhang sees France and Germany as having a more pragmatic stance towards Russia but unable to impose their views due to “political correctness” (政治正确).
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