A 100 Euro banknote is placed on top of a 100 yuan banknote in this picture illustration taken in Beijing, November 7, 2010. Photo: REUTERS/Petar Kujundzic
Originally appeared at DWN (German Economic News), translated by Karin exclusively for SouthFront
The former German ambassador to the People’s Republic of China, Michael Schaefer, sees the “New Silk Road” of China representing a major opportunity for Europe. He warns about bringing in FTA (free trade agreements) as geostrategic instruments against China and other BRICS countries.
German Economic News: Is China the new emerging world power? And do the US, Canada and the EU need an agreement like TTIP or CETA, to be able to compete better with China?
Michael Schaefer: China has undergone an impressive development in recent decades. Hunger could be successfully combated; nearly 400 million Chinese have moderate prosperity. But this also means that nearly one billion people still live between poverty and low income. I think that it will take at least two, probably three generations, until the level of prosperity in China is even remotely comparable with Western Europe.
This does not mean that China will not catch up more quickly in some areas to our development. The Middle Kingdom has, for example, progressed from an early industrialized to a digitized economy more quickly than many western countries. It has hereby skipped certain stages of development. This is important for the question of what role China will play in the 21st century. I am convinced that the distribution of power in the 21st century will not be solely determined by military capabilities, but of economic and social strength, especially of rights to standards and licenses in the innovative sectors. The digitization will play a central role. Chinese companies such as Ali Baba and Tencent have been strategically here well positioned while this development in Europe has been lagging behind. The Chinese always think strategically, in a long -term, often over generations. They are business partners who are tough trying to assert their interests, but after my experience, they are usually also fair.
The project of the “New Silk Road” – a maritime way from China via South Asia to Africa, and one over the northern land route from the Middle Kingdom to Central Asia and Iran to Europe -which China has launched now, is a good example of the strategic thinking and actions of the Chinese. The project is, which is also very Chinese, off high symbolic significance. It builds on to the ancient trade routes between the Middle Kingdom and Europe. But what seems even more important: It has an inclusive character. This means that every government who would like to, can actively participate in the development of the concept and its implementation. It holds in particular for Europe great opportunities. We should not obstruct these by assuming the Silk Road project to be a hegemonic intent of Beijing. We should take the offer of China seriously and test it through concrete cooperation.
Michael Schaefer
This means vice versa that we should not allow the western trade relations – Keyword: TTIP, CETA or TPP – to expand as a defense mechanism against an alleged Chinese threat. This would not be in the geostrategic interests of Europe, which is more than the United States relying on free markets, cooperation with all regions of the world and networking with other companies. Europe does not need isolation, but integration into global markets. Unlike last century, when the bipolar world of the Cold War turned unipolar, there will be several centers of power in the future, even if the path is up until then still rough. I have no doubt that the international community of the 21st century will be multipolar. Trade policies against the BRICS countries – along with China are Russia, India, Brazil and South Africa – will not benefit anyone, on the contrary. We must try to build on the foundation of the existing international legal system new structures of global governance – not against, but with the new global players.
German Economic News: Nevertheless, many consider China to be suspicious. The country is not a democracy and the human rights situation is unsatisfactory.
Michael Schaefer: Of course, China is not a democracy but an autocratic system with elements of market economy. China has a very different cultural and civilizational tradition then Europe, our societies are difficult to compare. Like for Europe Humanism and especially the Enlightenment was influential, so was and still is for China Confucianism. There are the family and society at the center, social stability is the overriding principle. However, many Chinese leaders know that they must allow participation and establish the rule of law. But this process of a currently existing “rule-by-law” into a real “rule-of-law”, a ruling of the law, is lengthy and will not happen overnight. We know from other transitional societies that first the basic existential needs must be satisfied before democracy and rule of law can develop fully. A full bowl of rice and a roof over their heads are initially more important for the people than freedom of speech. This changes with increasing prosperity. Lee Kwan Yew, the legendary prime minister of Singapore has this once very impressive explained in a conversation with Helmut Schmidt, in which I was allowed to be present. Only when the social and economic rights of the population are implemented, it will move on to the realization of political and civil rights.
Despite all the justified criticism of the increasingly repressive policy of Beijing against dissenters, I consider a diffuse fear of China is unfounded. In particular, I expect that China will continue to not operate in an aggressive hegemony political way. China has conducted virtually no wars of expansion in its nearly 4,000-year history, quite in contrast to western states. Sometimes I feel that the concerns about China are the expression of a projection of the West.
China will, however, defend its vital interests with intransigence. This includes the preservation of its supposedly legitimate territorial claims in the East and South China Sea. To indicate this means an aggressive foreign policy as a whole seems premature to me. Chinese foreign policy will remain for the foreseeable future about securing energy and commodites.
German Economic News: Many worry less about China’s military strength but more about being economically steamrolled by China in this era of globalization.
