Conference at CEIBS: inventing a new globalization
Dominique de Villepin delivered a conference in Shanghai on 7th September 2018 about the transition of the Sino-US-European relations in the international system. He spoke as Distinguished Professor of the China Europe International Business School (CEIBS) and was, at this occasion, appointed new Chairman of the International Advisory Board of the School.
Faced with a series of risks and the increasing possibility of both economic and military confrontation, what can China and the EU do to combat US actions and address an overall weakness in the international community? Dominique de Villepin explains his vision for a new approach to globalisation.
The weaknesses of the international scene after Brexit, after Donald Trump being elected President of the United States, after the many crises we are facing, are showing the incredible weakness of the international community. This is a fact. Our world society is weak; fragile. And, there is also a very important fragility of peace. The world can turn to one side or another, depending on how we are going to behave and handle the situation. The challenge today is about saving multilateralism and re-inventing a new globalisation. Globalisation as it is today cannot work for the benefit of humanity if we do not deeply change [our approach].
Assessing the importance of uncertainties
The first uncertainty is the risk that the West is facing; a risk mainly of fragmentation which has, of course, huge consequences in the international society.
Europe is facing three big risks. The first one is separatism, we see it with Brexit, we see it with Catalonia, we see it with the situation in Spain, Italy – this is an important new factor for Europe.
The second risk is populism, we see it mainly in the eastern part of Europe. Countries like Hungary that are taking the lead, taking advantage of the migration crisis. But this is spreading everywhere in Europe. Countries like France, Germany and Sweden are not [immune to] this new reality.
This is a problem we are all facing in Europe, and it is going to be at the heart of European Parliamentary elections in May 2019.
The third risk for Europe is protectionism. Europe has been the more open space to free trade and to the world in the last decade. So, of course, Europe is hit strongly by the perspective of protectionism that is rising in our world.
Unilateralism is gaining ground in the US [and] has destroyed many of the achievements of diplomacy in the last year. First, it has destroyed the global commitment of the international community to climate change. The US’ signature on the Paris Agreement is gone. Second, it has destroyed many of the peace efforts that have been tried by the international community. We saw that with the decision of the US to withdraw from the Iranian deal, with all the consequences it has for the stability of the Middle East. We know how much the Middle East has known instability in the last year. Let me tell you, we are not at the end of the road. We could see in the next month and years, maybe the fall of Saudi Arabia, maybe the fall of all the Gulf monarchies. This is on the table today. The US diplomacy is making so many mistakes with a strong alliance with Israel, and a strong alliance with Saudi Arabia, which is leaving such a big space for Iran, Russia, Hezbollah and some other allies – such as Turkey – in the region at the risk of confrontation. A new risk of war can happen in this very region.
The same [can be said of the situation in] North Korea, where we have seen a too candid Donald Trump – an innocent Donald Trump – ready to go to Singapore like he was going to solve the matter in just one day. And now, he is finding out that things are not going the way he believed they should go and might be tempted to show force in North Korea. He is going from one [approach] to another in a totally erratic way. There is not one thing more dangerous in the international scene than to have a strong power with an important leadership [figure who is] acting without predictability.
We also see the destruction of achievements in the field of free trade. Donald Trump has left the TPP, has questioned NAFTA, has questioned the TIPP; so there is a complete change from what used to be the rules of the game in the world of free trade. Last, we have to take [into account] the fact that we are a couple of weeks away from the mid-term elections. A lot of things can happen [between now and then] because this is a very important [period of time] for Donald Trump. He must win. If he wins this election, he might have a second term. If he loses the election, then the mechanism of, and the question about, his legitimacy to stay in power – facing the risk of the commission on Russia – will create a very big danger for him and he might face a lot of difficulties in the coming months and years.
So, the West is facing fragmentation and there is a risk of confrontation which is much higher than before. We see the risk in the field of economics. Not only with what is called, in the policy review, the enemies: China and Russia. But also former friends, former allies: Canada, Europe, Korea. All of these countries are now seen as potential dangers for the US. Economic confrontation is the new rule between Europe and the US, but also between the US and China. You know how much pressure Donald Trump has put on trade in order to get some return.
But, this battle on free trade is hiding another battle, which is much more important: the technological confrontation. This is the key for the US. Why? Everybody knows that the big question is: within how many years will China be number one in the world? Five years, 10 years, 15 years. The only objective of US diplomacy is to try to make it later, or even to make it impossible. This is the only logic behind US politics today.
