European Commissioner Stéphane Séjourné recently opened a magnet factory in Estonia. To be less dependent on the ‘whims’ of China, that’s what it sounded like NOS Journal. But China has no whims. The American president is unpredictable, he has whims. Not Xi Jinping. For example, there is the five-year plan for the state-driven economy, and policy documents provide a good insight into a long-term strategy. But it is even more important to look at what the Chinese government is doing.
Ten years ago, as a correspondent in China, I wrote about electric cars, of which there were already many more of them zooming around in Shanghai than on Dutch roads. A battery manufacturer with the rather lame name Build Your Dreams had focused on batteries and was fully supported by the Chinese state. Beijing had realized that the air in cities needed to be cleaner and saw a gap in the market. Volkswagen and its associates were still able to catch up in the field of electric driving. This was a push that set the entire auto industry in motion.
Yet in the West it remained limited to superficial conclusions and symptomatic treatment. Could the Chinese flood the European Union with cheap solar panels and electric cars thanks to state aid? Then came higher import duties and a finger-wagging at the Chinese president. Time and again it is believed that the Chinese government adheres to the rules that we in the West have devised and would be impressed by such measures. A few government leaders dared to think bigger; in paradigms and strategies. French President Macron has been advocating for a more autonomous Europe since taking office in 2017.
No geopolitical stuff
For decades, China itself was dependent on the West. In order to become stronger, it was important to turn the tables and make other countries dependent on China, the Communist Party (CCP) knew. After the cars came the chips. China cannot yet make the most advanced chips itself. But how long will it remain that way?
I also remember that the Chinese province of Anhui announced that it wants to build its own chip factories. Just as ten years ago every village wanted to have its own car factory because that was the key to success, chip factories now have to be located everywhere in the country. More than 99 percent will probably fail, but a new giant could emerge in a few years. Consider the global shock when a Chinese company released AI chatbot DeepSeek in early 2025. The country is further along than we think.
That does not mean that China is out for world domination. The Chinese government focuses on its own country. Economic policy is closely linked to geopolitics, but anything that falls outside its own strategy is not interesting for Beijing. In other words: the country does not engage in geopolitical wrangling unless there are very clear, concrete benefits.
For example, Xi could have come to the aid of the Europeans in the war that Russia started in Ukraine. After all, Xi and Putin are great friends. A mediating role, stopping support for Russia and perhaps even reprimanding Putin – if successful, this could have earned China nice concessions from the European Union, such as lowering import duties on electric cars and access to advanced chips.
There would also be geopolitical benefits. Breaking Europe away from the United States and getting the EU on his side – it was within reach for Xi. Yet he chose to feed Putin’s dependence. The CCP wants to turn the country into a strong economic and political bloc, dependent on no one and with ‘partners’ who need China more than the other way around.
Xi Jinping and his associates do all kinds of things to keep the economy growing, and these things often rely on foreign demand
The fact that this has been achieved in thirty years is a great victory. In the 1990s, Deng Xiaoping hosted European leaders in Beijing in the hope of attracting investment from the West. Now European leaders are visiting Xi Jinping to persuade him to set up factories in Europe. Macron left two weeks ago, and Starmer and Merz are also signing up for a spot in Xi’s agenda. From that position of dependency in the 1990s, the Chinese created a long-term strategy. Have we now also understood that strategy?
This is not an argument to learn from China. The country is a one-party state, with all that this entails for human rights, and with the ‘advantage’ that the CCP does not have to go through five stages to implement a project. (The nitrogen problem in China had long been solved.) But that’s not the point. Europe must learn about China.
The West simply decided to integrate China into the world economy, so now it must learn to deal with the country. We need to understand how China links its economy to its foreign policy. And realizing that the Chinese economy has an important weakness: it must always continue to grow. The CCP’s right to exist rests on the promise to the Chinese people that things will always improve under its rule.
Lack of trust
Xi Jinping and his associates are doing all kinds of things to keep the economy growing, and these things are often based on foreign demand. China has more or less been developed, and on the domestic car market the supply is also greater than demand. Growth must now come from loans and investments in factories, ports and railways in Europe, Africa and elsewhere in the world.
It would be a lot healthier if that growth came from our own population. Chinese with confidence in the future, who dare to change jobs, dare to start a business or buy a house. That trust has been waning since the Covid pandemic, which turned everything upside down. The state could strengthen the social safety net. Tiny pensions and meager benefits do not exactly invite you to take risks. And without affordable child care, Chinese couples are forgoing family expansion that could slow the aging of the national labor supply.
There are plenty of China experts to analyze these kinds of insights and draw sensible conclusions from them. Perhaps civil servants, ministers and government leaders should listen to that.
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