The last word: On China, leadership will come from Central and Eastern Europe 

The war in Ukraine would not be happening right now were it not, I believe, for an understanding between Beijing and Moscow.

Earlier this week I was in Seoul to host the international session at the 11th edition of the K.E.Y. Platform conference organised by Money Today Media, Korea’s largest business media outlet.  

Not only does 2023 mark the 70th anniversary of the Korean Armistice Agreement and the 70th anniversary of the establishment of an alliance between the Republic of Korea and the United States, but the conference also coincided with President Yoon Seok-Yeol‘s state visit to the US. 

As the competition for supremacy between the US and China intensifies, and authoritarian countries such as China, Russia, and Iran express solidarity with each other — also in the context of Russia’s invasion of Ukraine — collaboration between countries that value freedom, democracy, human rights and market economy, including South Korea and the emerging Europe region, is essential. 

In the US, there is a consensus that although it might be difficult to exclude China entirely and build a new supply chain it is essential to rapidly and drastically reduce the US’ economic dependence on China and put political, economic, technological and cultural pressure. The Dragon is resisting fiercely. It has started joining hands with Saudi Arabia, a traditional ally of the US, and Russia, which is in a proxy war with the US in Ukraine, and Iran, the dominant power in the Middle East. 

China’s struggles 

China will continue challenging the US both economically and militarily. An example of the latter challenge might be a potential Chinese invasion and an attempt to reunify Taiwan. The Taiwan Strait is the place where a geopolitical conflict between the US and China can take place. The US is likely to send troops to Taiwan which might lead to a global war which will have a huge impact on global politics and economy. 

The way the war in Ukraine will continue, as well as the results of the presidential elections in Taiwan and the US in 2024, and Xi Jinping’s re-extension of power in 2027, will play a key role in future developments. 

In the meantime, the social and economic situation in China is not very optimistic. Recently, the Chinese government set an economic growth target of around five per cent in 2023 — the lowest since 1994 when growth targets were first announced. Due to the Covid-19 pandemic, the economy grew by only three per cent in 2022. At the same time, the US economy grew by 2.1 per cent but nominal GDP increased by 9.2 per cent to 25.5 trillion US dollars thus widening the gap — China’s nominal GDP amounted to 17.4 trillion US dollars. Multiple research institutes are predicting that the Chinese economy will have a hard time surpassing the US economy. 

Even the population that was once one of China’s biggest strengths is now becoming a weakness. It was that population that made China the world’s manufacturing plant and the world’s largest consumer market that is now ageing very fast and declining. 

The economy is also being held back by a real estate bubble, shadow banking, and a debt risk. The zero-corona containment policy was a huge blow to the country’s domestic market. Innovativeness of private companies has shrunk as the government put forward the theory of common wealth and sanctioned big tech and platform companies. If there is no alternative to super-strong sanctions from the West, such as the United States, China’s dream of becoming a semiconductor powerhouse may be thwarted. Then the growth of high-tech industries where semiconductors are essential will also stop. South Korea could benefit US export controls on China, according to Professor Chris Miller, the author of Chip Wars.  

The current global complex economic crisis and the aftermath of the US-China competition for hegemony require extraordinary diplomatic and economic responses not only in South Korea but also in Europe. 

Europe’s backbone 

I later sat with Dr Edwin Feulner and Declan Ganley, who joined the K.E.Y. Platform conference. Feulner is the founder of the Heritage Foundation and he recently suggested that South Korea, the world’s most liberal democracy, should be included in the G7 while the United States, China, and Russia are in a tense confrontation. Ganley is the chairman and CEO of Rivada Networks, a US company which plans to launch 600 satellites that will circle the earth at an altitude of 1,050km, delivering a faster connection than traditional geostationary satellites. The company has also been sued over 100 times by various Chinese-backed entities which are not in favour of Rivada’s plans. 

The three of us talked about the role the emerging Europe region is playing and should play going forward in this geo-political situation. 

“This goes perhaps 30 years back but definitely 20 years back when Donald Rumsfeld was secretary of defence and he would say that the vigour from Europe is coming from eastern Europe, it’s not coming from the old guys,” says Feulner, who was in Berlin when the Wall was built in 1961 and then in Budapest when the Germans started dismantling it in November 1989. 

“Europe to me in the old days was London, Paris, Rome and Bonn rather than Berlin. Now it’s London, perhaps Berlin with a question mark and Warsaw. Paris and Rome don’t matter that significantly,” he adds. 

“We can see the fortitude of Europe, its backbone in Warsaw, we can see it in Vilnius, in Riga, Tallinn, Prague, Bucharest. We don’t see in other capitals what we would traditionally expect to see it them,” says Ganley, who witnessed Latvia’s restored independence in 1991 when he was still in his early twenties. “Imagine a Central and Eastern Europe as it continues to grow, to build upon what it has done over the last 30 years, the rebirth of Europe is going to come from there.” 

They both agree that the Chinese Communist Party targeted the region deliberately. 

“With 17+1 that became 18+1 we saw Xi Jinping and the Communist Party of China recognise that the most important parts of Europe to decouple, the places to target first that had a cultural and popular memory of what it was like to live under the communist oppression. That is why they went for them first. They know that demographically, culturally and intellectually the interesting stuff is happening in Central and Eastern Europe,” Ganley says. 

“When Lithuania had the guts to stand up to the People’s Republic of China (PRC), they got away with it. Then the Czech Republic spoke independently too. There are some people there who are not bound by the European bureaucracy in Brussels who are saying we are going to do our thing, that we think is in the interest of our people,” Feulner points out. 

In that light, recent comments made by the Chinese Ambassador on French national television claiming that former Soviet countries don’t have “effective status in international law” could not be random. 

Ganley gives points to Lithuania and says “because they set aside, short-term, narrow-minded so called economic interest, I would call them vested interests. And contrast that with Macron’s visit to Beijing.”

CEE leadership 

French President Macron told his Chinese counterpart Xi Jinping he was counting on him to “reason” with Russia and help end the war in Ukraine. 

“The idea that they are going to be a peace breaker, I mean you have to be spectacularly naive to believe that. I don’t think that anyone in any Central and Eastern European capital believes that, nobody is that stupid because they lived under regimes like this and they know that they lie. But in Paris they don’t know that. And even in Berlin they don’t know that,” Ganley says. “The war in Ukraine would not be happening right now were it not, I believe, for an understanding between Beijing and Moscow. I don’t think Putin would have done that completely on his own.” 

“China looks for weak spots and will push whenever they can,” Feulner says and gives the example of Panama, where since establishing ties in 2017, China has invested significant effort and made important, if uneven, progress in building influence.  

This is why Ganley believes it is critical to “find a formula that completely extracts Russia from the Chinese sphere because what we are seeing in real time is Russia becoming a vassal state of China and that is going to put the PRC’s interests right into Europe.” 

“Some European leaders like Macron treat this PRC problem and challenge as though this is an America-China thing. It’s not. They are going to come for us [in Europe] first,” he says. “I think the leadership in these issues is going to have to come from Central and Eastern Europe and is coming from there.” 

Going forward, emerging Europe’s role in standing up against China in the Old Continent might be as important as South Korea’s in Asia. 

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