[The goal is to] avoid this humiliation of the rise of China and the US as a descending power. Graham Allison put it very clearly, calling this situation the Thucydides Trap. [It has occurred] over 16 times in world history in the last 500 years. Twelve times, we have seen a rising power confronting a descending power; 12 times this ended with war.
The question is how are we going to get out of such a mess? The only way for the US to avoid the rise of China, or to stop it, is to put a strong hand on technology. That is why Made in China 2025 was such an issue for them. That is why the US’ questioning of free trade is such an issue. Because if they can stop this progress of China in technology, digital, artificial intelligence – even if they have to pay with a cyber war – they will gain at least some time and maintain US power.
We should also know that the possibility of a military confrontation is not to be completely [discounted]. [In terms of] conventional war, the capacities are bigger than ever. Every year the budget of the US is 600 billion dollars, compared to China’s 230 billion and Europe’s 180 billion.
And of course, the nuclear risk should also not be [ignored]. There is a risk of confrontation through the Iranian crisis, and a risk of confrontation in the North Korean crisis. Donald Trump’s dissatisfaction over the deal on Iran, as well as the changing mood on North Korea, could make the United States use this situation as an opportunity to go for a deep crisis and take advantage [of that]. Because their military [advantage] is still strong.
Faced with this situation, these uncertainties, China has a major responsibility because it can be a pole of stability. The rise of China has already profoundly transformed global governance. In less than 50 years, we have gone from the western order to a multilateral order because of the rise of China. We see China’s hard power in the country’s capacity for innovation. When you look at the tech companies – Tencent, Baidu, Alibaba, JD.com – there is a capacity in this country, which is the only one that can [compete with] the capacity of the US. The battle for being number one is more and more important.
And of course, [there is also a battle underway] in soft power. This is going to be one of the most important challenges for China. [It will involve issues such as] how China is going to deal with increasing influence in the art world, in the cultural world, in the academic world. These are places where, because of the foundations, because of the think tanks, because of Hollywood, because of a whole system, the US has acquired a strong capacity since World War II. And in this sector of soft power, China needs to be more influential and more creative. And that is where, with Europe, a very strong partnership can be created.
China has more influence, but also more responsibility. Today China is among the five members of the Security Council. In terms of economic and financial commitment, we all know the capacities and the responsibilities of China. In 30 years, the GDP of China has grown 30 times, so that shows the country’s progress and importance in the world economy. The same in climatic responsibility: one of the most amazing achievements made by China has been the hard work [done in fighting] climate change and pollution, and this has been really a revolution in this country in the last five, ten years.
But, there is another reality we should face. China cannot succeed alone. China needs new frames of cooperation. China needs new markets, new partners. Very few people know how influential China is today in Africa, or in South America. Even the US do not know the extent of China’s influence in countries like Venezuela, Peru, Argentina. The strength of China is rising every day in those countries, and it is an absolute need for China to gain influence around the world.
Of course, there are difficulties. China’s global debt is a big issue. Its total global debt is 30 trillion dollars, and its corporate debt is 160 percent of GDP. This is too much; this is a very important weakness for the country that needs to be addressed.
The second factor that has to be addressed is the question of security. To deal with the growing number of crises in the world, China has chosen, as is its right, to give priority to a multilateral treatment of crises. But, China can get more involved in order to change the trend of some of these crises, for example the Syrian crisis. Whatever the solution in North Korea, I think China is key; we need China to get more involved. I believe also that in global challenges like migration and climate change, China’s role, its responsibility, is key.
The rules have changed
I believe that the current trend in the US is a long-term one. Some naïve people believe that when Trump is out of office, everything will be settled. There will be no more problems with the US and we will be back on track like before. This is a big mistake. The agenda of the US is not going to change. Because, the agenda of the US is to face the rise of China, and the rise of China will keep [on going].
We have to understand that the choice that has made Donald Trump president may look stupid, but it is not stupid. Donald Trump believes the post-Second World War institutions, the rules of post-Second World War society, the world community that the global order has created in the last 60 years, is not aligned with the interests of the United States. [There is] the belief, faced with the rise of China, that anyone that competes with the US – whether it is China, Europe, Canada, Mexico – is an enemy of national security. This is something very new in the mentality of the US. Why [has this new thinking emerged]? Because the best ally of the US today – and this is a key point – is chaos.
