The three lessons to be learned from the failure of Emmanuel Macron’s visit to China
This column has been previously published in L’Opinion on 12th april 2023
Beijing has forgotten that the history of the 20th century teaches us that democracies lose out at first but end up as the winners when their governments tell their people the truth.
President Emmanuel Macron should take comfort from the fact that he is not the first — nor will be the last — Westerner to come back empty-handed from a trip to Beijing. To hope that President Xi Jinping would make some move towards bringing about peace was pure delusion from the outset, since the Russia-Ukraine conflict is one of the rare cases where China and the USA have a common interest: the pillaging of Europe.
On the one side, by China buying Russian hydrocarbons at a ridiculously low price and, on the other side, by the USA selling gas to the European democracies in unacceptable conditions that enable it partially to finance the plan laid out in the Inflation Reduction Act, which will speed up European de-industrialization. Therefore, any credible European peace strategy would have to focus on condemning the unjustified profits being made by the two greatest beneficiaries of the conflict — China and the USA — out of the two main victims: the Ukranian and Russian populations.
But, rather than sink into being mortified — French-style — by failure, it would undoubtedly be in our best interests to ask ourselves questions — Chinese-style — about the lessons to be learned, which could turn a defeat and a threat into an opportunity.
The first lesson, taken from The Art of War, is the need to cause division among the enemy. One cannot but admire Chinese genius in orchestrating the parade of European leaders who have visited Beijing — first Olaf Scholz, then Charles Michel, Pedro Sánchez, and Emmanuel Macron, deftly “uncoupled” from Ursula Von der Leyen — so as to highlight the absence of any governance in Brussels. We now have to reverse the dynamic and, in turn, divide the autocracies, whose only true basis for connivance is their shared hatred of the USA. We should start by dividing China and Russia, for example by condemning the growing subservience of Russia, illustrated by the recent refusal of Beijing to co-finance the $95 billion cost of the hypothetical gas pipeline “Power of Siberia 2”. This refusal was emphasized by the long-term agreement between Qatar and China which put the seal on a contract for supplying natural liquefied gas for 27 years and meaning that it can reduce its dependency on Russia for energy.
China is taking great pleasure from the way history has gone: in 1950, Russia sent Chinese soldiers to fight Western forces in Korea; in 2023, China put the Russians in the front line exposing them to American military technology and causing an estimated 70,000 deaths. The sooner the Russian people are persuaded of their humiliation by Beijing, the sooner Brussels will be able to hope for an end to the conflict.
The second lesson derives from the urgent need for Europe to reduce the “China risk”. The presidential visit has, oddly enough, bypassed the subject that is nevertheless the most disquieting topic of the moment: the Chinese Communist Party’s choice, during its 20th Congress last October, of an economy that is fundamentally Marxist-Leninist. This is a model that, for the first time in history, will contaminate 20% of world GNP, with the declared objective of gaining control over profits from private capital. This strategy is in total contradiction to the supposed reassurances from the new Prime Minister Li Qiang and has already been confirmed by the slicing up of Alibaba into six separate entities, by halting the capital increase in Swizerland of CATL, the leader in electric batteries, and by the still unexplained disappearance of Bao Fan, the head of the China Renaissance merchant bank.
There is therefore a need for European companies to “de-risk” China, but even more of a need for private Chinese entrepreneurs to do so, for, according to Bloomberg, they are now prepared to pay commission as high as 12% — as compared to only 1% in 2019 — to Western private banks in order to get their capital out of China. This is where there is an opportunity for Europe to build a “Friendship within limits” with China, in two stages.
The first stage is to unite our common interests with the Chinese private sector, by co-investment under a “China +1” strategy, so as to take a common position in South-East Asia — the region that holds the most promise for the next decade — which is still largely under the control of the private Chinese diaspora. The second stage is to remind Beijing that China’s growth will only reach 2–4%, limited by the poor increase in domestic demand and crippled by a real estate crisis that will cost 10 to 15 points of GNP spread over the next ten years.
“China’s idea is, with the help of the ‘Global South’ autocracies, to boost structural inflation in the West, this being the most effective weapon to destroy democracies.”
This is why industrial exports with high added value are so important, for they will need Europe both as a source of technology — since American competitors are now persona non grata — and for the USD 400 billion trade surplus with Europe, which could be taxed at any moment. As the figurehead President of the European Chamber of Commerce in Beijing, Jörg Wuttke keeps repeating, “China has never had such a great need of Europe.” Perhaps we should learn how to negotiate in favor of our interests!
The third lesson is to bring Europe into a “war economy”, where China has got ahead of us. As a future criterion of success, China has already swapped GNP growth — appropriate for a peacetime economy — for relative dependency, which is far more enlightening in a war economy. Illustrated by the price rise in Covid masks from 1 centime to 1 euro in March 2020, China is trying to make a massive value transfer towards the bottlenecks of the production function, thereby maximizing the monetization of the “Workshop of the World”.
China’s idea is, with the help of the ‘Global South’ autocracies, to boost structural inflation in the West, this being the most effective weapon to destroy democracies. The recent rise of the far right in Italy, Sweden and Finland simply helps convince China that this strategy is the right one.
But Beijing has forgotten that the history of the 20th century teaches us that democracies usually lose out at first but end up as the winners. They lose as long as governments lie to their people, but win when governments finally tell them the truth.
Let us hope that the walkabout among students at Sun Yat-Sen University in Canton, cleverly orchestrated by the authorities, will not have prevented President Macron from seeing to what degree young Chinese people have lost confidence in the government, after the lies about the “zero Covid” strategy. On the other hand, let us hope that he will have seen the need to no longer hide the extent of the economic crisis that the French should expect. It will be three times worse than 1973, with an energy crisis as well as an environmental one, re-globalization, and hyper-inflation in food prices combining into a shock of close to 10% of GNP.
The answer to this fracture would do well to take its inspiration from one aspect of the Chinese social model: senior citizens, deprived themselves of any decent retirement, use their savings to finance the future of their grandchildren. Let us hope that seven hours of private talks with President Xi will have convinced Emmanuel Macron that it is not the moment for Europe to indulge in the unrealistic defense of purchasing power, but to realize the necessity for a supply-side policy and to make certain sacrifices — sacrifices that will be acceptable to Europeans only if they lead to a common purpose. Once again, this is a field in which China has kept itself ahead by means of “war propaganda”: the — possibly spurious — aim of becoming the world number one, ahead of the USA, by 2049, serves to unite the whole population.
It merely remains for the literary brio of President Macron to help him find the words that will bring Europe together in finding a “third way”, which will mean — in response to Beijing and Washington — promoting the building of “a society worthy of our children and grandchildren by 2040”.