Michael Schaefer: This concern is of course not entirely unjustified. And yet the answer cannot be that we shut ourselves away or try with agreements as TTIP or TPP – the Pacific counterpart – to exclude China. Globalization cannot be stopped and we should make the best use out of it, by keeping our competitiveness or even expand. However, this requires a constant process of transformation. The economy in East Asia is subject to similar mechanisms as we have already passed through. It has already become apparent that labor-intensive industries, which rely on low-paid workers, are moving from China to other countries such as the Philippines, Bangladesh and Cambodia.
The European and especially the German economy still benefits in many areas of high technology in the world market. Therefore, it is important that we invest as much as possible in education and research, because the resources of a country like Germany, happens to be the minds of its inhabitants.
German Economic News: But is it not just a matter of time before the Chinese will have caught up with us? What speaks in favor for Europe when the Chinese universities produce hundreds of thousands of engineers each year?
Michael Schaefer: For Europe speaks his humanistic and enlightenment tradition. In Europe, as you could say, “inventing got invented” here research and science originate, based on the creativity and dynamism of individuals. This has led to a certain kind of systematic thinking, which relies on individual solutions and allows repeatedly walking new thought paths. This is an essential prerequisite for creativity.
The education of our children at the earliest age gives them a playful approach to problem solving; the courage to leave gaps open is allowed and leads later to an understanding of problems from completely different angles. This is important for the individual creativity, a prerequisite that is mostly missing in Chinese child education, which is much more on focused on discipline and learning. We in Europe should remember our strengths and build on them, and then we will succeed in the globalized world.
German Economic News: Now is it realistic to assume, that the Western countries will meet this challenge? Doesn’t it seem at first to be more convenient to play the political power card?
Michael Schaefer: In fact, we are faced with many conflicts, most of which are still effects of old geopolitical interests. This absorbs our governments and leaves little, too little room for strategic reorientation. But such forward aiming strategies are needed. We need to understand properly the future role of the new global players, we must look at their interests correctly and develop concepts, how we can include these powers in the building of the world of tomorrow, and not by their marginalization. Of course, it’s also about old power configurations: In the Middle East it’s about oil and gas, in the Chinese sea to control of the trade routes and in the resource-rich Africa to reduce the growing Chinese influence. In the analysis of regional conflicts and “civil wars”, this of course must always be seen. But in the medium and long term it’s about the question of how we think about “governance” in the new future. Foreign policy will evolve, as Minister Steinmeier said some time ago, from a foreign policy of governments to a foreign policy of the societies. This means as a consequence that we have to think beyond the boundaries of the social sector scale much more than before. Politics, economy, science, culture and civil society must be thought of as complementary actors in solving complex problems in the future. Then it will be not only about political or only about economic factors. A society’s ability to create social peace will be a high priority.
German Economic News: Will the dollar remain being the worlds leading currency?
Michael Schaefer: Right now, the role of the dollar is still strong, not least due to the huge amounts of US government bonds the Chinese are owning. Therefore a collapse of the dollar does not lie in the Chinese interest. However, I predict that in the medium to long term in addition to the dollar and euro other currencies will gain in importance – including the Chinese Renminbi. This will also reflect the rise of a multipolar world.
German Economic News: How long will it take until the Renminbi will be fully convertible?
Michael Schaefer: No later than 2020, perhaps earlier. China will carefully try to control this; first the entire banking system must be structurally reformed and liberalized.
Overall, I am cautiously optimistic about the integration of China into the global community. It seems important to me to include China in the development of structures of global and regional governance, and not to try to exclude the country.
Europe is indeed currently itself facing major challenges. Only if the EU overcomes its current crisis of self-understanding, and given the enormous global challenges that are facing us, again develops into a genuine solidarity, only then we will be able to participate in the concert of the new forming powers. Alone every European nation state will be too small to apply weight in the new parallelogram of forces in the world, but together, the EU has an enormous potential. This has to be made clear to our people who see Europe almost as a barrier to greater prosperity. What we need is not more Europe, but a more capable Europe. A Europe that speaks with one voice and acts together in key areas such as business, finance or foreign and security policy.
I am deeply convinced that the opportunities that arise from the peaceful coexistence with China and other new global players are much greater, than the risk of being booted out of these new powers. The “new Silk Road” could be understood as an offer, in an innovative form of interregional cooperation to create the basis for cooperation as equals, which leads to a real balance of interests.
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Dr. Michael Schaefer is since July 2013 Chairman of the Board of Management of the BMW Foundation Herbert Quandt. After studying law, he joined in 1978 the Foreign Service and was, inter alia, Permanent Representative at the Embassy Singapore (1987-1991), head of the political department at the Permanent Mission in Geneva (1995-1999), head of the task force Western Balkans (1999-2001), Deputy Political Director and Lecturer of stability policy Southeast Europe (1999 -2002) and Political Director of the Foreign Ministry (2002-2007). 2007 to 2013 he was Ambassador to the People’s Republic of China.
Michael Schaefer is an author of foreign articles and monographs on security issues. He is among others Honorary professor at the China University of Political Science and Law in Beijing, member of the German group of the Trilateral Commission e.V., a board member of the Mercator Institute for China Studies (MERICS), member of the board of the German Society for the United Nations (UNA) and a member of the Commission on Global Security, Justice & Governance.