We Europeans and you, the Chinese, we believe in institutions, we believe in rules, we believe in multilateral order. The US today, they take a strong advantage in disruption – in chaos. The more there are uncertainties, the more there are crises, the more they can triangulate – play one against another. Divide to be able to dominate. This is a new law in the international community, and this is not going to change.
So, in this context, the [important issue] is how China and Europe can unify their forces in order to create a new global order based on multilateralism. This is the challenge. We need a common vision of peace and of prosperity. We have based our friendship on history. France was the first country to have diplomatic relations with China in 1964 because of General de Gaulle, and it has been the same for most of the European countries. We are today strong partners, not only in trying to find peace in the world but also for defending the world order of free trade. We should reinforce [this friendship], and we have a fantastic opportunity which should not be missed: the strategy of President Xi Jinping launching, in 2013, One Belt One Road.
I believe this strategy is a very important vision. Because for the first time we see a new tool, a new possibility in world diplomacy, which is a diplomacy of projects. Not bilateral diplomacy, not multilateral diplomacy, but a project where everyone can participate and utilise their strengths for the same goal. The goal is how to develop some countries, that are too weak today, through new infrastructure with the help of Europe, China, any country that wants to participate to create more stability. This is the best way to fight against terrorism; the best way to fight against [radical] Islamism and to give hope to millions of people who are going to be part of a new prosperity which is going to open new markets. This is not only an economic approach, it is a political approach, it is a strategic approach, and it is a cultural approach. [It is] betting on the fact that when states know each other better, they should live in peace with one another.
So, I believe we should make it a success. Of course, we know that there are difficulties, Europe today is scared by the project. Because, they believe this project is too much of a Chinese project [geared] toward China’s benefit; [that it is] too much in the [interest] of Chinese technology and Chinese products. So we should make it a double track project where everyone can be in a win-win situation, and not in a zero-sum game like the US wants it to be. It has to be for the [benefit] of both. So, it has to be supported both ways. The New Silk Road should be supported at the origin in China, and very strongly in Europe. Because we need to learn to work together more and we need to create more trust with one another.
The second point, in making Europe and China a cornerstone of world stability, is we need to reinforce what Donald Trump doesn’t want: our institutions, our capabilities, our rules, in order to work more efficiently together. I personally believe that we need more economic and financial coordination. I hope in the next years, between France and China for example, we will have a public office for investment between Europe and China. We need such a public office for investment in order to make sure that any investment made from Europe in China, and China in Europe is going to be for the benefit of everyone.
We have seen in the past years, too many Chinese private investors coming to Europe with fake deals. Promises but no money or strategy to buy a company, to sell the assets of the company and then to go back in Shanghai in order to make more money. We need to secure the reality of these investments, and it is in the interest of both parties to control the credibility of such strategy. I think we also need some kind of a permanent secretariat for the New Silk Road based here in Beijing, but also in Brussels, that could work together in order to concretely appreciate the quality and capacity of each project. I think that could be a way to import a new perspective for the One Belt One Road.
Second, we need more financial coordination, and I believe in this [regard], it should be very important to have more coordination between the [People’s Bank of China] and the European Central Bank. Maybe, if we are successful in better coordinating the euro and the yuan, then we can extend it to a G3 with the Federal Reserve Bank. But we have to show the way for more coordination. I believe if we show the way, the US will then be willing to be on board. If we start by saying, ‘okay let us have a G3 right now’, the US will say no and then nothing is going to happen. The same for political and diplomatic coordination. (Because it is so difficult to have such coordination in the G7) we need a political G4 with Paris, Berlin, Moscow, and Beijing. This is of course going to be seen as a provocation in Washington, but if we start working together to make progress on some crises, on some [challenge], that will be a strong incentive for the US to be back on track with dialogue, on coordination.
For example, Emmanuel Macron has proposed a global pact for the environment, this could also be an initiative that we could take together in order to give credibility to our efforts facing climate change. But, we should not wait for the US to change [its] mood because I do not think they will. We should create a situation in which we choose movement, initiative, dynamism, trust between us in order to change the mindset of the world.
At this very moment, it could be very damaging for the international community to wait too long and to act in a too cautious way. We need to take risks because the world is in great danger.”
This is an edited transcript of a speech given to Chinese academics at a September 7 event in Shanghai.
Dominique de Villepin is Distinguished Professor & Chairman of the International Advisory Board at China Europe International Business School.